When and how can an employer change the terms and conditions of employment of its employees?
Many employees (and employers) are of the view that once an employee has a signed contract of employment, that is it - it can never be changed. Many employers believe that while they can change their contract 'templates' for new employees going forward, that of existing employees cannot be altered. Inevitably, they then end up with an HR landscape that is next to impossible to navigate - no uniformity, historical differences, unequal treatment and the like.
Sometimes changes in terms and conditions are however necessary to ensure the survival of the organisation, or simply to become more competitive or efficient. So - what is an employer to do? Unfortunately, many employers have regarded the current Covid-19 situation as a "free pass" to try and effect such changes and as a result, went about it all wrong - for example implementing unilateral reductions in remuneration by simply sending letters to that effect to employees, without any process having been followed. We are sure to see a lot of litigation in the coming months around these types of disputes. However, our courts have also recognised the realities of doing business - even as they continue to emphasise the rights of employees and the obligation to preserve jobs. There are indeed, within our existing labour dispensation, mechanisms to effect such material changes lawfully and fairly. The employer must just be prepared to put in the time and effort to do this right - and must also be able to show that there is a justifiable operational-/ business rationale for making those changes. And employees who then remain intransigent in the face of compelling reasons for change, might find themselves at risk of being without any job at all. It might not necessarily be a smooth or easy process, especially if employees in a particular workplace have been used to entrenched, albeit outdated, practices and benefits and are resistant to change as a matter of principle. Nevertheless, necessary changes can - and should - be effected if required. The fear of conflict should not immobilise employers and deter them from doing what is necessary to ensure the survival and efficiency of the organisation. The starting point is to have sufficient flexibility built into the contract of employment - to make provision for policies or practices that may be revisited and reviewed, subject to a consultation process with employees. An undertaking by employees in their contract of employment to be flexible in this regard, may go a long way to facilitate such changes (see Legal Aid South Africa v Theunissen (CA14/18) [2019] ZALAC 71). Employers should also refrain from 'over-regulating' themselves in their contracts and policies and being too rigid in their formulation. It should further be clear that subsequent changes supersede and replace the previous provisions. This does however not mean that employers that have not done so in their contracts and policies are without recourse - the process might just be somewhat more difficult. When an employer considers actions that would constitute material changes to terms and conditions of employment of (some of) its employees, it is crucial to approach this strategically and highly recommended to obtain advice from a labour law expert before embarking on this process. This field of law has become very specialised and knowledge of the relevant case law developments on this topic is essential. 🔻 The principle is that terms and conditions of employment may not be changed unilaterally by the employer and that the consent of the employee is required. This implies a negotiation process with the affected employees in order to secure such consent. But what happens when the employees refuse to agree to the changes? It stands to reason that the employer must have some mechanism to resolve this situation, otherwise the whole process will be moot from the start as the employees would ultimately have the power to decide how the business should be run by simply refusing any necessary operational changes. Many employees in fact believe that this is the legal position and that they are immune from repercussions, based on section 187(1)(c) of the Labour Relations Act, which provides that dismissal in such circumstances could potentially be automatically unfair. 🔻 However, the courts have made it clear that not every failed negotiation which leads to an employee being dismissed can result in an automatically unfair dismissal claim. The bona fide operational requirements of an employer may be used as a final trump card to effect necessary workplace changes. (See NUMSA v Aveng Trident Steel [2019] ZALAC 36 and Jacobson v Vitalab (2019) 40 ILJ 2363 (LC))
The employer does have the right to insist on such changes if it can justify these as essential for its operational requirements. Then, if employees persistently refuse to agree to the changes (as a measure to avoid dismissal) despite a proper consultation process, they may indeed be fairly dismissed (retrenched) on the basis of the employer's operational requirements in terms of section 189 of the LRA. Obviously, if these dismissals are challenged, it will be up to the employer to satisfy the courts of its bona fide operational requirements that necessitated these. As always, the process and the end result will depend on the circumstances of the particular situation, the history and the specific workplace dynamics. These factors will impact on the duration of the consultation process, the level of conflict and if eventually an agreement is reached or if any employees are dismissed. This is a difficult type of situation, but unfortunately one that both employers and employees will have to accept as a reality. Rather than trying to insist on perceived rights, the consultation process under these circumstances should be utilised (by both sides) as a tool towards progress and efficiency, and ultimately change for the good of everyone involved. We all have to work together in the South Africa of today to stimulate the economy and for people to be gainfully employed. Adversity is not the way to go to achieve this. Tolerance, transaprency and understanding the realities of our new world are essential qualities in our workplaces of today.
© Judith Griessel