Can You Vary Terms of Employment Verbally? Employers Beware of Nom Clauses

‘No Oral Modification’ clauses (NOM clauses) are commonly used in commercial and employment contracts to ensure that parties can only vary existing terms, in writing.  Failure to comply with such clauses and seek to change terms verbally, can give rise to a dispute.

Following a judgment by the Supreme Court, employers seeking to amend terms of employment orally where written agreement is required under the Employment Contract, will be on dangerous ground.

The facts of MWB

In the case of MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2016] EWCA Civ 553, the parties of a licence agreement included a NOM clause, which expressly stated that variations of the licence must be made in writing, prior to any change taking effect.

The Claimant had issued proceedings against the Defendant for an original payment amount and had argued that the oral variation of the contract was invalid due to the NOM clause.  During the proceedings, the Defendant sought to rely on an oral agreement with the Claimant, specifically that the claimant had accepted a reduced payment, due to the Defendant falling into arrears of its licence fees.

The Judgement in MWB

The Supreme Court found in favour of the Claimant and agreed that the oral variation was invalid as the alleged agreement did not follow the procedural requirements to vary the contractual terms as stipulated within the NOM clause.

This judgement is now very likely to apply to employment contracts and the same approach will be taken by an Employment Tribunal.

Niki Avraam comments:

An Employer may find it useful to implement a NOM clause in their standard employment contracts to provide certainty of future changes to an employee’s contract, and to prevent potential disputes from arising.

It is important that a NOM clause outlines in substantive detail, what the procedure is to vary a term of a contract and Employers should take care not to abuse the existence of NOM clause especially after agreeing a benefit such as a pay rise by then not complying with the said clause.  Such conduct could amount to a breach of an employee’s trust and confidence and could give rise to additional complaints.

Howat Avraam Solicitors can provide specialist advice to businesses on the effects of implementing NOM clauses within a contract of employment and will ensure that such a clause is drafted prescriptively to ensure full protection of your business. 

CONTACT US

To discuss any employment matter on a no obligation basis, please contact Niki Avraam, Employment Partner, on 020 3735 6708 or email Niki at Niki.Avraam@hasolicitors.co.uk. Alternatively, visit our website at www.howatavraamsolicitors.co.uk.

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