Everything you need to know about a unilateral modification clause
There may be reasons for you as an employer to unilaterally amend certain terms and conditions of employment if you are unable to reach an agreement with the employee(s). For example, to adjust the travel allowance because employees are working from home more often since the corona crisis. Then a ‘unilateral change clause’ from the employment contract can offer a solution
In principle, employers cannot simply change terms of employment unilaterally. After all, there is an agreement and both parties must respect the arrangements therein.
However, under circumstances, the employer must also be able to unilaterally amend the contractual agreements with an individual employee, in order to meet the interests of the collective of employees (e.g. the survival of the organisation). A unilateral modification clause can help the employer do this.
What is the unilateral modification clause
The unilateral modification clause allows the employer to make changes to the employment contract (in the future) without the further consent of the employee. Because the employer can easily include a unilateral modification clause in the employment contract and obtain the required consent of the employee upon commencement of employment to do so, the legislator set strict conditions for the use of this clause.
The employer can invoke a unilateral amendment clause if he has such a strong interest in the amendment that the employee’s interest, which will be harmed by the amendment, must give way to it according to reasonableness and fairness.
When may the employer unilaterally modify the employment contract?
Whether these conditions can be met depends very much on the factual circumstances of the case. As a starting point, if the works council (OR) agrees to a collective change in the employment conditions package, the employer’s overriding interest is deemed to be present. Does your organisation not have a works council? Then the assessment must be made whether the interests of the employee must reasonably give way to the interests of the employer.
Possibilities without unilateral change clause
If the employment contract does not provide for a unilateral amendment clause, it is only possible to unilaterally amend employment contracts by invoking the general standards of good employee conduct (Article 7:611 of the Civil Code).
Double test of reasonableness
However, the Supreme Court ruled in the so-called ‘Mammoet judgment’ that, when testing against Section 7:611 of the Civil Code, not only what can reasonably be expected of the employee in such a situation should be considered. The question of whether, given the situation, a good employer could have found reason to make a proposal to change the terms of employment should be considered first. It must then be assessed whether the proposal is reasonable, taking into account all the circumstances of the case.
This ‘double reasonableness test’ must be applied for each individual employee, which is particularly cumbersome if an employer wants to implement a collective change in the terms of employment. A unilateral change clause can then offer a solution, especially if the weighty interest of the employer appears to be present, because the works council has agreed to the collective change of the employment conditions package.
Therefore, check whether your employment contracts provide for a unilateral changes clause. Such a clause allows you to more easily realise unilateral collective changes to the employment conditions package, for instance in case of a change in the law or if business economic circumstances give reason to do so.
More information or advice on unilateral change clause ?
Want to know whether you can unilaterally change employment conditions, with or without a unilateral change clause? Contact Richard Ouwerling, lawyer at LVH Advocaten in Rotterdam for more information.
