Thursday 19 September 2019

Changing employment conditions? Here’s what you should know

When an employer and employee sign an employment contract, both are bound by this contract, including the terms and conditions of employment. So what happens when an employer wants to change the employment conditions that were agreed?

Can an employer change employment conditions?

Under Dutch employment law, an employer can always change employment conditions in consultation with the employee (with the employee’s consent). In addition, an employer can also sometimes change the employment conditions unilaterally (without the employee’s agreement).

This article looks at three situations in which an employer can unilaterally change the employment conditions, and explain what each situation means for the employee’s rights.

Unilateral changes in a fixed-term employment contract

When a fixed-term contract (an employment contract with an end date) is about to end, the employer can offer the employee a new contract with altered or new employment conditions. At this point, the employee has the right to choose whether or not to accept the new contract and its terms.

If the employee chooses to accept the new employment contract, then the new employment conditions will apply to them. If the employee chooses not to accept the new contract, then the changed employment conditions will not apply to them for the remainder of their existing contract.

Unilateral changes clause in an existing employment contract

If the employment contract, whether fixed-term or permanent, contains a unilateral changes clause, then the employer has the right to unilaterally change the employment conditions and these conditions will apply to the employee.

However, it is important to note that the employer may only do this if they have an overriding business interest that takes priority over the interests of the employee, and is in accordance with the standards of reasonableness and fairness.

Even so, the employer is obliged to first try to reach an agreement with the employee about the change of employment conditions. If no agreement can be reached, then the employer can unilaterally change the terms of employment. In this case, the interests of both parties will be weighed against each other.

No unilateral changes clause in existing employment contract

If the employment contract does not contain a unilateral changes clause and the employer wants to change the employment conditions, then the employee can decide not to accept the changed terms of employment – but this is not always allowed.

If the employer’s proposition is reasonable, then the employee must accept the changed terms and conditions. To decide whether the employer’s proposition is reasonable and acceptance can reasonably be required of the employee, the courts can weigh the interests of both parties against each other.

Example: company lease car

A clear example of changing an employment condition would be when an employer decides to stop giving their employees a lease car.

In a recent case, the employer (a bank) unilaterally changed a term of employment when they decided to stop granting lease cars to their employees. However, the employees didn’t agree with this change and went to court to ask that it be undone.

The judge first determined that being granted a lease car is a term of employment. Secondly, he explained in which instances such a term can unilaterally be changed by the employer. The bank had included a unilateral change clause in their employment contracts. The judge therefore had to determine if an overriding business interest existed which would take priority over maintaining the employee’s terms and conditions of employment, in accordance with the standards of reasonableness and fairness.

After weighing the interests of the bank against those of the employees, the judge decided that the bank had no overriding business interest that justified changing the terms of employment unilaterally. On that basis, the employees did not have to accept the loss of their lease car. The judge added that this also applied to the employees that didn’t have a unilateral change clause in their employment contract.

What to do if your employer changes your employment conditions

If your employer changes your employment conditions and you feel the changes are unreasonable, then you would be wise to seek legal advice.

Whether the change affects your company lease car or a proposed salary cut, an expert in employment law can help you to understand your rights and advise you on the best course of action.

Godelijn Boonman is a partner at GMW lawyers and an expert in international employment law for Legal Expat Desk.

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