UK: Contract- Supreme Court breathes new life into “no oral modification” clauses

Employers can have more confidence that an “entire agreement” or “no oral modification” clause in an employment contract is likely to be effective in preventing extraneous contractual terms or oral variations respectively, following a Supreme Court ruling overturning the Court of Appeal in Rock Advertising Ltd v MBB Business Exchange Centre Ltd (see our Litigation blog for further details). The Supreme Court in Pimlico Plumbers referred to this ruling confirming its applicability in the employment sphere.

Best practice is always to record any changes to contracts in writing, to avoid subsequent dispute. This case suggests that if the contract provides that it can only be varied in writing, this may render oral variations ineffective (although in some limited circumstances the doctrine of estoppel might apply). Employers should therefore ensure they follow any formal process for variation set out in the employment contract.

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