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Home RA Newsletters Unilateral Changes To Terms and Conditions of Employment

Unilateral Changes To Terms and Conditions of Employment

In terms of the common law, an employer is not allowed to change the terms and conditions of employment with an employee, unilaterally. The change to the terms and conditions cannot be made without first consulting with the employee on the proposed changes thereby obtaining the employee’s consent to agree to the change. The proposed change must be done by  mutual agreement between the parties concerned. One must be mindful of the fact that a  contract of employment is a mutual agreement between two parties and the one party to the agreement cannot change the terms and conditions of that agreement without the consent of the other party.
Unilateral changes to the terms and conditions of employment may be in the form of a cut in the employee’s salary  without communicating this to the employee, an increase in working hours without the option of overtime paid, changes to commission structure or a reduction in the amount of commission paid, the removal of the employee’s bonus. 
Employers must note that by enforcing unilateral changes to the contract of employment, the existing contract of employment is in fact terminated and replaced by a new contract.
An employer may however unilaterally change the terms and conditions of an employee’s employment contract if the new terms and conditions were not present in the original contract of employment.
The CCMA would only have jurisdiction to arbitrate the dispute arising out of unilateral changes to the terms and conditions of employment on the substantive fairness of a dismissal (the reason for the dismissal).
In the event that employees are faced with a threatened unilateral change to their employment contract, they are entitled to seek an interdict, under the common law, against the employer. They can also sue for damages on the basis that the employer has breached the contract of employment.
The other option that may be available to an employee is to refer the matter directly to the Labour Court. If the change to the terms and conditions of employment affects a number of employees, the employees can embark on strike action after appropriate procedures have been adhered to as set out in the Labour Relations Act 66 of 1995 (hereinafter referred to as the LRA).  Chapter 4 of the LRA deals with Strikes and lock outs.
Section 64(4) of the LRA suggests that the employee or any trade union can refer the dispute to the CCMA or a bargaining council, and the employee or trade union may require the employer not to unilaterally implement the change to the terms and conditions of employment, or if the employer has already implemented the change unilaterally, the employee or trade union may require the employer to restore the terms and conditions of employment that applied before the change.

Section 64(4) of the LRA states as follows:
“Any employee who or any trade union that refers a dispute about a unilateral change to terms and conditions of employment to a council or the Commission in terms of subsection (1)(a) may, in the referral, and for the period referred to in subsection (1)(a)-
require the employer not to implement unilaterally the change to terms and conditions of employment; or
if the employer has already implemented the change unilaterally, require the employer to restore the terms and conditions of employment that applied before the change.”


In Staff Association for the Motor and Related Industries (SAMRI) v Toyota of South Africa Motors (Pty) Ltd 1998(6) BLLR 616(LC), it was held that in terms of Section 64, an employee must show, firstly, that unilateral changes were effected to the terms and conditions of the employment contract and, secondly, that there was no consent to the changes. If an employee has duly referred a dispute to the CCMA in terms of section 64(4) and the employer fails to restore the position as required, the employee is entitled to approach the Labour Court for an order compelling the employer to do so.
The employee is entitled to seek enforcement of the contract in the High Court , in the event that he/she does not want to embark on strike action.
The meaning of “unilateral” in the context of section 64(4) does not mean “without consultation”; it means “without consent”.  In SAPU & another v National Commissioner of the South African Police Service & another [2006] 1 BLLR 42 LC, it was held that, while unilateral change is treated as a subject of collective bargaining in the context of section 64(4), employees are not prevented from pursuing their contractual remedies in the Labour Court or High Court in terms of section 77(3) of the Basic Conditions of Employment Act 75 of 1997.
In SAMRI v Dlamini & others [2001] 10 BLLR 1168 (LC), it was held the fact that all the employees concerned had not been identified at the conciliation stage of the dispute was not considered to be material, nor was conciliation a precondition for an urgent application. However, final relief cannot be obtained by means of a court order in terms of the Act. If employees wish to restrain their employer from unilaterally varying terms and conditions of employment for a period longer than that permitted by section 64(4), they can do so only by means of strike action.
In Monyela & others v Bruce Jacobs t/a LV Construction (1998) 19 ILJ 75 (LC, the judge observed that a unilateral change to terms and conditions of employment amounts to a repudiation of the contact of employment. In addition to the remedy contained in section 64(4), an employee is therefore also entitled to exercise her or his contractual remedies of accepting the repudiation and claiming damages or rejecting it and holding the employer to the contract.
In Airlink Pilots Association SA v SA Airlines (Pty) Ltd & another (2001) 6 BLLR 587 (LC), the Labour Court was prepared to pierce the corporate veil and order a company (the first respondent) to restore terms and conditions of employment contained in a collective agreement between the applicant union and another company (the second respondent). The first respondent, the court found, controlled the second respondent and was the sole decision-maker in respect of the change to employment conditions at issue.
Section 187(1)
“A dismissal is automatically unfair if the employer, in dismissing the employee, acts contrary to section 5 or, if the reason for the dismissal is—
….
(c) to compel the employee to accept a demand in respect of any matter of mutual  interest between the employer and the employee; . . .”
In the event that the employer is undergoing a restructuring exercise, the employer may, under certain circumstances without the employee’s consent, make changes to the terms and conditions of the employment  contract.
In the case of Media Workers Association and others v Independent Newspapers (Pty) Ltd (2002) (LC), it was stated that although the judge agreed that employers should consult with registered trade unions and not directly with their employee members, she took the view that where trade unions refused to consult with the employer, the employer had no alternative but to consult personally with the individual employees. The Court found that an application of Section 189 would often bring about changes to terms and conditions of employment. These changes are justified provided that they were made in the course of a bona fide retrenchment exercise and as an alternative to retrenchment. The Court went on to state that where changes to terms and conditions of employment (and possible dismissals) were a result of restructuring, a dispute arising out of these changes did not constitute a mutual interest dispute. By implication, aggrieved employees are precluded from embarking on protected strike action to challenge the changes affected by their employer to their terms and conditions of employment. An additional consequence of the conclusion derived by the Court was that while an employer is ordinarily obliged to negotiate before implementing changes to term and conditions of employment or face the risk of strike action, an employer implementing similar changes in the context of a section 189 restructuring exercise can effect these changes after only consulting with affected employees. Once this has been done the employees are precluded from striking.
In MWASA v Independent Newspapers (Pty) Ltd   [2002] 5 BLLR 452 (LC), it was held that a unilateral change to terms and conditions of employment, implemented to avoid retrenchments, is enforceable as an alternative to retrenchment and creates a dispute of right rather than interest. Under such circumstances the employer is not obliged to institute a lock-out to compel employees to accept the change to their employment conditions.
In FAWU v General Food Industries Ltd  [2002] 10 BLLR 950 (LC), the employer retrenched a number of employees immediately after concluding wage negotiations in order to reduce its wage bill. The Labour Court held that the dismissals were automatically unfair because the employer’s action improperly transformed a dispute of interest into a dispute of right. This decision was however, reversed on appeal.
In Fry’s Metals (Pty) Ltd v NUMSA & others  [2003] 2 BLLR 140 (LAC) , the Labour Appeal Court held that a dismissal which is final and irrevocable does not constitute a dismissal intended to compel an employee to accept the employer’s demand. This ruling was endorsed by the Supreme Court of Appeal in NUMSA & others v Fry’s Metals (Pty) Ltd    2005] 5 BLLR 430 (SCA). Similarly, in Mazista Tiles (Pty) Ltd v NUM & others  [2005] 3 BLLR 219 (LAC),  the Labour Appeal Court concluded that the employer, when dismissing employees on operational grounds, had no intention of later withdrawing the dismissal and re-employing them. On the contrary, the employer was prepared to hire them as independent contractors only and their dismissal was occasioned by their rejection of this change in status. Consequently, their dismissal was not aimed at compelling the employees to comply with the employer’s demand and was, therefore, not automatically unfair.
In CWIU & others v Algorax (Pty) Ltd    [2003] 11 BLLR 1081 (LAC). the appellants were dismissed after they refused to accept a proposed change to their shift system which, the respondent argued, was based on operational requirements. The Labour Appeal Court held that an employer may dismiss employees who do not satisfy the operational needs of the business if its purpose is to get rid of them permanently and replace them with others prepared to work in accordance with its operational requirements. However, where an employer dismisses workers in the hope that they will be induced to comply with its needs, the dismissal is for the purposes of compelling the workers to comply with a demand and is, therefore, automatically unfair. The critical issue is the purpose of the dismissal. In this case the court concluded that the purpose was to compel the employees to comply with the respondent’s demands. The dismissals were therefore automatically unfair.
In NCBAWU v Hernic Premier Refractories (Pty) Ltd    [2003] 1 BLLR 50 (LC), the respondent, after taking over a business in terms of section 197, embarked on a restructuring exercise and sought to negotiate new terms and conditions of employment with the union of the transferred employees. When the union rejected the proposed changes, the respondent declared all posts redundant and invited the employees to apply for new posts subject to the new employment conditions. When the employees refused to sign the new contracts of employment they were retrenched. The court noted that dismissals to compel employees to comply with a demand are automatically unfair. Although the respondent was in danger of closure, the true reason for the employees’ dismissal was their failure to accept the new conditions. The “retrenchments” were consequently a ruse to get rid of the employees and their dismissals were held to be automatically unfair.
In NUMSA & others v Zeuna-Starker Bop (Pty) Ltd   [2003] 1 BLLR 72 (LC), the respondent locked out employees who refused to accept its final wage offer and then dismissed them. The dismissal was held to be automatically unfair.
In Jabari v Telkom SA (Pty) Ltd  [2006] 10 BLLR 924 (LC),  the applicant’s dismissal in this case was held to be automatically unfair when it was found that a secondary reason for the applicant’s dismissal was the fact that he had declined to accept a supposedly voluntary severance package.
Having regard to the above, employers and employees must be aware of the implications when unilateral changes to terms and conditions of an employment occur.
 

 

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