What many people don’t usually understand is that there is a distinct difference between employment contracts and commercial contracts. Commercial contracts between two parties are typically written agreements with very specific terms that “lay down the law” in black and white. Both parties know exactly what they’re getting and what they’re required to do as it is clearly stated. Such specificity is required in the business world to minimize confusion and ensure absolute certainty. Commercial contracts often contain terms that strictly prohibit any changes to the agreement. The only way an amendment can be made is if both parties agree to the changes in writing. Such iron-clad written agreements don’t usually exist with employment contracts.
Employment Contracts are like Living Documents
The difference with employment contracts is that they are constantly evolving. This is due to the working relationship between employer and employee which changes over time. Employment contracts require a high degree of flexibility as they must adapt to reflect these changes. These changes are still regulated by law, but in a different way. Unlike commercial contracts, the changes in an employment contract don’t always need to be in writing.
Employment Contracts - Amendment by Conduct
It doesn’t matter if an employment contract is written, oral, or a bit of both, it is still enforceable by employment laws. Furthermore, the conduct between employer and employee over a period of time can also be enforceable. What this means is that the relationship between employer and employee can amend one or more terms in the original employment contract. In some cases, the conduct between the two can be such an extreme change, that it can supersede the original employment contract entirely. Even in a situation like that, whether the employment contract is written or not, it’s still fully enforceable by law.
Employment Contracts Amended by Conduct - How does it Work?
All employment contracts contain terms and making amendments or changes to those terms require mutual agreement. That is a requirement at law, and without mutual agreement, an amendment is not possible. Naturally, the most certain way to obtain agreement is with a signed formal document; but, what happens if you don’t have written proof?
It’s all about history. If an employer and an employee agree to a change, it will be indicated by the conduct between the two over a period of time. The relationship or conduct between employer and employee is considered evidence. If the historical facts of the relationship indicate irrevocably that the changes to the original employment contract were agreed upon, then, in the eyes of the law, an amendment by conduct has occurred. Basically, if an employer makes a change to your employment contract, and you go along with it, that means you agree with it.
A classic example is one of an employee who claimed his employer had breached the employment contract because the employer had made changes that he didn’t agree with. In fact, over the 26-year history of his employment with the same company, there were numerous transfers and changes to his position; some of which he didn’t like. Despite his dissatisfaction, he went along with all of these alterations until he filed a claim for wrongful dismissal. He believed that the latest assignment he received was a demotion and it was his employer’s sly way of dismissing him. The facts indicated otherwise, and since the employee had a long history of complying with similar transfers and position changes, the judge ruled in favor of the employer. Conduct created the amendment to the employment contract which allowed the employer to determine these kinds of adjustments. The employee didn’t have a case.
On the flip side, conduct can create an amendment that works in the employee’s favor. For example, if, after you were hired, your employer offered you a travel allowance or extended health coverage, you would likely accept these new terms without any protest. By doing so, these terms have now been officially amended by conduct into your employment contract. As such, it is your right to demand that these benefits be maintained without change unless you agree otherwise.
Knowledge is power. If you are unsure of your rights as an employee or have experienced any recent changes in your employment contract, contact Employment Contract Lawyer, Bob Yeager. He can provide immediate answers to all your questions so you know how to best proceed.
