I received an e-mail from the owner of a company who, after a particularly poor financial year, is considering reducing the high costs associated with the employment of his staff.
He says he made a lot of concessions to them during the “fat” years and improved their conditions of service. Now, during the “hard” times, he has the need to take away some of those generous benefits.
In his case, he shared the wealth by adding benefits such as cellphone, petrol and car allowances as well as housing subsidies and annual bonuses.
Our reader does not want to retrench his staff, but must reduce staff costs to get the company on a stable footing again. He wants to know what he can do to address these costs and how to go about it.
Sometimes the actual contract of employment is amended with the agreement of both parties, but, more commonly in smaller enterprises, these changes are done verbally as was the case with our reader.
Whether verbal or written, such new benefits will amount to amended terms and conditions of employment.
A unilateral change of these conditions means that the employer announces to his employees that certain changes will be made that affect their terms and conditions of employment without consulting them and then implementing those changes.
Even a change in the method of performing work may be considered a unilateral change of the terms and conditions of employment if it entails a change to the essential nature of the job.
It must be emphasised that a unilateral change by an employer is unlawful only if it amounts to a change of terms and conditions of employment.
If the changes envisaged do not affect employees’ terms and conditions of employment or benefits to which they are contractually entitled, then the employer is free to do so without consultation and can simply inform them.
Even under the common law, it is not allowed to unilaterally change terms and conditions of employment. If the employer does, the employee can claim a breach in contract of employment and sue for damages.
Under the Labour Relations Act (LRA), if the change involves “unfair conduct” in relation to “benefits”, it may amount to an unfair labour practice.
In this instance, employees can approach the CCMA and the Labour Court for relief and can also apply for an interdict to prevent the employer from implementing the changes until the court has adjudicated the dispute.
Employees can also embark upon a “protected” strike on such changes, provided they have followed the correct procedure.
Therefore, any changes our reader wants to make, must be done through a consultative process with the aim of reaching an agreement on the changes to the conditions of employment.
This process must be “meaningful” – in other words he should not have taken the final decision before starting the consultations and he must consider and respond to the employees’ input.
The courts will in certain circumstances sanction unilateral changes to terms and conditions of employment if there are sound commercial reasons for doing so and if the matter has been negotiated in good faith with the employees concerned.
In WL Ochse Webb & Pretorius (Pty) Ltd versus Vermeulen (1997), the Labour Appeal Court held that an employer is entitled to alter an employee’s remuneration package if it has commercial rationale for doing so.
Our reader may also embark upon a retrenchment process if he can justify that the change is required for operational reasons. However, this also includes meaningful consultations in terms of section 189 of the LRA.
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Robert Niemand from LabourNet in Port Elizabeth is a labour law consultant. He is also a part-time commissioner at the CCMA, a labour law and labour relations lecturer and a contributor to various publications.
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