Altering Contracts of Employment

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Because an employment contract is purely consensual, the parties may agree on whatever terms they wish subject to basic or minimum employment standards. These terms must, however, be consistent with the nature of the employment relationship and may not be illegal or against good morals. Once the parties have agreed on the essential terms of the contract, its terms are fixed. Neither party may unilaterally change the terms unless the original contract provides for this.

 

Changes in basic conditions of employment legislation will normally automatically supersede any provision in the contract that is less favourable to the employee.

 

For example, if the minimum amount of leave to be granted to a full-time employee is increased in terms of legislation from the current fifteen days per year to, say, twenty days per year, such change will automatically apply to all employment contracts with less favourable conditions. The fact that the contract stipulates fifteen days leave will therefore be of no use to the employer as legislation will then require the new minimum standard.

 

Under common law, an employer cannot without its agreement be compelled to change an employment contract in a way that favours the employee. For example, the employer is not obliged to adjust the employee’s wages to keep pace with inflation or the employee’s accumulated experience, or to promote the employee. Conversely, an employer cannot unilaterally change an employment contract even if the change is to the employee’s advantage. However, this does not mean that the relationship between the parties is frozen in a contractual straitjacket. An employer may change working practices, provided that such changes do not alter the employee’s contractual rights. Aspects such as remuneration and conditions of employment also form the basis of annual negotiations between employers and trade unions or individual employees.

 

Changing an Employment Contract v Changing a Work Practice

Whether a change constitutes a change of work practice or a contractual change depends on the facts of each case. The contract is changed if the change involves work of a nature not initially discussed by the parties, or a reduction in salary or status.

 

There is a fine line between unilateral changes to employment contracts and changes to working practices. For example, in A Mauchle (Pty) Ltd t/a Precision Tools v NUMSA & Others (1995) 16 ILJ 349 (LAC) the Labour Appeal Court ruled that an employer’s instruction to its employees to operate two machines instead of one as usual did not constitute a unilateral change. The court observed:

“A description of the work to be performed as that of ‘operator’ should not … be construed inflexibly, provided that the fundamental nature of the work to be performed is not altered … employees do not have a vested right to preserve their working obligations completely unchanged as from the moment when they first begin work. It is only if the changes are so dramatic that the employee undertakes an entirely different job that there is a right to refuse to do the job in the required manner.”

 

As appears from this passage, the courts have not provided any specific guidelines for establishing when the introduction of new work practices constitutes a unilateral change to a contract.

 

The courts tend to use general terms such as ‘dramatic change’, or they refer to changes to ‘fundamental terms’ of the contract. The focus, however, is on the core content of the job in question. The boundaries of that core content mark the dividing line between a lawful refusal to comply with a unilateral change, on the one hand, and insubordination, which is a breach of contract, on the other. Precision Tools indicates that the courts do not regard a mere increase in the volume of work as a change to an essential term, provided it is reasonable and especially if it is of a temporary nature.

 

Changing the Contract by Mutual Agreement

The employer and employee can change by mutual agreement the terms and conditions of an employment contract at any stage. The parties’ consent need not be explicit. If one of the parties remains silent and goes along with the change, he/she may not later complain that the change was illegal. However, the courts are unlikely to accept that there has been tacit acceptance of a change by an employee when the employer threatens the employee with dismissal or subjects the employee to some other form of duress if they do not agree to the change. Under the LRA, dismissal of employees to compel them to accept demands by their employers constitutes an automatically unfair dismissal.

 

The Basic Conditions of Employment Act limits the extent to which employers and employees may vary statutory basic conditions of employment:

  1. Employers and employees can change some of the provisions of the Basic Conditions of Employment Act only by collective agreement, for example between an employer or employers’ organisation and a registered trade union.
  2. Other provisions may be amended by individual agreements, which in some instances must be in writing.
  3. Bargaining councils may alter by agreement some basic conditions in the sector over which they have jurisdiction.

 

Collective agreements between employers and unions may replace or exclude any basic condition to the extent permitted by the Basic Conditions of Employment Act. For example, they may provide for the averaging of hours of work, or the reduction of family responsibility leave. Employers and employees may agree to reduce meal intervals, or the period in which time off in lieu of extra payment for Sunday work may be granted.

 

Changing an Employment Contract Unilaterally

It may happen that an employer needs to amend the employee’s contract of employment, or more specifically, conditions of employment such as working hours or remuneration.

 

These situations normally occur where the employer must change its operations due to economic demands.

 

If the employer implements such changes unilaterally (without the consent of the employee) it may soon be faced with various consequences. The employee(s) may:

  • Declare a dispute where more than one employee is affected and in referring such dispute, demand that the employer reinstate the previous conditions that applied prior to the change. If the employer fails to adhere to this demand, the employees may embark on a protected strike (subject to the relevant provisions of the LRA).
  • Claim breach of contract and claim damages in terms of contractual civil action.
  • Resign and claim that the resignation was because of the employer making continued employment impossible (constructive dismissal).

 

To avoid the possibilities mentioned above, the employer must always attempt to reach consensus prior to making any changes (especially changes that will be to the detriment of the employee) to the contract or conditions of employment. This does not mean that an employer is totally at the mercy of an employee once a contract has been signed and that it is impossible to amend such contract or employment conditions. Where a good reason exists for such changes and employees do not agree to the changes, the employer will have to follow the provisions of section 189 of the LRA, normally referred to as retrenchments. In terms of these provisions, it is possible to terminate employment due to the operational requirements of the business. The LRA requires that the employer should consider all alternatives prior to termination of employment. One of these alternatives may be to offer jobs with less favourable conditions of employment.

 

Changing Employment Policies

Provided employment policies are not expressly incorporated in the employment contact, making it a term and condition of employment, policies may be changed by the employer from time to time as they see fit. No formal process is required to change policies, but it is good practice for employers to consult with their employees regarding to any changes they make, so that the employees may provide input on how the changes may affect them, and how to counteract any adverse effects.

 

Essentially, once a policy has been amended or implemented, it need only be communicated to employees for it to take effect. To discipline an employee for breach of a rule, it must be proven that the employee was aware of the rule, and that the rule is lawful and reasonable. The employer should therefor keep a record of how policies are communicated or implemented to show that the employee was made aware of the rule. Policies may be communicated through workshops, induction, or by providing employees with a copy of the policy and having them sign for acknowledgement of receipt.

 

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