The issue of unilateral changes to employment terms and conditions has become a pressing one, as employers want to remain competitive during these challenging economic times. Having a proactive workforce that can adapt to operational changes is important. However, employers are cautioned to be mindful of the consequences of unilaterally changing employees’ working conditions without any negotiation and agreement.
Terms and conditions of employment are usually reduced to writing in the form of a contract of employment between employee and employer. Unilateral changes to terms and conditions refer to a scenario where the employer changes these abovementioned terms and conditions initially agreed to without any negotiation and agreement. Such an act is considered a breach of the contract of employment and can give rise to multiple labour disputes being referred to the CCMA/Bargaining Council and/or Labour Court.
Furthermore, should it be found that an employer has indeed made changes to employee’s basic conditions without negotiation and agreement, the Labour relations Act affords these employees, or unions acting on behalf of such employees, certain recourse in terms of section 64 (4):
“Any employee who or any trade union that refers a dispute about a unilateral change to terms and conditions of 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)-
- Require the employer not to implement unilaterally the change to terms and conditions of employment; or
- If the employer has already implemented the change unilaterally, require the employer to restore the terms of and conditions of employment that applied before the change.”
The employer will need to comply with the requirement of subsection (4) within 48 hours of service of the referral on the employer, meaning that the employer should not implement the proposed unilateral changes to employment or if the unilateral changes have already been implemented, to reverse those changes for a mandatory period. Should the employer not comply, the employee will not need to give notice of the proposed strike action or wait 30 days after referral.
In the event that the employer complies, the matter will be set down for determination through conciliation and should the parties not resolve the issue at conciliation, a certificate of non-resolution will be issued by the Commissioner stating that the employees can embark on a protected strike and that picketing rules must now be established between the union/employees and employer.
In a case where a unilateral change is considered to be an unfair labour practice, e.g., where an employer has raised a performance standard so high that the employee cannot attain it, the matter can be to the Labour Court. If found to be a case of an unfair labour practice, this could carry a punitive award of up to 2 years. The Labour Court could also make any order it deems appropriate, which could turn out very costly for employers.
It is also important to distinguish between what is a change to basic conditions of employment vs what changes an employer can make as part of their managerial prerogative due to operational concerns. In the case of Apollo Tyres South Africa Pty Ltd v National Union of Metalworkers of South Africa (“NUMSA”) & others (2012) 21 LC, the employer sought to amend the shift patterns of the workers contained in a collective agreement between the parties. The union maintained that these amendments constituted a change to the worker’s basic conditions of employment. The employer maintained that the changes formed part of their managerial prerogative and did not constitute a change to their basic conditions of employment. The court confirmed that merely changing a shift system or a workplace practice is not a change to basic conditions of employment but a change to an employer’s operations within its managerial prerogative. Therefore, it follows that this issue would not have to be negotiated with employees and an agreement reached. For this to be considered a change to basic conditions of employment, the union would have to prove that the right to work specific shifts was a contractual right. The crucial part here is that the collective agreement between the parties allowed the employer to make changes for operational reasons after consultation (not negotiation) with employees. The court found here that the employer had complied with this.
It is important to look at how the courts have dealt with this issue. The latest case being Macsteel Service Centres SA Pty Ltd v Numsa (J483/20), wherein the employer required workers to take a 20% salary reduction for reasons that the employer was shut down for the lockdown period, not being an essential service provider, and not generating any income. NUMSA submitted that the employer’s unilateral action to reduce salaries was unlawful, and employees, therefore, embarked on a strike. The employer approached the Labour Court to declare the strike unlawful and order striking employees to return to work. The court relied on the case of Staff Association of the motor and related industries (SAMRI) v Toyota of SA Motors Pty Ltd 1997 (18) ILJ 374 (LC), where “ the court held that section 64(4) and (5) of the LRA is aimed at limiting the managerial prerogative to vary terms and conditions of employment and/or policies unilaterally and found that: “to be successful under s 64(4) the employee has to show firstly unilateral changes were effected on their terms and conditions of employment contract and secondly that there was no consent to the unilateral changes.” … variation to an employee’s salary… amounts to a change in terms and conditions of employment and cannot be affected unilaterally. Salary is a quid pro quo to work rendered.
The court, in this case, found that the reduction in salaries was a change to the basic conditions of employment. The court further found that the fact that the company gave an undertaking to apply for TERS benefits for the short pay was insufficient to support the applicant’s submissions that it had complied with section 64(4) since the employer was unwilling to cover the shortfall should the TERS application fail, or payments be insufficient to make up 100% of the employee’s salary. The court dismissed the employer’s application to interdict the strike action.
We can see how serious the issue of changes to basic terms and conditions of employment can be. Employers are encouraged to engage employees and their unions effectively and to bargain in good faith. It should be explained to employees and unions why changes are necessary and to try by all means to mitigate the impact certain changes may have on employees. Any changes to basic conditions of employment should be negotiated and agreed upon in writing before they are implemented.
Article by: Tenielle Meth
Dispute Resolution Official – Pretoria