Avoid unilateral changes to the employment contract

Estimated reading time: 4 minutes

• The employment contract can be of immense value to the employer if used effectively but when abused, it can pose great risks.
• South African labour legislation and relevant case law require employers to adhere to the terms and conditions agreed upon in the contract.
• Businesses operate in a challenging economic climate and other external forces can leave a business with little choice but to realign, restructure and reorganise to become more competitive or to maintain an existing position in the market.
• It is vital that employers always follow the correct procedure as specified by labour legislation whenever any changes are made to employees’ terms and conditions of employment.
• Operational changes can create opportunities for both the business and employees with regard to skill and personal growth, leading to better and more efficient use of human resources and the implementation of better procedures, ultimately improving efficiency and profitability.

The employment contract can be of immense value to the employer if used effectively. Making a mind shift regarding employment contracts from an ‘administrative burden’ to ‘risk mitigating tool’ can save employers a lot of time and money in the long run. Take note that labour legislation applies to all employers and employees, irrespective of how the employment relationship is recorded, or the term thereof.

However, if the employment contract is abused, it can pose great risks to the employer. Employees rely on their employment contracts for stability and security in the workplace. Unilateral or one-sided adjustments can disrupt this stability, leaving employees uncertain about their rights and future. By maintaining a commitment to honouring the terms of the contract, employers can provide employees with a sense of security and confidence, allowing them to focus on their work and contribute positively to the business.

Contracts that are fair

South African labour legislation and relevant case law require employers to adhere to the terms and conditions agreed upon in the contract. These terms may never be less favourable than those set out in the Basic Conditions of Employment Act, 1997 (Act 9 of 1997), as well as Sectoral Determination 13 which regulates labour relations in the agricultural sector.

When the terms and conditions of employment are fair, employees feel valued and respected, leading to greater job satisfaction and productivity. On the other hand, unilateral changes to the employment contract cannot only create a power imbalance and breed dissatisfaction amongst employees, ultimately harming the business’s overall performance – it can also constitute unfair labour practice.

Changes and legal stipulations

Businesses operate in a challenging economic climate and other external forces can leave a business with little choice but to realign, restructure and reorganise to become more competitive or to maintain an existing position in the market. Restructuring is the act of reorganising a business’s structures (legal, ownership, operational or other structures) for the purpose of making it more profitable or better organised for its present requirements.

It is vital that employers always follow the correct procedure as specified by labour legislation whenever any changes are made to employees’ terms and conditions of employment.

If an employer intends to restructure or make organisational changes in the near future, it is important to take the following into account:

• Communication is key. Change is difficult and can leave employees feeling anxious. We advise employers to be open and clear as to why changes are needed and to explain the business’s needs and goals, as well as make regular announcements to all employees in terms of progress made. Restructuring is more likely to be successful when managers understand the fundamental strategic problem or opportunity the business faces.
• Consult with employees in respect of suggestions and ideas, as well as to gain feedback. Often a combination of ideas can lead to the best solution. Employees operating in a specific structure will be able to identify challenges the employer may have overlooked.
• Plan ahead. Implementing changes smoothly will directly impact on how quickly and efficiently the process will be finalised.
• Consistently commit to quality over quantity in all aspects of the business, from the very beginning. This can greatly relieve an employer’s need to restructure later on.
• Seek professional assistance. Because restructuring is not a regular occurrence, most employers are not that experienced with regard to the correct procedures to be followed, which poses a huge business risk to the employer.

Read more about the art of conciliation.

A final thought

Operational changes can create opportunities for both the business and employees with regard to skill and personal growth, leading to better and more efficient use of human resources and the implementation of better procedures, ultimately improving efficiency and profitability. – Madeleine Ackermann, legal advisor, LWO Employers Organisation

For more information, email to Madeleine Ackermann at madeleine@lwo.co.za or info@lwo.co.za.