Under the common law, an employer is not permitted unilaterally to change the terms of an employment contract with an employee. Common law, defined by Investopedia is “a body of unwritten laws based on legal precedents established by the courts” will prevail in an instance such as this. Terms and conditions of employment of employees are required to be stipulated in an employee’s contracts of employment, which can either be verbal or be in writing.
The prohibition on variation includes a downward variation of the status of the employee, his or her remuneration and any change in the nature of the work he or she is required to perform.
A unilateral change by an employer is unlawful only if it amounts to a change of terms and conditions of employment. An employer is free to change benefits, such as loan schemes, special leave privileges or discretionary bonuses to which employees are not contractually entitled.
Neglect of a binding collective agreement which governs terms and conditions of employment, by an employer, will also amount to a unilateral variation.
Employers be warned
As contemplated by section 64 (4) of the Labour Relations Act 1 Collective power is not available to an individual employee faced with a unilateral change to his / her terms and conditions of employment. In which case, does it mean that an employee is deprived of a remedy provided in terms of the CCMA and that the alternatives include options to only implement strike action if the employer unilaterally changes the contract of employment? Should this situation occur without agreement, the employee would have the right to either abandon the contract or to sue for damages in terms of the contract.
The CCMA states that “The Labour Court has had held that at least in the case of a variation that takes the form of non-payment or under-payment of remuneration, the employees retain their common-law right to seek enforcement of the contract in the High Court.”
How can changes be fairly introduced?
- Where sound commercial reasons exist which necessitate the variation
- Where the employee has been consulted regarding fair commercial reasons and agrees that a variation in terms and conditions is preferable to loss of permanent employment or short time (if short time conditions are applicable)
- Where all options have been discussed in a matter of “good faith” (consultation)
For guidance on how to implement changes to an employee’s contract, Contact KZNEIA.