Terms and conditions of employment

The terms and conditions under which a person is employed are generally recorded in the form of an employment contract. However, two other documents also regulate certain terms and conditions of employment: an in-house set of company regulations and a collective agreement. We are often asked whether it is possible to amend terms and conditions of employments and, if so, how.

Terms and conditions of employment

Terms and conditions of employment fall into two basic categories: pay and fringe benefits. Pay is the main condition of employment. The term ‘fringe benefits’ (or secondary terms of employment) covers things like holiday entitlements, bonus payments and pension rights.

Although an employee’s terms and conditions of employment are generally decided by a process of individual negotiation, the employment contract may also be subject to the terms of a collective agreement for the industry in question (known in Dutch as a CAO).

There are various ways in which the parties can be bound by the terms of a collective agreement. For example, the employer and/or the employee may be a member of a contracting party, the employer and the employee may include a provision in the contract of employment stating that it is covered by a collective agreement, or the company in question may be covered by a special order (known in Dutch as an AVV) extending the applicability of a collective agreement to an entire industry.

As far as most collective agreements are concerned, it is possible to disregard their terms only if this works in the employee’s favour. In other words, derogations (i.e. varying conditions) that work to the employee’s detriment are null and void.

Adjust terms and conditions of employment

We are regularly asked whether it is possible for an employer or an employee to adjust the terms and conditions of employment unilaterally, for example in order to standardise the terms and conditions applying to all members of staff in the wake of a merger or because an employee is forced by certain circumstances to reduce the number of his or her working hours.

Whether this is possible depends on various factors, such as any prior arrangements that have been made about amending the terms and conditions of employment, the reason for the change and the specific terms and conditions involved.

If the employment contract contains a ‘unilateral amendment clause’, the employer is entitled to amend the terms and conditions of employment unilaterally (that is, without the employee’s consent) if the company’s interests are so important as to ‘reasonably’ outweigh those of the employee.

If the employment contract does not contain this type of clause, however, the employee is in principle required to give his or her consent to any change in the terms and conditions of employment. In certain circumstances, this consent may reasonably be expected to be forthcoming, for example if the company’s situation has changed such as to necessitate the proposed change and also if the proposed change is reasonable in the light of the situation.

In short, irrespective of whether the contract contains a unilateral amendment clause, in practice the decision as to whether the employer’s proposal is fair in the light of the particular circumstances is taken on a case-by-case basis. One of the main considerations is often whether or not the proposal contains some sort of transitional or phasing-out arrangement. The fairer the proposal, the less likely it is that the employee will be able to contest it.

Why should you contact our emplyment law lawyers?

We can answer all your questions about terms and conditions of employment. Whether you’re interested in finding out whether your company is subject to a collective agreement, whether your employer is observing the terms of the relevant collective agreement, or whether your employer can freely alter certain terms and conditions of employment, we will be pleased to help.