The basic rule is that major changes to the employment contract (eg. changing the salary, the hours of work, or the position) can only occur where both parties agree to vary the contract. Most changes can be refused by the employee if they want to maintain their existing employment contractual arrangements.
The Fair Work Act also provides numerous protections for employees, including that an employer must not exert undue influence or undue pressure on an employee in relation to the employee’s terms and conditions of employment.
Sometimes employers may offer a pay increase but only on the condition that an employee will agree to changes elsewhere in the employment contract. This creates a dilemma for an employee – but in most instances if they want the increase, then they may have to agree to the other changes in the employment contract which the employer wants to make.
Laws in this area change from time to time. Employers are entitled (and indeed are well advised) to update and modernize their employment contracts to take into account legislative changes and changes to underlying industrial instruments such as Modern Awards or Enterprise Agreements.
If there is agreement to change a term of a contract, it is good practice to record that variation to the employment contract in writing.