What can employer change unilaterally in a work relationship?

In an employment relationship, an employee works under the management and supervision of the employer. When entering an employment relationship, you should also enter into a contract of employment that defines the terms and conditions of employment in more detail. An oral agreement is also valid, but it leaves the burden of proof on whichever party wishes to state something on the basis of the agreement in any given instance. However, the employer must present the central terms of employment in writing. The collective agreement also plays a crucial role regarding the terms of employment, so it should be mentioned in the contract of employment. Some sectors do not have a binding collective agreement in place, which means that the contract of employment will have to present its terms in more detail.

Sometimes an employment relationship changes over time. One's employment relationship can be changed by joint agreement in many cases. However, the scope of changes that can be done unilaterally is much narrower. The often cited term here is the employer's right to direct the work, which means that the employee must adhere to the employer's instructions and commands. It is not always clear which things fall under this right and which do not.

As a rule in labour law, neither party to an agreement may alter an essential term of the agreement without consent from the other party. However, in employment relationships with the possibility of termination, termination of the agreement is sometimes used not to actually end the employment relationship, but as a means to change the existing agreement through negotiations either by altering the existing agreement or creating a new one.

As a rule in labour law, neither party to an agreement may alter an essential term of the agreement without consent from the other party.

If a company that employs over 20 employees is facing economic challenges or there is a need for the reorganisation of work, the company must enter into cooperation negotiations. After these negotiations the company can state that the amount of work has been reduced and that employees might have to be terminated or furloughed. In such an instance the company is obliged to look for reallocation and training opportunities for these employees and see if they could be moved to new positions. This must be done prior to termination.

The new position may come with new terms of employment

The new position can be completely different than the last and have completely different employment terms. If the employee accepts their new position, its terms will enter into effect after the period of notice adhered to by the employer has passed.

So if an employee has a period of notice of 4 months, for example, and they are offered a new position after cooperation negotiations, the new employment terms would enter into effect after this 4 month period of notice has passed.

In some instances it can be agreed that the new job begins before this period of notice has passed, but even in these cases you should still agree that the new terms of employment only enter into effect once the period of notice has passed. Here an offer of new work means a specific and concrete job offer that contains adequate information on the work tasks and makes the employment terms understandable to the employee.

If an employee does not accept the new position in a situation where cooperation negotiations are ongoing and the amount of work has been reduced, the employment relationship can be terminated. In such an event the employment relationship remains in effect as it is until the contract of employment ends. When an employee is terminated for production-related or financial reasons, the employer is also bound by an obligation to rehire the employee if the situation improves.

Salary is an essential term

Essential terms in an employment relationship include salary and the primary job description. In practice, a person's salary cannot be touched without grounds for termination. When salary cuts are justified on collective grounds, it also requires that other reorganisation efforts are taking place and that the salary cuts are necessary to improve the company's operational conditions.

Performance bonus systems have been considered to fall within the employer's right to direct the work, especially in instances where the company has reserved the right to change the system on an annual basis, for example. In the Supreme Court case KKO 2010:93, the company in question had also refused to include their performance bonus system in the employment contract. Even though it is possible to change the terms of these systems, the entire system can only be discarded if it has been said or intended to be temporary. The terms of the performance bonus system can require, for example, that the employment relationship is in effect on the date when the bonus is paid.

The job description should be defined precisely in the contract so that both parties know which tasks the employee is committing to undertaking.

Job tasks are also essential content of the employment relationship. The looser the job description on the employment contract, the more the employer has room to alter the nature of the work. For this reason, the job description should be defined precisely in the contract so that both parties know which tasks the employee is committing to undertaking. Employment contracts often contain a clause that states that the employee's job tasks also include other tasks designated by the employer. Here the contract could emphasise the temporary nature of such work tasks, that the employee would be performing these other tasks only on a temporary basis, which would remove the opportunity for unilaterally changing one's job description.

Place of work is also negotiable

There are some cases where the place of one's work has been changed. In the event that the place of work is specifically defined in the employment contract, changing it has been deemed to require grounds for termination even if the change would not cause one's commute to grow longer.

Legal praxis has also highlighted the fact that terms that have been specifically agreed upon must be considered essential. The necessity of the change also bears meaning. For example, in one instance an employee's place of work could not be changed because it would have increased the employee's daily commute by 100 kilometres (TT:1989-9).

The crucial thing about these changes that fall outside of the employer's right to direct the work is that they may be made possible by an existing justification for termination.

The essential terms of an employment relationship may also become established as time goes by even without a written agreement, but the clearest and simplest way to proceed is to come to a written agreement about the essential terms beforehand. This way both parties know what the rules are.

The author works at TEK as an employment lawyer.