It is common for employers to seek to change the terms of their employees’ contracts for varying reasons and it is not illegal to do so. However, in the event of a change to the essential terms of an existing employment contract, the employer must consult with the employee.
Section 10 (5) of the Employment Act states that “Where any matter stipulated in subsection (1) 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.”
Section 13 of the Employment Act on the other hand provides the guiding principles for the variation of contracts which can be summarized as follows;
- An employer who wishes to vary the terms of an employment contract must give the employee one month’s notice of such intention in writing.
- The employer must engage in consultation with the employees.
- After such consultation, the employer may revise the contract to reflect the variation and should again notify the employee of the said changes in writing.
- The employee must consent to the variation. Consent may be inferred or expressed. If the consent is express, it must be in writing.
- Consent may be inferred from other contractual materials such as collective bargaining agreement, or flexibility clause in the contract giving the employer the power to unilateral variation.
The court interpreted Sections 10 and 13 of the Employment Act in the case of Elizabeth Kwamboka Khaemba v Bog Cardinal Otunga High School Mosocho & 2 others [2014] eKLR
The claimant, Ms. Elizabeth Kwamboka was hired by the respondent as a cateress to carry out the following duties; preparation of budget estimates for foodstuffs and other kitchen requirements, preparation of the menu for students, supervision and guidance of all kitchen staff, preparing and serving meals during school functions. However, the employer varied their job description to include cleaning boarding areas without consulting her about the change. When the claimant refused to carry out the new duties she was terminated.
The court in making a determination held that, the key position is that the employer cannot alter the employee’s employment contract without consulting the employee. The wording of Sections 10 and 13 of the Employment Act is couched in mandatory terms an indication that the employer cannot unilaterally revise the contract unless there is consultation. In the current case, there was no consultation and the decision to change the duties and position of the claimant was made unilaterally. The court found that the end result of changing the claimant’s contract without consultation was tantamount to terminating the existing contract and therefore amounted to an unfair and unjustified termination.”.
Similarly, the court in the case of Ibrahim Kamasi Amoni v Kenital Solar Limited [2018] eKLR, agreed with the claimant that the reduction of his salary was unilateral. The court stated that for a reduction to be valid, an employer must obtain the approval of the employee by communicating the reduction in writing. The court also pointed out that salary is a fundamental term of employment whose reduction hurts the employee’s livelihood and should not be done unilaterally or arbitrarily by an employer.
Typically, no issues arise when the changes relate to promotion or betterment of an employment contract. Problems and disputes arise when such variations are to reduce employees’ benefits. In cases where such changes are unfavorable to the employee, the employer must not only engage in consultation but also seek to obtain written consent from the employee to prevent potential legal action. Failure to follow the proper legal steps may result in a constructive dismissal scenario.
Constructive dismissal arises where the employer in the absence of any justifiable reasons for dismissal, proceeds to create an environment where the employee reasonably believes that the employer no longer wishes to be bound by the terms of the employment contract.
It’s however not enough for the employee to claim constructive dismissal, the employee must prove that (1) He or she resigned as a result of the changes;(2) the changes were unilaterally made without consultation; (3) the situation was so intolerable that the employee was left with no option but to resign; and (4) that the employee reasonably believed that the employer would not abandon the pattern of creating a toxic working environment.
Conclusion
Taking all the above into consideration, the employer is expected to consult with the employee whenever they intend to make a fundamental change in their employment contract. However, it should be noted that not every change in the contract needs consultation with the employee for example changes brought about by technology and variation of work methods do not necessarily mean variation in the contract. Employees have an obligation to adapt to new changes of better methods of work.
Where a trade union is involved, the employer would need to take into consideration the terms of the Recognition Agreement and Collective Bargaining Agreement which will outline the procedure for changing the terms of employment.
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Disclaimer
This article is for informational purposes only and should not be construed as legal advice.
