Agreements between an employer on terms and conditions of employment are generally set out in an employment contract, collective agreement or staff handbook. The basic principle is that what the parties have agreed cannot be changed unless the parties agree on a deviation.
However, there are conceivable situations in which it is nevertheless necessary for an employer to unilaterally change an employment condition of an employee or a group of employees. Consider a change in legislation or financial circumstances, or wanting to offer green employment conditions (see our earlier article on green employment conditions). An employee will have less trouble with a change for the better, but what about if the change represents a deterioration for the employee?
In practice, in brief, there are three ways in which an employer can unilaterally change terms of employment. This can be on the basis of:
(i) a unilateral change clause (ex Article 7:613 of the Civil Code),
(ii) good employee conduct (ex Section 7:611 DCC), and
(iii) based on reasonableness and fairness (ex Section 6:248(2) BW).
Below, we explain these three routes.
(I) UNILATERAL AMENDMENT CLAUSE
This is a written clause under which it is agreed that the employer can unilaterally change employment conditions. A precondition is that the employer has such a weighty interest in the change that the interest of the employee, which would be harmed by the change, must give way to this according to standards of reasonableness and fairness.
(II) GOOD EMPLOYER AND EMPLOYEE ETHICS
If no unilateral modification clause has been agreed between the parties, an employer can invoke good employee behaviour. For this to be successfully invoked, the following conditions must be met:
(a) there is a change of circumstances;
(b) the employer has made a reasonable change proposal to the employees; and
(c) acceptance of that proposal in light of the circumstances of the case can reasonably be required of the employee.
Section 7:611 of the Civil Code may be invoked in the case of both collective and individual changes.
(III) REASONABLENESS AND FAIRNESS
Finally, an employer may unilaterally amend a condition of employment if maintaining the condition of employment is unacceptable according to standards of reasonableness and fairness. The bar for amendment on this ground is high and the test is tougher than on grounds of good employee conduct.
BALANCING OF INTERESTS
Case law shows that primary terms of employment are difficult(er) to change unilaterally compared to secondary terms of employment.
In all cases, there is in any case a balancing of interests and the employer must inform the employee in advance about the intended change. The employer must also enter into discussions with the (representatives of the) employees about the consequences and (depending on the route chosen) more specifically in relation to the individual and personal interests of the employee.
Under certain circumstances, an employer may be expected to make a provision such as a phase-out, commutation, alternative, and so on as part of making a reasonable proposal.
The employee should also be given the opportunity to object.
MODIFICATION OF COLLECTIVE LABOUR CONDITIONS
Under the Collective Bargaining Agreement Act, an employer cannot in principle make unilateral changes to the terms and conditions of employment laid down in a collective agreement. However, a CLA may contain provisions allowing the employer to make changes to the terms and conditions of employment in certain cases. There may also be agreements in the CAO about the possibility of making unilateral changes under certain circumstances. Examples include a provision that a unilateral change is only possible after consultation with unions or employees, or that certain procedures must be followed before a change can be implemented.
It is therefore possible for an employer to still proceed with individual as well as collective changes without an employee’s consent. The bar against which this is judged varies by route.
In any case, it is advisable to include in an employment contract the possibility of unilaterally changing employment conditions. After all, this is the least onerous route to take.
In addition, it is important to recognise the interests of employees and make provision where reasonable and possible. The moment you want to change terms of employment as an employer, it is advisable to seek legal advice beforehand. This will help you better strategise as an employer and ensure an efficient and effective approach.
Feel free to contact us so that we can assist you.