Unfair Employment Contract Terms In The UK: How Employers Can Fix Them

If you’re a small business owner, your employment contracts are one of the most powerful tools you have to protect your business, set expectations, and reduce HR headaches as you grow.

But there’s a catch: if your contract includes unfair employment contract terms in the UK that are commonly used (often copied from old templates, a previous employer, or the internet), those clauses can backfire.

In practice, “unfair” terms can lead to disputes, resignations, tribunal claims, and reputational damage. Even worse, you might think you’re protected - only to find the clause is unenforceable (or only partly enforceable) when you need it most.

Let’s break down what “unfair” really means in the UK employment context, the terms that most often cause problems, and how you can fix them in a practical, business-friendly way.

This article is general information for UK employers and isn’t legal advice. Employment risk is fact-specific, so get advice for your situation.

What Counts As “Unfair” Employment Contract Terms In The UK?

In the UK, there isn’t a single “unfair contract terms” law that applies to employment contracts in exactly the same way it applies to consumer contracts.

Instead, employment contract terms tend to become “unfair” (and risky) because they are:

• Unenforceable under contract law (for example, too vague or too broad),
• Inconsistent with statutory employment rights (for example, attempting to limit statutory holiday pay),
• Discriminatory (directly or indirectly) under the Equality Act 2010,
• Unreasonable or imposed without proper process (for example, changing pay or hours without consultation), or
• Likely to create an unfair dismissal risk because they encourage shortcuts in procedure.

To make this more concrete, the “unfairness” usually shows up in one of these ways:

1) The Term Conflicts With Statutory Rights

Many employee rights are set by law and can’t usually be reduced below the legal minimum by contract. If a contract tries to remove or limit those rights, the term is likely to be invalid and the statutory right may apply instead.

Common areas where this happens include:

• holiday and holiday pay (Working Time Regulations 1998),
• notice and termination protections (Employment Rights Act 1996),
• discrimination protections (Equality Act 2010), and
• minimum wage (National Minimum Wage Act 1998).

2) The Term Is So One-Sided It’s Unlikely To Be Enforced

Employment contracts don’t have to be “equal” in the way a commercial contract might be, but if a clause is extreme (for example, a very long non-compete with no real justification), it may not be enforceable - and a court may refuse to enforce it entirely rather than rewriting it for you.

3) The Term Creates Process Risk (Even If It Looks “Tough”)

Some clauses look good on paper but tempt employers into taking action without following a fair process. That can increase the risk of unfair dismissal claims, discrimination issues, or breach of contract disputes.

If you’re putting new hires on a template you haven’t reviewed in a while, it’s often safer to tighten your fundamentals early with a properly drafted Employment Contract that matches how your business actually runs.

Common Unfair Employment Contract Terms UK Employers Should Watch For

Here are some of the most common contract terms we see small businesses use that can become “unfair” in practice - plus why they’re risky and what a better approach often looks like.

Overly Broad Restrictive Covenants (Non-Compete / Non-Solicit)

It’s completely reasonable to want to protect your customers, pricing, staff, and confidential information. The problem is when restrictive covenants are:

• too long (for example, 12 months in a role that doesn’t justify it),
• too wide geographically (for example, “anywhere in the UK” when you serve one town),
• too broad in scope (for example, banning work in an entire industry), or
• used for every employee regardless of role or access to sensitive info.

Fix: tailor restrictions to the employee’s seniority, client contact, and access to confidential info. You’ll usually get better protection from a well-drafted confidentiality clause, a narrower non-solicit, and strong IP ownership terms than from a sweeping non-compete that won’t hold up.

Clauses That Try To Waive Holiday, Sick Pay, Or Other Minimum Rights

If your contract suggests (directly or indirectly) that staff aren’t entitled to statutory holiday, holiday pay, or rest breaks, that’s a major red flag - and a common reason employers get concerned about unfair employment contract terms in the UK.

Fix: align your holiday wording with the Working Time Regulations and your internal processes for requesting leave. If you need help understanding working time limits and opt-outs, the Working Time Regulations rules are a good place to start.

“We Can Change Anything Anytime” Variation Clauses

Many templates include a sweeping right for the employer to change:

• job duties,
• hours,
• place of work,
• commission structures, or
• benefits and policies,

…with little or no notice.

In reality, relying on these clauses too aggressively can expose you to:

• breach of contract claims,
• unlawful deduction from wages complaints (if pay changes),
• constructive dismissal risk (if the change is significant), and
• discrimination risk (if changes impact protected groups disproportionately).

Fix: you can include a carefully drafted flexibility clause, but you should still use a fair process when making material changes: explain the rationale, consult, provide notice, and document agreement. Also be cautious about assuming acceptance “by conduct” - sometimes it can be argued, but it’s risky and fact-specific.

Probation Clauses That Don’t Match Your Actual Process

Probation is useful - but problems arise when your contract says probation is three months, your managers treat it like six months, and performance concerns are handled informally with no paper trail.

This can create confusion about notice periods, performance expectations, and whether you followed a fair process.

Fix: keep probation clauses simple and make sure your managers know how to run probation reviews. It also helps to align probation with a lawful performance process (and to avoid surprise terminations). Your probation wording should match how you operate day-to-day, which is why it’s worth revisiting Probation Periods as part of your contract update.

Disciplinary And Dismissal Clauses That Encourage Shortcuts

Some employment templates list “gross misconduct” examples that are vague, exaggerated, or inconsistent with what a tribunal would consider fair.

If you rely on those clauses to dismiss quickly, you can end up with claims that the dismissal was procedurally unfair, disproportionate, or inconsistent with how you treated others.

Fix: keep gross misconduct examples realistic, include a fair investigation process, and ensure managers understand the steps. A practical reference point is a Gross Misconduct checklist approach that focuses on process (investigation, meeting, right to be accompanied, appeal), not just the label.

Pay Secrecy Clauses Used In The Wrong Way

Some employers include strict confidentiality terms that imply employees can never discuss pay. This is risky, because under the Equality Act 2010, employees are protected in certain situations when discussing pay for the purpose of identifying potential pay discrimination.

Fix: confidentiality clauses can still protect your business (for example, pricing, client info, trade secrets). But if you want to manage pay discussions, use careful wording and rely on a broader communication and conduct framework rather than an absolute ban. It’s worth pressure-testing your approach against the rules on pay secrecy.

Unclear Commission / Bonus Clauses

Commission and bonus schemes often cause disputes because the contract wording is unclear on key points like:

• when commission is “earned” versus “paid”,
• what happens if the employee leaves mid-deal,
• what happens on refund/cancellation,
• whether it’s discretionary, and
• how targets are measured.

Fix: put the mechanics in writing and make sure the employee can understand it without legal translation. If the scheme is discretionary, say so - but be careful, because “discretionary” doesn’t always mean “do whatever you want” if your decisions look inconsistent or discriminatory.

Why Unfair Contract Terms Are A Serious Business Risk (Not Just A Legal Technicality)

When a contract term is unfair, unclear, or unenforceable, it doesn’t just create a theoretical risk - it often leads to day-to-day operational problems.

You Lose Leverage In Disputes

If a clause is too broad to enforce, you may have limited options when an employee:

• poaches your clients,
• uses your IP,
• shares confidential pricing, or
• undermines your team on the way out.

A well-drafted clause gives you real leverage to negotiate, resolve issues early, and avoid escalation.

You Increase Tribunal And Claim Exposure

Unfair terms can feed into claims like:

• unfair dismissal (for example, if you shortcut process relying on a shaky clause),
• discrimination (if the term or its application disproportionately impacts protected groups),
• unlawful deduction from wages (if you withhold commission or make deductions without a proper contractual right), and
• breach of contract (if you change key terms without agreement).

You Create A Culture Problem

Employees talk. If your contract includes clauses that feel aggressive or unfair, it can:

• hurt trust early in the employment relationship,
• increase turnover, and
• make recruitment harder (especially for senior roles).

Clear, fair contracts don’t make you “soft” - they make you predictable, professional, and easier to work for.

How To Spot Unfair Employment Contract Terms In Your Business (A Practical Audit)

If you want to reduce your risk quickly, you don’t need to rewrite everything overnight. Start with a structured contract audit.

Step 1: Gather What Your Staff Are Actually On

Small businesses often have multiple versions of contracts in circulation (especially if you’ve hired over time, used templates, or inherited contracts through a business purchase).

Collect:

• the signed employment contract for each employee,
• any later variations (pay increase letters, role changes, location changes),
• commission/bonus scheme documents, and
• your handbook or workplace policies (even if informal).

Step 2: Check The “High-Risk” Clauses First

These clauses tend to cause the most disputes:

• pay, commission, deductions, and expenses,
• hours of work, overtime, and opt-outs,
• notice periods and termination rights,
• probation and performance management,
• restrictive covenants and confidentiality,
• disciplinary and gross misconduct wording, and
• holiday and sickness rules.

Step 3: Stress-Test Each Clause Against Reality

A simple question that finds problems fast is:

“If I applied this clause tomorrow, would it match what we actually do - and would it feel fair and defensible?”

For example:

• If your contract says overtime is “reasonable as required”, do you regularly require 10–15 extra hours a week without extra pay?
• If your contract says probation is 3 months, do you terminate people at month 5 and call it a “probation fail”?
• If your commission clause is unclear, have you had arguments about when commission is earned?

Step 4: Identify Where Process Needs Fixing (Not Just Wording)

Many “unfair terms” problems aren’t solved by contract drafting alone - they’re also about having a repeatable, fair internal process.

For example, if performance is managed informally, your managers may benefit from a documented approach such as Performance Improvement Plans to reduce dismissal risk and improve outcomes.

How To Fix Unfair Employment Contract Terms (Without Disrupting Your Team)

Once you’ve identified risky clauses, the next step is fixing them in a way that’s legally sound and workable in real life.

1) Decide Whether You Need A New Contract Or A Variation

There are usually three options:

• Issue a new contract (often best if your template is outdated or inconsistent).
• Use a contract variation letter for targeted fixes (useful for one or two clauses).
• Move detail into policies (for example, expenses procedures) while keeping core rights/obligations in the contract.

Be careful here: changing contractual terms usually requires employee agreement. In some cases, agreement might be inferred from conduct, but relying on that is risky and depends heavily on the facts and how clearly the change was communicated.

2) Use A Fair Consultation Process (Especially If The Change Is Significant)

Even when you believe a clause is “reasonable”, imposing changes without proper engagement can create more risk than the old clause ever did.

A sensible approach often looks like this:

• explain what you want to change and why (in plain English),
• give employees time to review,
• invite questions (and consider feedback),
• confirm the change in writing, and
• keep a signed record of acceptance.

If you’re changing pay, hours, or role scope, it’s especially important to take advice on the process so you don’t accidentally trigger constructive dismissal risk.

3) Replace “Aggressive” Clauses With Enforceable Protection

This is where many small businesses can level up quickly.

Instead of relying on a broad, scary clause that might not be enforceable, use tighter, better protection such as:

• Clear confidentiality wording (what is confidential, how it must be handled, return of property).
• IP ownership clauses (so work created in employment belongs to the business).
• Narrow non-solicitation clauses (focused on clients the employee dealt with).
• Garden leave clauses (where appropriate) to protect relationships during notice.

These options often achieve the business goal (protecting your customer base and know-how) while being more realistic to enforce.

4) Align Your Contract With Your Day-To-Day Policies

A contract shouldn’t sit in a drawer. It should reflect how your workplace operates.

Practical alignment areas include:

• holiday requests and approvals,
• sickness reporting and fit notes,
• remote or hybrid working expectations,
• use of work devices and monitoring, and
• disciplinary and grievance procedures.

As your team grows, documenting expectations in policies and a handbook can prevent misunderstandings - but the contract should clearly say which policies are contractual and which are guidelines.

5) Don’t “DIY” High-Stakes Clauses

It’s tempting to fix an unfair term by tweaking a template line-by-line. The issue is that employment clauses work as a system: one change (for example, to notice, commission, or mobility) can create knock-on issues elsewhere.

If you want to be protected from day one, it’s often more cost-effective to get your core contract structure right upfront rather than trying to patch problems later during a dispute.

Key Takeaways

• Concerns about unfair employment contract terms in the UK usually come from clauses that conflict with statutory rights, are too one-sided to enforce, or encourage poor HR process.
• High-risk terms include overly broad restrictive covenants, sweeping “we can change anything” clauses, unclear commission wording, and disciplinary provisions that encourage shortcuts.
• Even if a clause looks protective, it can backfire if it’s unenforceable or inconsistent with how your business actually operates.
• A practical contract audit should focus first on pay/commission, working hours, notice/termination, probation, discipline, and confidentiality/restrictions.
• Fixing unfair terms is usually a mix of better drafting and better process - including consultation, written agreement, and aligning contracts with real workplace policies.
• Replacing “aggressive” clauses with tailored, enforceable protections often gives you stronger real-world leverage and fewer disputes.

If you’d like help reviewing or updating your employment contracts (or fixing a clause you’re worried is unenforceable), you can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.