How to change employees’ working hours, reduce salaries and/or restructure without committing an unfair labour practice

Posted on April 28, 2020

The majority of employers and employees have been confronted with the effects of the COVID 19 pandemic on the economy and several companies have been forced to make operational changes to what they considered to be normal. The consequences of the COVID 19 pandemic will, unfortunately, still be felt by individuals and companies long after the lock down has been lifted.  

In light of the pandemic, the operational requirements of a company may require that working hours be amended, salaries be reduced, shifts be changed or an entire restructuring of the company. These changes might constitute a change, or changes, to the terms and conditions of employment of the employee. In the event that an employee does not accept the new proposed terms, the employer may be faced with new challenges.

This article will focus on the available procedures to an employer that wishes to change the terms and conditions of employment of its employees’ and the remedies available to an employee whose terms and conditions of employment have been changed without the employee’s consent.

1. IMPLEMENTATION OF CHANGES TO TERMS AND CONDITIONS OF EMPLOYMENT

Changes to an employee’s terms and conditions of employment can take on several forms, including the reduction of salaries, reductions or changes of benefits, changes in status or changes to working hours. As a result of the consequences and impact of the COVID 19 pandemic on the economy, an employer might find itself in a position to implement certain changes to terms and conditions in order to ensure the survival of the company.  

If an employer is confronted with the difficult choice to implement changes to an employee’s terms and conditions of employment, we propose that the following steps be followed:

Step 1 – The employer issues a notice to consult over the proposed changes to terms and conditions of employment to the affected employee. The notice should contain the date, time and place of the consultation as well as the proposed changes. The proposed changes should be fair, real and valid. 

Step 2 – Consult with the employee. If the parties are subject to travel restrictions imposed by the Disaster Management Act, then the consultations can be done via conference call. During the consultation process the parties should attempt to reach consensus over the proposed changes and reduce the agreed changes to writing. This can be done in the form of an annexure to be affixed to the current contract of employment. 

Step 3 – Should the employee not agree to the proposed changes, the employer may embark on a retrenchment process. The employer should then follow the procedure enshrined in section 189 of the Labour Relations Act No. 66 of 1995 (LRA), which procedure commences with the issuing of a written notice inviting the other consulting party to consult with it and disclose in writing all relevant information as set out in section 189(3) of the LRA. In MWASA v Independent Newspapers (Pty) Ltd 2002 5 BLLR 452 (LC) the Labour Court held that a unilateral change to terms and conditions of employment, implemented to avoid retrenchments, is enforceable as an alternative to retrenchment.  

The initial alternative to retrenchment, ie. the proposed changes, can be discussed again during the retrenchment consultation.

We prefer the approach in terms of consultations and/or negotiations precede retrenchment proceedings to avoid job losses and because section 189 is only invoked when the employer contemplates dismissing one or more employees for reasons based on the employer‘s operational requirements.

 

2. REMEDIES AVAILABLE TO AN EMPLOYEE THAT ALLEGES A UNILATERAL CHANGE OF TERMS CONDITIONS TO EMPLOYMENT

The only reference regarding a unilateral change to terms and condition in the LRA is in section 64(4) which provides that:

(4) Any employee who or any trade union that refers a dispute about a unilateral change to terms and conditions or 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) –

(a) require the employer not to implement unilaterally the change to terms and conditions of employment; or

(b) 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.

It was confirmed in SAPU v National Commissioner of the SAPS (2006) 1 BLLR 42 (LC) that the statutory definition of an unfair labour practice in section 186(2) of the LRA does not make provision for the unilateral change to terms and conditions of employment.

Option 1 – Strike action – In order to rely on the provisions of section 64 of the LRA an employee needs to establish that there is both an existing term and condition of employment and that the term and condition will or have been changed by the employer, without the employee’s consent.

It is noteworthy to state that strike action as a remedy is only an interim remedy appending conciliation of the dispute, thereby putting pressure on the employer to bargain with an employee on this dispute. In Monyela & others v Bruce Jacobs t/a LV Construction (1998) 19 ILJ 75 (LC) it was stated that employees are given the right to strike over a dispute about a unilateral change of their terms and conditions of employment, despite it being a rights dispute. In Sibanye Gold Limited v Association of Mineworkers and Construction Union and Others (2017) 38 ILJ 1193 (LC) it was held that the right to strike is only an interim measure until such time as either 30 days have elapsed since the referral or a certificate of failure to settle has been issued.

Step 1 – Refer a dispute about the unilateral change to terms and conditions of employment to the relevant Bargaining Council or CCMA.

Step 2 – If the employer fails to comply with the requirement to restore the status quo ante or not to implement the proposed changes after 48 hours, then embark upon strike action without the need to give notice of the proposed strike action or having to wait 30 days from date of the referral. The only remaining requirements are that the dispute needs to be correctly referred and the employer needs to be afforded 48 hours in order to temporarily withdraw the changes.

Option 2 – Sue for damages

The Labour Court has concurrent jurisdiction with the civil courts to hear and determine any matter concerning a contract of employment. An employee can claim for contractual damages upon acceptance of the repudiation of the contract by the employer. 

Option 3 – Specific performance

If the employer breached the provisions of the employment contract, the employee is entitled to reject the employer’s repudiation of the contract and bring an application to hold the employer to the agreement. 

Option 4 – Interdict

The employee can approach the Labour Court or High Court for an interdict to prevent the employer from continuing or implementing a unilateral change in the employment conditions.

An interdict can rarely stand alone as a remedy in the employment sphere and in most circumstances, is utilised in conjunction with other remedies, but precede them. The aforementioned remedies may be utilised in conjunction with an interdict.

Option 5 – Constructive dismissal

An employee can also, although difficult to prove, base his or her claim on the facts that the continued employment relationship has become intolerable as a result of the unilateral change in employment conditions. A unilateral variation of the contract by the employer will not in itself justify a claim for constructive dismissal. The variation must be such as to evince an intention on the employer’s part to repudiate the contract, if it is to warrant the conclusion that the employee could not reasonably be expected to endure the situation, or be such as to go to the roof of the employment relationship.

Option 6 – Unfair labour practice

The employee may refer the matter to the relevant Bargaining Council or CCMA in terms of the provisions of section 186(2) of the LRA if the unfair act involves unfair conduct by the employer relating to promotion, demotion, probation or training of an employee or relating to the provisions of benefits to an employee. The referral should be made within 90 days of the date of the act or omission which allegedly constitutes the unfair labour practice. 

Conclusion

The aforementioned guideline is designed as a broad guideline, based on generic scenarios and should be investigated for appropriateness for individual employee and company circumstances prior to implementation. We recommend that you consult with our offices via email or conference call prior to implementing any of the generic recommendations.

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