Are unilateral changes to an employment contract legal?

It's expected that terms and conditions of employment may change from time to time and, therefore, Section 10(5) of the Employment Act, 2007 provides that: -

“Where any matter stipulated in subsection (1) [the employment contract] changes, the employer shall, in consultation with the employee, revise the contract to reflect the change and notify the employee of the change in writing.”

A decision taken ‘in consultation with’ another is one that's taken after a discussion with the other party about the thing that's being decided.

If there's trade union involved, the Recognition Agreement and Collective Bargaining Agreement will no doubt outline the procedure of making changes to the contractual terms.

This is not usually a problem if the proposed change is to the employee’s benefit; the problem arises where the proposed change is to the employee’s detriment; in such a case, the employer should not only consult but should also get the consent of the employee, if this is not done the results could be any of the following: -

Constructive dismissal

A constructive termination arises where the employer, in the absence of any justifiable reasons for dismissal, proceeds to “construct” circumstances that will bring about a dismissal. A unilateral change to a contract may amount to a constructive dismissal. For the Court to hold that a constructive dismissal has occurred, the following must be established by the employee: -

1.            That the employer made a fundamental change to the contract of employment;

2.            That such change was unilateral;

3.            That the situation was so intolerable that the employee was unable to continue working;

4.            That the employee would have continued working had the employer not created the intolerable work environment; and

5.            That the employee resigned because he did not believe the employer would abandon the pattern of creating an unacceptable work environment.

No effect

The Court may ignore the change/amendment and uphold the earlier contractual terms. In Joseph Maina Theuri v Gitonga Kabugi & 3 others, the court declined to uphold disciplinary rules and procedures that were not notified to the employee.

Stay of implementation

The court may stay the implementation of the amendment until consultations are undertaken.

Mode of notification

The notification of the change may be done through a simple letter to the employee outlining the change or through an addendum to the contract. In either case, the employee should sign and retain a copy of the amendment and the signed acknowledgment should be kept in the employer’s records.

Summary

1.            An employer should consult an employee prior to effecting changes to agreed terms and conditions of employment;

2.            Consultation is mandatory, consent is not;

3.            A change that is of a fundamental nature, if not consented to, may lead to a finding that an employee who resigns as a result of the change, has been constructively dismissed.