Can employers unilaterally change workers contracts?

Davis Ndumiso Sibanda
Many disputes between employers and workers relate to unilateral variation of employees contracts by employers who believe they are exercising their right to manage.
Last week I had a case of an employer who slashed the fuel allowance of an employee arguing that he could no longer sustain it and that the allocation was also too generous.

The 400 litres of petrol allocation to the employee was expressly given in the employee’s contract and in the conditions of service for employees in his grade. The employee had signed for and accepted the conditions of service.

The legal argument raised by the employer was that as an employer he should be allowed to unilaterally vary policies and contracts and the worker believed that since the 400 litres of petrol allocation was contractual the employer had no right to unilaterally vary the contract.

The employee argued that if the fuel allocation had been lower he would not have taken the job.
The legal position is that the employer has no legal right to unilaterally vary an employment contract or any terms of the contract.  The parties have to negotiate and agree on varied terms.

Common areas of conflict include reduction of commission or variation of commission structure by employers, removal of contractual bonuses, introduction of additional conditions for example sales people can be told that commission will not be paid until customers pay or production people can be told that no bonuses until the goods leave the warehouse Issues raised above are most likely going to result in workers successfully raising cases of unfair labour practice.

Employers have also to be careful as at times unilateral variation of workers’ contracts can be so substantial that it goes to the root of the relationship forcing workers to resign and later claim constructive dismissal.

In the case Moyo versus BNC/LC/MT/155/09 where Moyo’s contract was unilaterally varied from a Human Resources Executive to a Sports and Welfare Officer and he immediately resigned, the Labour Court found Moyo to have been constructively dismissed and the Labour Court ordered payment of damages in lieu of reinstatement.

Where the employer has unilaterally varied contractual matters an employee’s relief lies in following grievance procedures set out in the appropriate code of conduct, where the matter affects many employees the matter can start at works council and if no solution is found then a dispute can be declared to have the matter dealt with in terms of Section 93 of the Labour Act by either the NEC or Labour Officer as appropriate.

Where there is no code of conduct and parties are using the national code of conduct which has no grievance procedures then the dispute can be dealt with in terms of section 93 of the Labour Act the NEC or Ministry of Labour.

It is however advisable for parties to first seek internal solutions as litigation tends to harden attitudes and soil labour relations into the future.

Employers should also desist from unilaterally tampering with employees contracts and be willing to backtrack if they find that they made a mistake.

There is however an exception to the rule on variation of contracts.
The law allows the employer to unilaterally vary or change employees contracts where the business of the employer has materially changed such that employees contracts have to be changed.

However, to prove such a change is not easy for the employer.
In Zimbabwe we rely on case law, in the matter Chirasasa and others versus Roseline Nhamo N.O. and Fidelity Life Assurance of Zimbabwe (Pvt) Ltd SC135/02 the Supreme Court said “the appellants failed to appreciate that a contract of employment cannot remain static throughout the whole of its existence regardless of the changes in the fortunes of the business.

Refusal to accept a change in terms and conditions of employment necessitated by the commercial interests of the business may be good enough reason for terminating a contract of employment on notice.”

This judgment clearly shows that there are cases where unilateral variation of contracts can be viewed by the courts as reasonable, however employers have to exercise caution on taking this route as many contractual variations will not qualify.

Termination on notice could be tricky as there is a chance that courts might order retrenchment depending on how the parties approach and argue the case.

In conclusion, variation of contracts should only be done after getting expert advice as it could turn out to be very expensive for the employer.