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During early January I received a number of calls from employees who complained that upon returning to work after the December recess, they were informed by management that various changes to their terms and conditions of employment have been implemented with effect from 1st January. These changes included salary cuts, reduced commissions, increased sales targets to be met before commission becomes due, changes to medical aid benefits, restrictions on private usage of company cars, restrictions on private use of company cell phones, and so on.
In one instance, the employer had, during December , instructed the Medical Aid scheme to place every employee on a lower plan with effect from 1st January. This change meant that there would be greatly reduced benefits to the employee, albeit at a lower contribution. The rationale behind this move was obviously that the employer's contribution would be far less (it was in fact reduced by about 50% because of this change) and the employees were informed that they should be grateful about the change because their take-home pay would now be increased.
Sadly, employers always act first, and when the bomb explodes they rush to consult labour lawyers and consultants to implement damage control. Consultation with your labour law expert should be your FIRST move – not the last move.
Some employers reported to me that employees had gone as far as taking the collective dispute to the CCMA – the outcome is yet to be made known, but I can guess what it will be. The Employment Contract. The Letter of Appointment. Terms and Conditions of Employment. Call it what you like. The question is this : does the employer have the right to change or amend in any way, the original terms and conditions agreed to when the employee took up employment? Or the existing terms and conditions?
The short answer is no – the employer does not have that right. And to do so is unfair in the extreme – both legally and morally. Another short answer is yes – the employer does have that right, but he must first comply with certain conditions before he can exercise that right.
All rights are limited. No right is absolute. For example, you have the right to own a motor car. But before you can exercise that right, you must amass sufficient finance to pay the purchase price of the car. If you do not do that, then you are denied the right to own a motor car. You have the right to drive a motor car. But before you can do that, you must attend driving lessons and pass certain tests which enable you to be awarded a legal license which certifies that (legally) you are competent to drive a motor car on a public road. If you do not obtain that license, you are denied the right to drive a motor vehicle on a public road.
So it is with employment contracts. Whatever terms and conditions were agreed between employer and employee at the time of employment forms the very basis of the contract. This represents an agreement between two parties – the employer and the employee. Because it is an agreement, it follows that the one party cannot make changes or amend that agreement without consulting with the other party to the agreement, discussing the proposed changes, and obtaining the other party's agreement to those proposed amendments or changes.
Only after agreement has been reached, may the proposed changes be implemented and the new agreement signed by both parties. If one party tries to implement changes to the original agreement without the consent of the other party, then the first party is, in fact, in breach of contract – and the other party may have a right of action (either civil action or action via the CCMA) against the first party. In the case of an employment contract, if the employer enforces any changes without the consent of the employee, this may be seen not only as breach of contract, but it may also be construed that the employer has in fact terminated the original contract, and as a consequence of such termination, the employee has now been unfairly dismissed.
Again, this would entitle the employee to a right of action, not only for breach of contract, but also for unfair dismissal in terms of the employer's unilateral termination of the original contract. Usually, these changes are brought about by employers in the interests of reducing operation expenses. Such changes may include reduction of salaries, reduction of working time, reduction or removal of benefits such as medical aid, cancellation of bonuses, and so on. Whatever the case, the employer must remember that whatever changes are contemplated, it usually represents a HUGE change for the employee, and usually a change to his/her take-home pay, and very often an unreasonable or unfair change.
The employer has no right to mess with the employees salary or benefits, hence consultation and negotiation with the employee is a pre-requisite to the implementation of any changes. The employee, for example, is entitled to put forward his/her views on the proposals, and to make counter-proposals. The employee is entitled to put forward suggestions for other cost cutting methods, such as the Directors taking a salary cut, or downgrading the Director's company cars to a lower, cheaper and more fuel-efficient model. For example, a down grade from the latest Mercedes 500se or whatever to a Toyota Camry.
The employee is entitled to raise these questions – such as what is the comparison of figures for the forthcoming year to the past year? What is the profit difference? What steps has management taken in other areas to cut costs and obtain a greater market share, thus improving profit share?
And a very big question – what undertaking is management prepared to give with restoring the status quo when business improves to a pre-determined or agreed level? Is the business truly suffering, or is it merely the case that the shareholders want a bigger slice ??
Employers must come clean with their employees on such issues. Sadly, many employers today do not regard employees as a valuable asset – but rather as a necessary and dispensable evil.
And it may surprise you to learn that many, if not most, employees these days regard their employers as "not to be trusted" and they view any proposal put forward by an employer with great suspicion. I know this to be fact because the greater portion of my working hours are spent in dealing with employee problems Don't treat your employees like garbage – they will retaliate in the same way. If you propose changing terms and conditions of employment, then do it unilaterally at your peril.
In some employment contracts, provision is made for the periodic payment (say quarterly or half-yearly) of a specific bonus. For example, the employer may agree to pay a Dept Manager a percentage of the profit made above the figure budgeted for.
Some employers adopt the unacceptable practice of "restructuring" the employment contract just before or indeed even just after the bonus payment becomes due. When the employee questions why his bonus has not been paid, he is told that "we are holding that back because we are busy restructuring your contract." This may be all well and good. However, the fact that the employer is "restructuring" the contract does not in any way suspend the conditions of the existing contract – that remains of full force and effect until a new contract is agreed, signed and sealed.
Therefore, whatever monies are due to the employee in terms of the existing contract must be paid, and may not, under any circumstances, be held back "because we are busy restructuring your contract." To "hold back" the payment would constitute breach of contract, and the employee would have a right of action in that respect. But not all clouds are storm clouds. Quite obviously, not every employee is going to be in agreement with proposed changes. Some will firmly stand their ground, steadfastly refusing any such agreement. What do you do then ? If the employee's refusal is an unreasonable one, then the employer must simply advise the employee (in writing) why the employer considers the employee's refusal to be unreasonable, and in the same letter the employer can set out his rationale for implementing the change – in other words, he must justify the change based on sound and fair business principles.
Having done that, he can go ahead and implement the change – and the employee, if he doesn't like it, can resign. Should he go to the CCMA with a dispute of unfair labour practice, I doubt he would succeed in such action provided the employer has sound and fair reasons for enforcing the change, and provided he followed a fair procedure in doing so – such as prior consultation and negotiation with the employee, etc.
Make unilateral changes only at your peril.
You have been warned.
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