When an employer wishes to make any amendments to an employment contract, it is common practice for the employer to use and prepare an Addendum to Employment Contract. As a supplemental document, the Addendum adds information to the existing and original contract of the employee, allowing the employer to modify any of the conditions stipulated in the contract, or add specific terms which the Parties would have agreed to. In this way, the original contract can be edited to include these new terms and replace the old terms, without the employer having to prepare an entirely new employment agreement.
Some examples of when an Addendum to Employment Contract is normally utilised are in the cases of increases in the employee's salary, or due to modifications made to any applicable legislation which would require the employment contract to be amended to reflect this modification.
The preparation of an Addendum is straightforward and follows the general principles of contract drafting. A crucial factor to be indicated is that the Addendum is entered by and between both Parties voluntarily and mutually to regulate the new terms and conditions being applicable. The new terms cannot go against any legal provisions, and they cannot be less favourable to the employee otherwise it shall be declared null, and the wording of the original contract will continue to apply. Most importantly, it must be indicated that the Addendum does not constitute as a substitution to all the other terms and conditions stipulated in the employee's Employment Agreement. However, other than these main considerations, the Parties are free to enter into any agreement on the terms, via an Addendum, and there are no restrictions on the amount of information and/or details which are to be included which is to be provided.
Once the Addendum is finalised, as a written document, it must be signed by both parties to the original employment contract and then shall become an integral part thereof. A copy is always provided to the employee so that they are properly notified and informed of the changes.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.