Is it time to update your employment contracts?

The process of updating contracts of employment can be daunting and research-intensive—especially when dealing with changes in labor laws, company policies, and market conditions that can alter the terms of agreements between you and your employees.

That’s why we’ve put together a short guide to help you understand when to update your contracts of employment, how to go about the process, and a convenient solution for getting a revised contract signed quickly, especially if you have remote employees.

How often should a contract of employment be updated?

Generally, it’s recommended that you review your contracts at least once a year, prior to the start of a new financial year. This practice allows you to review any recent changes to employment laws and update contracts accordingly.

You may also want to update your employee contracts when there is a legal change or if any adjustments are recommended by your legal counsel.

What are some reasons for updating contracts of employment?

Change in federal and local laws

Laws regarding employee rights and protections, like minimum wage increases or overtime requirements, are constantly evolving, but failing to dust off and revise outdated contracts can leave businesses vulnerable to costly legal disputes and penalties.

Updating contracts in accordance with the law not only helps to protect your employees and your company by ensuring compliance, it also promotes transparency and trust between management and staff who know they’re all on the same page.

Change in workplace policies and practices

If you’re introducing a four-day workweek, remote work, or a dress-code change at a company-wide level, updating your employment contracts with your newest relevant policies is a great way to make sure everyone’s in the loop and helps to prevent any confusion or misunderstandings.

Revising your contracts can also be beneficial in protecting your company as business practices change. For example, if you have staff working with sensitive information that you’d like to keep a tight lid on, you may need to introduce a non-disclosure clause to their employment contracts or draft a non-disclosure agreement.

Change in an employee’s duties or pay

As an employer, it's important to recognize that an employee's responsibilities are likely to evolve over time, even if your employee has remained in the same role for years. While they may have taken on new duties or received a well-deserved bump in compensation, it's crucial to update their employment contract to reflect these changes.

While these changes likely don’t affect your business on a broader level, having updates in writing still provides clear, up-to-date employment terms that both you, your employees, and any other relevant parties can reference if need be, especially in the event of a legal dispute.

Can an employer change a contract of employment without agreement from the employee?

Generally, employers can’t make changes to an employment contract without a sign-off from the employee—unless certain clauses were already established in the original contract.

For example, a flexibility clause could allow you to make changes to your employees’ work schedules, or a mobility clause might enable you to modify your employees’ work locations, either temporarily or permanently. If you’re unsure about how you can enforce these clauses, be sure to consult with a legal specialist to understand what to do in your specific situation.

But if you’re planning on making any major changes, in compensation or job roles for instance, you should discuss with your employees first and get their agreement on record.

Tips on updating a contract of employment

1. Make sure that the changes comply with any applicable laws and regulations—federal or local.
   

2. Ask the affected employee to sign the new contract.
   

3. Provide adequate notice of the proposed changes and explain how they will impact the employee’s rights, obligations, and benefits in clear language that everyone can understand.
   

4. If necessary, provide an opportunity for employees to discuss and negotiate proposed changes with union representatives (collective bargaining).
   

5. Keep records of all discussions regarding the proposed changes to show that attempts were made at negotiation and/or collective bargaining (whenever necessary).
   

6. Sign the new employment contract once you and your employee are in agreement.
   

How to quickly sign an updated employment contract with Dropbox Sign

Whether you’re updating an employment contract because you’ve updated your work-from-home policy or you’re giving an employee a promotion, Dropbox Sign makes the process flexible and saves you time. You can simply upload your revised contract, add whichever signer fields you need, and send the contract off to your employee to sign—all within the same system. And, if you’re updating contracts at scale, Dropbox Sign can help you manage the contract management process with efficiency.

Plus, both you and your employee will have a time-stamped, tamper-proof, electronic record of the signed contract that can be referenced by either party at any time.

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Disclaimer: This information is intended for general informational purposes only. This is not intended to be legal advice and should not be a substitute for professional legal advice. Consult a licensed attorney for legal advice or representation.