How to change the employment contract?
March 13, 2011 Leave a comment
The employment contract has been in place for a while and you need to change some of its terms. What do you have to do?
There are two ways the employment contract can be amended:
- an agreement between the employer and the employee, which usually takes the form of a written annex/addendum to the employment contract;
- variation through notice by the employer.
The parties may amend the employment contract via a written annex at any time while the contract is in force and to the extent they both agree on.
Variation of the employment contract by the employer is a procedure specific for labour law, which allows the employer to change certain terms of employment, contingent on the employee’s consent. Variation is effected through notice, which means that there is some time space between the moment when the employer declares his or her intention to change the employment contract, and the moment when the amendments take effect.
The employer’s declaration on variation of the employment contract must be made in writing and name new (changed) terms of the employment. After such a declaration has been served on the employee, he or she may either accept or reject the new employment terms. In the event of rejection the employment contract terminates on lapse of the applicable notice period. If the employee fails to inform the employer of his of her refusal to accept the new employment terms before lapse of the first half of the applicable notice period, it is understood that acceptance has been given, provided that the employer’s declaration contains a clear instruction in this respect. In absence of such an instruction, the employee has got time until the end of the applicable notice period to reject the new employment terms.
As you can see, variation through notice by the employer may lead to termination of the employment contract.
Formally, the employee has no power to interfere in the legal effects of this procedure, he or she may only accept or reject the new terms, the latter case resulting in dissolution of the employment contract. So the choice is like between black and white and it’s not easy, especially for those who don’t welcome the changes proposed by the employer but cannot afford to lose their jobs.
Variation through notice is applicable to material changes of the employment terms, usually those to the detriment of the employee (pay decrease, promotion withdrawal, position change).
Variation through notice is not available to the employee. The employee may only ask the employer to change the employment terms via an annex to the employment contract, but such a proposal is not binding on the employer.
Because variation through notice may lead to termination of the employment contract, it is governed by general provisions on terminating employment contracts through notice (I will write about that soon). As a result, the same restrictions apply (e.g. it is obligatory to name a reason for variation through notice in relation to employment contracts for an indefinite period of time; certain categories of employees are protected from variation through notice).