An employment contract is a written or verbal agreement between an employer and employee that sets out the terms and conditions of employment. An employment contract must be agreed upon by both parties, and any attempt to force an employee to enter into a new contract is unlawful. However, there may be times where your employer asks for your permission to alter the terms of your employment. For example they may seek to change your duties and role. This is legal if you give permission, however it is illegal if your employer changes your employment terms without your knowledge or consent.
Altering the terms of your contract
An employer cannot change the terms of an employment agreement without letting the affected employee know. Employment agreements need to be agreed on by both the employer and employee in order to actually be an agreement. Therefore, you need to provide consent to introduce changes to your employment contract. A unilateral change to your contract will result in a breach of contract. You should be aware that continuing to work under changed employment conditions, without bilateral agreement on the changes, will result in you implicitly agreeing to the changes.
Fundamental terms are the foundation of an employment contract. Any change to them results in the formation of a new contract. The fundamental terms of an employment contract include:
- Remuneration (pay)
- Term of employment i.e. start and end date
- Hours of work
Patricia works at a well-reputed consulting firm. A recent economic downturn has meant that a lot of work has dried up. Patricia’s firm ask all senior partners to accept a 20% pay cut. However, the firm can only make this change effective if the partners agree.
The Fair Work Act 2009 (Cth) entitles you to workplace rights as an employee. Section 343 of the Fair Work Act prohibits an employer from coercing an employee to entering a new employment contract. Coercing someone means to use fear, intimidation, force or threats to make someone do something against their will. Therefore, if an employer coerces you to sign a new contract by threatening to terminate or demote you, or change your employment status, you can make a claim to the Fair Work Commission for unlawful conduct by the employer.
Section 344 prohibits an employer from unduly influencing or pressuring an employee into entering a new agreement. It is easier to show this influence or pressure than it is to show coercion. To do something unduly, a person acts in an unwarranted or excessive manner. If they ‘influence’ or ‘pressure’ you, they are persuading, impelling or harassing you to do something. Therefore ‘undue influence or pressure’ refers to when an employer excessively persuades, impels or harasses you to change your conditions of employment.
Both undue influence and coercion are unlawful even if the employer was not successful in getting you to agree to a new contract.
In conclusion, your employer is prohibited under law from forcing you to sign a new employment contract. They also cannot use unfair tactics to force you into entering the agreement. Be aware that changes to the fundamental terms of your agreement forms a new contract. It is best to seek legal advice from an employment lawyer if you believe your employer has, or is attempting to force you into a new employment agreement.