Changes to the Employment Terms and Conditions

In light of the current challenging economic climate within South Africa, a question that becomes prevalent is to which extent employers are entitled to vary the terms and conditions of their employees’ employment, if at all.

Another critical question is what the consequences of the employee’s refusal of such change might be. Examples of such changes include salary reductions, reduced working hours or overtime, demotions, and changes to employees’ job descriptions or conditions of work.

Navigating Employment Contract Variations

As a general principle, employers are not entitled to unilaterally amend the terms and conditions of an employee’s employment contract and therefore, most unilateral variations may be disputed as a breach of contract by the employer. In instances like these, the employee has the right to either resile from the contract, sue for damages in terms of the contract or engage in strike action in terms of Section 64 of the LRA. 

Therefore, should an employer require any variation to the employee’s terms and conditions for any reason whatsoever, this should be approached and handled with caution and always in consultation with the affected employees. 

Constitutional Court Ruling Sets Precedent on Dismissals and Employment Contract Variations

A recent matter before the Constitutional Court addressed the above issue and has since been welcomed by employers, especially in light of the economic crisis caused by the pandemic. In the matter of National Union of Metal Workers of South Africa v Aveng Trident Steel and Another [2020] JOL 48801 (CC), the Constitutional Court upheld a Labour Appeal Court decision and created a clear precedent to be applied in similar instances in future.

The Constitutional Court had to rule on whether dismissal would be considered automatically unfair if employees are dismissed as a result of rejecting a demand and subsequent variation in the terms and conditions of their employment that arose as a result of the employer’s operational requirements.

Automatic Unfair Dismissals and Employment Contract Variations: Understanding Section 187(1)(c) of the LRA

Section 187(1)(c) of the Labour Relations Act, 1995 (the “LRA”) provides that a dismissal will be automatically unfair if the reason for the dismissal is a refusal by employees to accept a demand in respect of any matter of mutual interest between them and their employer.

In the NUMSA matter, the employer dismissed 733 employees due to operational requirements after they refused to accept altered employment conditions from the employer. These employment variations included restructuring the workforce and redesigning job descriptions, and combining certain functions. The employer argued that the variation of the terms and conditions of their employment was critical in ensuring the future subsistence of the company. However, NUMSA, on behalf of the employees, argued that the dismissals were automatically unfair based on Section 187(1)(c).

The Courts’ Considerations for Fairness

The dismissals were upheld in Court, and in determining this, the Courts held that if the dismissal had taken place regardless of whether or not the employees’ refused the demand, the dismissal would not be automatically unfair.

The Court further held that even where there is evidence suggesting a possibility that the dismissal occurred because the employee refused the demand, it may still be possible for the employer to prove that the dismissal was for a different and more proximate reason that is fair and justifiable.

The primary consideration that seems to have been applied by the Courts throughout the adjudication of the above matter is whether or not the cause of the variation in the employment conditions is genuine and bona fide to the extent that the survival of the business would be jeopardised in the absence of such variation. Should the answer be affirmative, the dismissal will be justified and fair, and the affected employees would have no recourse against the employer.

Therefore, employers are advised to ensure compliance with the necessary legal requirements and required consultation processes to ensure that should the affected employee dispute the dismissal, the employer will be able to prove that the dismissals were effected in a procedurally fair manner and that there had been a genuine and justifiable operational need to change the relevant terms and conditions of employment.

Do not hesitate to contact Invictus on 0861 737 263 for assistance with making changes to the working conditions in the workplace.