Updating Employment Contracts in Australia: Notice and Consent

Updating an employment contract sounds simple until you hit the real problem: you cannot usually change core terms just because the business wants to. Many employers get caught by three common mistakes. First, they send out a new contract and assume continued attendance at work means acceptance. Second, they rely on a long notice period, such as 90 days, as if notice alone makes a change legally binding. Third, they update title, pay, duties or location without checking the Fair Work Act, the employee's award or enterprise agreement, and any consultation obligations.

If you are reviewing contracts after a restructure, pay review, policy refresh or growth phase, this guide explains how to legally update employment contracts in Australia. It covers when consent is required, when notice helps but is not enough, what triggers a proper contract review, and how to avoid turning an administrative update into a breach of contract, underpayment issue or unfair dismissal risk.

Overview

An employer can update some employment paperwork relatively easily, but changes to binding contractual terms usually need a clear legal basis and, in many cases, employee agreement. A 90 day notice period may be relevant if the existing contract allows certain changes on notice, but notice is not a universal workaround for changing wages, hours, duties or other essential terms.

• Identify whether the change affects a policy, a contractual term, an award entitlement or a statutory right.
• Check the current contract for variation clauses, flexibility clauses, notice provisions and consultation requirements.
• Review any applicable modern award, enterprise agreement and National Employment Standards obligations.
• Decide whether the employee's written consent is needed before you sign or issue anything.
• Assess whether the change could amount to repudiation, adverse action, redundancy or constructive dismissal if imposed.
• Document the process carefully, including consultation, acceptance, rollout timing and version control.

What This Means For Your Business

The short answer is this: most employment contracts cannot be changed unilaterally if the proposed update affects a substantive term of employment.

That matters for founders and managers because contract updates often happen at practical pressure points. You may be hiring your first operations lead, folding two roles into one, changing bonus structures, moving to hybrid work, or standardising templates after growth. This is where businesses often assume a fresh document solves the issue. Legally, the question is not whether the new contract looks cleaner. The question is whether the employee is actually bound by the new term.

Contract updates versus policy updates

Not every workplace change requires a new contract. Some matters sit in policies rather than the contract itself. For example, a policy on IT use, social media, leave approval processes or reasonable work from home procedures may often be updated more flexibly, especially if the contract says policies can change from time to time.

But if you want to change a core employment term, the risk is much higher. Core terms usually include:

• salary or wage rate
• hours of work
• position and seniority
• duties and reporting lines, if the change is significant
• place of work
• commission, bonus or incentive structures
• restraint clauses and confidentiality obligations
• notice of termination
• probation, if the person is already employed

These are not usually matters you can rewrite without agreement unless the existing contract clearly permits a specific type of change and the change is exercised lawfully.

What a 90 day notice period does, and does not, do

A 90 day notice clause can be relevant, but it does not automatically let an employer rewrite the deal.

For example, a contract might say the employer may vary certain non essential aspects of duties, location within a reasonable area, or policies on giving notice. In that case, notice may be part of a valid process. But a general statement that the employer may amend terms on 90 days' notice can still be challenged if it tries to override minimum legal entitlements, contradicts an award, or allows one party to change the contract in a way that is uncertain, unfair or inconsistent with basic contract principles.

In practical terms, a notice period is strongest when it relates to:

• administrative updates
• changes expressly allowed under the current contract
• future offers of employment, where the employee can choose whether to accept
• policy changes that are not contractual promises

A notice period is much weaker, and often not enough on its own, where the proposed change would reduce benefits, alter job security, cut remuneration, increase hours materially, or shift the role into something substantially different.

Key triggers for reviewing employment contracts

The safest time to review your contracts is before pressure builds. Common triggers include:

• a restructure or management reshuffle
• a move from office based work to hybrid or remote work
• promotion or demotion discussions
• changing a contractor to an employee, or the other way around
• changes to pay, commission, incentive schemes or allowances
• new confidentiality, intellectual property or restraint concerns
• business sale preparation or due diligence
• award classification reviews or underpayment concerns
• expansion into another State with different operational needs
• older contracts that no longer reflect actual working arrangements

If one of these moments has come up, the legal task is not just drafting a new template. You need to map what is already in force, what legal minimums apply, and which changes require agreement before you sign.

Legal Issues To Check Before You Sign

The direct answer is this: before you issue updated contracts, work out whether you are changing legal rights, not just paperwork.

1. Check the existing contract first

Start with the current signed contract and any later variation letters. Founders often work from the latest template and forget the binding document may be an old offer letter plus years of accepted changes.

Review the clauses dealing with:

• variation and amendment
• duties and flexibility
• location and travel
• remuneration review and incentive schemes
• policies and handbooks
• notice periods
• entire agreement language
• consultation or review mechanisms

If the contract says changes must be in writing and signed by both parties, that clause matters. If it says policies can change from time to time, that may help with non contractual processes, but it does not usually let you cut contractual benefits through a policy update.

2. Check awards, enterprise agreements and the NES

An employment contract cannot undercut minimum legal entitlements. Even where an employee is salaried or has a managerial title, they may still be award covered depending on the role and duties.

Before you sign or propose any update, confirm:

• whether a modern award applies
• whether an enterprise agreement applies
• whether the proposed term is at least as favourable as the minimum standard
• whether consultation obligations apply to roster, hours or major workplace changes
• whether the change affects leave, notice, redundancy or flexibility rights under the National Employment Standards

This is where businesses often get caught. A tidy new contract does not fix an underpayment problem if the underlying pay structure is wrong.

3. Work out whether consent is required

If the change affects a fundamental term, written agreement is usually the safest course. Consent should be genuine, informed and recorded clearly.

That means more than emailing a document and saying it will take effect in 90 days. A sounder process often includes:

• explaining what is changing and why
• giving the employee a reasonable opportunity to review the document
• inviting questions before they sign
• avoiding pressure or misleading statements
• recording acceptance in writing

If the employee does not agree, you may need to negotiate, keep the current arrangement, or consider a more formal organisational change process. In some cases, terminating the old contract and offering re-employment on new terms may be considered, but that approach carries real unfair dismissal, adverse action and employee relations risk. It should not be treated as a simple administrative reset.

4. Separate policies from contractual promises

Many businesses want more flexibility around bonuses, hybrid work, leave procedures and performance management. One solution is careful contract drafting so that the core bargain stays in the contract, while more changeable operational rules sit in policies.

That only works if the drafting is clear. If a bonus scheme is described as guaranteed in one place and discretionary in another, disputes follow. If a work from home policy is incorporated into the contract by mistake, changing it later becomes harder.

Before you sign, make sure the documents clearly distinguish:

• binding contractual entitlements
• discretionary benefits
• policies that can be updated
• guidelines that are not intended to form part of the contract

5. Consider consultation and employee relations risk

Even where you believe a contract permits a change, the process still matters. A poorly handled update can trigger grievances, resignations, stop work concerns, union involvement or claims that the business acted unreasonably.

This is especially relevant where you are changing work location, hours, reporting lines or duties after a restructure. Consultation may be required under an award or enterprise agreement, and it is often sensible even where not strictly mandated.

6. Keep evidence and version control

If a dispute appears later, the business needs to prove what terms applied and when. That sounds basic, but contract version problems are common in growing businesses.

Keep a clear record of:

• the original signed contract
• any variation letters or side agreements
• the date the new contract or variation was issued
• communications explaining the change
• the employee's signed acceptance
• the commencement date of the updated terms

Before you rely on a verbal promise from a manager or founder, check whether it has already changed the practical arrangement. Informal promises can create confusion, even if the contract says otherwise.

Common Mistakes With How to Legally Update Employment Contracts

The biggest mistake is assuming notice equals consent. It does not, at least not for every kind of contractual change.

Sending a new contract without dealing with the old one

Some employers issue a replacement contract and ask the employee to continue working under it from a future date. If the employee never signs, the legal position can become messy. Continued work may support acceptance in some cases, but it is risky to rely on silence where the changes are significant or detrimental.

A cleaner approach is to identify whether you need:

• a variation letter for a specific change
• a full replacement contract with express mutual agreement
• a policy update only
• a broader consultation process first

Using broad variation clauses too aggressively

A clause allowing the employer to vary duties, policies or work practices is not a blank cheque. Courts and tribunals will still look at what was promised overall and whether the change is within the scope of the contract.

If a marketing manager is told they now need to perform a substantially different junior sales role, work permanent weekends, or relocate far from the original workplace, a general flexibility clause may not save the business.

Reducing pay or incentives without checking legal minimums

Commission structures and bonus plans are common update points. They are also a common source of dispute.

Problems usually arise where the business:

• changes the scheme mid cycle
• tries to apply the change retrospectively
• fails to define whether the bonus is discretionary
• creates a salary package that no longer leaves the employee better off overall under an award

If you are changing remuneration, check both the contractual promise and any minimum entitlement framework.

Backdating changes

Backdating a contract update can look tidy internally, but it creates evidentiary and trust problems. If the employee did not know about or agree to the change at the earlier date, backdating may be ineffective or misleading.

Use the actual issue date and actual commencement date. If you are documenting a change that has already been operating in practice, say that clearly and get advice on how to regularise it properly.

Forgetting sham contracting and role classification issues

Sometimes the real issue is not an employment contract update at all. The business may be trying to convert an employee into a contractor arrangement, or vice versa, because the working relationship has changed.

Before you classify someone as a contractor, check the substance of the relationship. Control, delegation, tools, integration into the business, and commercial risk all matter. Relabelling a worker on paper does not fix a misclassification problem.

Treating consultation as optional during major change

Where a restructure affects duties, reporting lines, location or ordinary hours, employers often focus on the new contract and overlook consultation obligations. That can create separate legal exposure even if the final contract terms would otherwise have been acceptable.

The main risk is not only breach of an award or agreement. A poor process can also feed into general protections or unfair dismissal arguments later.

Rolling out one template to everyone

A standard form contract helps with consistency, but a single template rarely fits every worker. Senior employees, award covered staff, casual employees, part time staff and incentive based roles often need different drafting choices.

Before you sign or roll out changes across the business, sense check:

• whether each role is correctly classified
• whether the same clauses make sense for each employment type
• whether old side deals need to be expressly replaced
• whether the contract reflects the actual day to day arrangement

FAQs

Can I change an employee's contract by giving 90 days' notice?

Not usually for a fundamental term unless the existing contract clearly allows that specific change and the change is lawful. Notice may support some changes, but it does not automatically replace the need for agreement.

Does an employee have to sign the updated contract?

If you are changing substantive contractual rights, a signed written acceptance is the safest approach. Relying on silence or continued work is risky, especially if the change disadvantages the employee.

Can I update workplace policies without employee consent?

Often yes, if the policy is genuinely non contractual and the contract allows policies to be updated. You still need to act reasonably and cannot use a policy to remove contractual or minimum legal entitlements.

What if the employee refuses the new terms?

You may need to negotiate, keep the existing arrangement, or consider a formal change process. Terminating employment and offering new terms can create serious legal risk, so get advice before taking that step.

Should I use a variation letter or a whole new contract?

It depends on the scale of the change. A variation letter can work well for one or two specific amendments. A new contract may be better where multiple clauses need updating, but it should clearly replace earlier terms and be properly accepted.

Key Takeaways

• Employment contracts in Australia generally cannot be updated unilaterally if the change affects a core term such as pay, hours, duties or location.
• A 90 day notice period may help for some permitted changes, but notice alone does not automatically make a contract variation binding.
• Before you sign or issue updated terms, check the current contract, any award or enterprise agreement, and the National Employment Standards.
• Use clear written consent for substantive changes, and do not assume continued employment means acceptance.
• Separate policy updates from contractual changes, and draft documents carefully so discretionary benefits and non contractual policies are clearly identified.
• Keep strong records, including old contracts, variation letters, consultation notes and signed acceptance of any new terms.
• Take extra care during restructures, pay changes, contractor reclassification, remote work changes and role redesigns, because these are common trigger points for disputes.

If you want help with contract variations, award compliance, consultation processes, and new employment contract drafting, you can reach us on 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.