The unilateral change of the terms and conditions of employment
Recently, the Supreme Court ruled on the balancing of interests that must be made in case an employer wishes to unilaterally change the terms and conditions of employment.
This blog first discusses the doctrine on unilateral change of the terms and conditions of employment and then the consequences of the Supreme Court ruling on this doctrine.
The change of the terms and conditions of employment in general
There are three ways to change the terms and conditions of employment. The starting point is that the change requires the employee’s consent. In cases, however, an employer can also make an unilateral change to the terms and conditions of employment if the employer has made a reasonable proposal to the employee and this proposal cannot be refused by the employee according to the standards of reasonableness and fairness. A third option is that the employer makes use of an unilateral changes clause (eenzijdig wijzigingsbeding) if the employee and employer agreed upon such clause in writing.
The unilateral changes clause
The use of an unilateral changes clause is subject to two conditions as reflected in Article 7:613 of the Dutch Civil Code: (i) the unilateral changes clause must be agreed upon in writing, and (ii) the employer must have such a substantial interest in the change that this interest outweighs the interests of the employee in accordance with the standards of reasonableness and fairness.
Approaches in case law and literature
Two approaches to the unilateral changes clause can be distinguished in literature and case law. On the one hand, the approach is followed that the substantial interest of the employer must be determined in absolute terms (also called the absolute approach). On the other hand, the approach is followed that the substantial interest of the employer should only be assessed in relative terms (also called the relative approach). But what do these approaches actually mean?
In the absolute approach, two conditions must be met before the employer can unilaterally change the terms and conditions of employment:
(i) the employer must have an independent and substantial interest in changing the terms and conditions of employment; and
(ii) the employer must have such an interest in the change that this outweighs the interests of the employee in accordance with the standards of reasonableness and fairness.
This is different in the relative approach. In the relative approach, the substantial interest of the employer must be compared with the interests of the employee affected by the change. It is therefore not necessary to first determine whether or not the employer has a substantial interest.
Judgement of the Supreme Court of 29 November 2019
On November 29, 2019 (ECLI:NL:HR:2019:1869) the Supreme Court gave an answer to the question which approach is leading. In the case that preceded, the parties were divided as to whether the employer could unilaterally decide that the pension premiums were no longer entirely for the account of the employer, but also partly for the account of the employees.
Court of appeal The Hague (Court)
The Court ruled that the employer had no substantial interest in changing the distribution of contributions. The Court therefore stated that no balancing of interests had to be made, since there has not been any evidence of the existence of a substantial interest on the part of the employer. The Court thus follows the absolute approach.
The Supreme Court does not agree with the Court on that point and considers that the application of Article 7:613 of the Dutch Civil Code concerns a weighing of interests whereby the terms and conditions of employment can only be unilaterally changed to the disadvantage of the employee if a substantial interest on the part of the employer justifies this. In this approach, the weight of the interests of the employer is partly determined by the weight of the opposed interests of the employee.
The Supreme Court ruled that the relative approach is leading. In our view, the judgement of the Supreme Court is logical, since an approach other than the relative approach can lead to the situation that the employer is not able to make any changes in the terms and conditions of employments, without the employee’s consent, even if the changes itself would only affect the employee’s minor interests.
Soon an article will be published in which my colleague Laurie Kuijpers and I will elaborate on the judgement cited in this blog and the influence of this judgement on the doctrine of unilateral changes to the terms and conditions of employment.