Can an employer change the terms and conditions of an employees’ employment contract?

Introduction

When an employer and an employee conclude an employment agreement, they would have reached a stage of their negotiations where they create an employment relationship on agreed terms and conditions. These are the terms and conditions that govern their relationship -ranging for the place of work, all the way to the remuneration the employee will be paid for his services.

Naturally, both parties will also have certain expectations of how this relationship will evolve in the future. The employee will, for example, be expecting that their salary will be increased or that they will be promoted. On the same vein, the employer would be keen to maintain some level of flexibility to allow them to change the terms of employment, as and when there are changes in the market. A good example of this is when we saw a change in the market due to the Covid-19 pandemic, which rocked our world as we know it.

During this difficult period, characterised by unnerving uncertainties, a lot of employers wanted to change their employees’ terms and conditions. Most employers wanted to change the employees’ working hours in order to meet the decreasing demand for their products and the decreasing amount of work from clients. Some employers wanted to implement salary cuts. All the above constitute changes in terms and conditions of employment. In this article we discuss the nature of employment terms and conditions, whether they can be changed and to what extent.

What are terms and conditions of employment?

Before debating whether terms and conditions of employment can be changed, its important to firstly define what is meant by, “terms and conditions”. Loosely defined, terms and conditions of any contract are the details expressing the manner in which parties to a contract will treat each other going forward in their newly formed relationship. Terms and conditions set out the roles and responsibilities of each party to the relationship, as against each other. In an employment agreement, terms and conditions relate to hours of work, salary and other job-related terms and conditions.

Terms and conditions of employment can either be express or implied. Express terms are those that an employer and an employee explicitly agree on, and they may be reduced into writing, or they may be stated orally. In practical terms however, most employment agreements are now reduced into writing, although the Basic Conditions of Employment Act does not require employment contracts to be in writing. Nonetheless, I highly recommend that you ensure that your employment contracts are reduced into writing. It’s always easier to hold the other party accountable on easily provable terms and conditions, in case there is a breach.

Implied terms are those that stem from Collective Agreements, workplace custom or practice, or the law. Again, these can easily be proven by referring to either a Collective Agreement or by oral evidence of other employees or officials who can prove the existence of a workplace custom or practice. Some workplace customs or practices are easier to prove through Company Policies, but the gist of the idea is that the easier the terms are to prove, the better.

The BCEA also contains some inalienable terms and conditions of employment that come into existence by operation of law, when an employment relationship is created. The reason for this is that the BCEA contains minimum terms and conditions of employment that employers and employees cannot contract below. To illustrate this, where the BCEA affords employees a minimum 21 consecutive annual leave days, employers and employees cannot agree on lesser leave days. However, an employer and an employee can agree on 30 consecutive annual leave days for example. This benefits employees, therefore, it will acceptable.

Having said the above, one of the most important aspects to note is that, once an employment agreement is concluded, its terms and conditions, whether express or implied, become legally binding on both parties.

Can terms and conditions of employment be changed?

An important aspect of the legally binding nature of terms and conditions of employment is that they cannot be unilaterally changed. This view was firmly expressed by the Labour Court, in Monyela and others versus Bruce Jacobs t/a LV Construction. It’s also crucial to understand that terms and conditions ordinarily come about as a result of negotiations and are thus consensual. In practical terms however, employees with little or no leverage to negotiate have two choices. They can accept the employer’s terms and get the job, or they may decline and potentially lose the offer. However, once all parties sign an employment contract, it becomes legally binding on them.

According to the Labour Court in the Monyela case above, when an employer plans on changing employment terms and conditions, they must seek the consent of the employee. If they don’t obtain such consent, it doesn’t stop there. They can exercise the right to lock out provided for in the Labour Relations Act and force employees to accept their demands or they can lawfully and fairly terminate the employees’ employment.

In practice, however, the size of your company will play a pivotal role of how you go about changing terms and conditions of employment for your employees. The larger your staff compliment, the more difficult this may become. If you throw in the weight of workers’ Unions, then things may dramatically become even more complicated, with CCMA or Bargaining Council referrals, Labour Court interdicts and/or the possibility of strikes. A seemingly simple change to terms and conditions of employment may end up complicated and bring about an entirely different process on its own. Therefore, it is incredibly crucial that you do not take changes of terms and conditions of employment lightly.

For small to medium, and growing companies, the best solution may be to obtain employees’ consent through a process of negotiating the changes in terms and conditions of employment. At times, these changes will be the fine line between your employees having a place to call work or starting job hunting again. They may literally decide whether you have a company tomorrow or you start a retrenchment process. It may thus be much easier to negotiate changes in terms and conditions as a small company owner, because your employees will have a vested interest in the survival of your business. However, it is still crucial to handle it in the right manner. Employees can be unpredictable when faced with desperate situations, so you want to ensure that the entire process is above board and beyond reproach.

Conclusion

Whilst the law prohibits the unilateral change of terms and conditions of employment, there is no bar to changing general workplace practices that do not materially change terms and conditions of employment. In A Maulchle (Pty) Ltd t/a Precision Tools v NUMSA (Precision Tools) the Court stated that only where the nature of the job is drastically changed can it be said that there has been a unilateral change of the contract. In this case the employer had instructed its employees to operate one, instead of two machines in the performance of their duties. The court found that the employees’ duties essentially remained the same, but that only the practice is what had changed.   Sometimes, it may not be easy to determine whether a change in the workplace constitutes a unilateral change or whether it constitutes a change in the workplace practice. As such, it may be prudent to consult an employment Law expert of Labour Lawyer to provide you with the adequate advice if you are not sure.

– Sudden Mutsengi

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