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Scenario:

Employee works at a medium sized Company (100-500 employees). Company has recently changed office locations and needs to update employee contracts to reflect the change. Company presents Employee with a revised contract.

Company informs Employee that the contract is legally binding at X date regardless of Employee's approval and signature of the document. The contents of the contract are different beyond the address change that was the declared reason for the revision of the contract.

IF Employee does not sign the new document are they legally bound to the contents given their "implicit consent" in that they were made aware by the Company of X date?

IF Employee does not sign the new document AND is not legally bound to the contents of the new contract, are they still legally bound to the contents of their previous contract?

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The employee and employer should be wary of relying on the purported variation to the initial contract:

  • Consideration is required in Australia for contracts to be legally binding; otherwise, agreements may be binding if executed as a deed. In the case of variations to a contract, fresh consideration may need to be provided in order to create a new contract:

    In a recent Supreme Court decision1, when one party asserted that an agency agreement had been varied so the agent's commission was reduced from 60% to 40%, one of the reasons the court refused to uphold the alleged variation was that the agent received no consideration for the reduction in commission.

    At least this (there may be others) Supreme Court decision states that consideration is required; it reflects the common law principle (now superseded by statute in the United States) that consideration is required for a contract, and that performance of an existing legal duty is not good consideration.

    However, let's say that it were...

  • Acceptance is simply the indication that the terms are agreed to by both parties; signature is a common way, conduct even more so - we enter into contracts all the time by paying for things and walking out of shops with them. In some cases, particularly in transactions involving real property (land), written acceptance is prescribed by statute.

    If you were to not sign the contract but your conduct was such that it would appear to an objective and informed person that you had agreed to the contract - for example, by turning up to work at the new location - then it may be held by a court that you had accepted by conduct.

  • Supercession of a contract needs to be explicit - otherwise, you are bound by all previous agreements. That is, even if it would not be possible for you to perform all of your agreements, you are still contractually bound to do so, and legal remedies may be sought if you fail to do so.

  • However, if it is an implicit or explicit term that your employer provide a specific premises at which you would work, and there were no provisions that they could change it without your agreement, then you may be entitled to sue for damages when they no longer do so.

Basically, my (unlicensed and completely general information-based) view is that the variation, even if you were to agree to it, would not be enforceable; there is no consideration.


1. GT Corporation Pty Ltd v Amare Safety Pty Ltd [2008] VSC 143

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Not a lawyer. Don't listen to me and complain if/when you get fired.

Employee works at a medium sized Company (100-500 employees). Company has recently changed office locations and needs to update employee contracts to reflect the change. Company presents Employee with a revised contract.

Think of this as being offered a brand new job.

Company informs Employee that the contract is legally binding at X date regardless of Employee's approval and signature of the document. The contents of the contract are different beyond the address change that was the declared reason for the revision of the contract.

You cannot be bound by the terms of a contract that you do not accept since, without agreement, no contract exists. If you do not agree to the new terms you should provide verbal and written (documented) notice to your employer that you do not agree to the change in terms as presented AND you should avoid creating the appearance that you have accepted those terms by changing any of your present behavior, including where you show up to work.

IF Employee does not sign the new document are they legally bound to the contents given their "implicit consent" in that they were made aware by the Company of X date?

Signing the document is simply a way that a party shows that they accept the agreement. There are other ways, for instance, saying nothing and showing up to work at the new location without complaint (what many of your colleagues will no doubt do). If you do not want to agree to the terms you should make it clear to your employer that you do not accept the new terms and you should be careful that your behavior cannot be construed as passively accepting the changes.

IF Employee does not sign the new document AND is not legally bound to the contents of the new contract, are they still legally bound to the contents of their previous contract?

The offer of the new contract cannot, by itself, terminate your or your employers' obligations under the previous contract. That you did not accept the new offer means there is no new contract, only the "previous" one. You should carefully review your current employment contract to see how each party's obligations under that contract can be terminated. Also, you should be aware that laws may exist outside of the contract which allow for its termination in certain circumstances which might include those present.

I mean, think about it. I have a ham sandwich I brought for my lunch today. I will sell you this sandwich for $10. This is a legally binding contract effective at 12:00 noon US Eastern time. Do you really think a court is going to make you send me $10? No? Then they won't assume you accept your employer's new terms. Now, if you send me the $10 and I send you the sandwich, and then you go to court and complain... well that's a different matter entirely.

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