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Topic: Contractual clauses

no oral variation clause
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No oral variation clause

No oral variation clause

A no oral variation clause is one which states that any contract amendments or variations must be in writing, so oral agreements are ineffective. If you include it in employment contracts, it can give certainty, but make sure you don’t also require the employee to sign to agree any variations as you’re then limiting your options to make contractual changes.

Boilerplate clauses

A no oral variation (NOV), or no oral modification (NOM), clause is one which states that any contract amendments or variations must be set out in writing and, usually, signed by the parties. Along with whole agreement clauses (see our Whole Agreement Clause) and notices clauses (see our Notices Clause), they’re often referred to as “boilerplate” clauses, i.e. standard provisions that appear at the back of contracts which are there to achieve certainty. It’s more common to find these clauses in commercial contracts than in employment contracts, but they do occasionally appear in the contracts of senior employees and directors. NOV clauses are legally effective and they regularly appear in commercial contracts because they can: (a) avoid disputes about whether variations were intended and about their exact terms, (b) prevent attempts to undermine written contracts by informal means, and (c) provide formality in recording variations, making it easier for businesses to police their rules about who has the authority to agree contractual amendments.

NOV Clause

Our No Oral Variation Clause can be inserted into employment contracts, although be aware that the presence of such a clause doesn’t cancel out the law on changing terms of employment. We’ve made our clause slightly different to standard NOV clauses in that we’ve only provided for variations to be set out in writing and signed by you, i.e. not signed by the employee as well. This is to prevent an employee trying to use your own clause against you either where you’ve made a change which is already authorised by their contract, e.g. you’ve invoked a mobility clause to change place of work, or you’ve unilaterally imposed a contract variation (one which is without express employee agreement, but you then try to rely on the employee’s subsequent conduct to establish their implied agreement to it), and they hadn’t signed anything. Also, think carefully before you add our clause to all employment contracts, as it means that if you wish to amend the contract, you must always follow the procedure set out in the clause to vary its terms, i.e. you’ll need to put the change in writing and sign it - an oral variation may not be effective, even if the employee agreed to it. The clause would even apply to routine contract changes, such as an annual pay rise.

 

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