Unilateral amendment clause not specified in employment contract

Year of publication

2011


Edition number

194


Reference

Supreme Court March 18th, 2011, www.rechtspraak.nl, ljn: BO9570


Decision

In 2000, a major publisher buys out another major publisher. The acquired company has known a profit sharing arrangement since 1997 in which 12.5% of the operating profit is distributed among the employees. In the profit-sharing arrangement it says that it has been established in consultation with the workers council and that amendment is possible with the consent of the workers council. In 2000 the council approves an amendment so that the profit sharing arrangement for employees of the acquired publishing company will become an annual fixed rate of 12.5%. Apparently this implied that 12.5% of the salary will be paid. Addi-tionally it is agreed that the profit-sharing arrangement will be renegotiated with the workers council in case of such deterioration that drastic reorganization is inevitable. When as from 2000 the company shows poor operating results, the workers council agrees late 2002 that from now on employees of the acquired company will receive a basic allowance of 8.3% (thirteenth month) plus a supplementary benefit up to 12.5% depending on the operating result.

Some employees of the acquired publishing company cannot support the agreement and say that it is a matter of unilateral change in working conditions whereas there is no unilateral amendment clause in their employment contract. Therefore the employer would not have the authority to unilaterally change their working conditions. In the end it is the Supreme Court who has to judge on this question. It judges that for validity of a unilateral amendment clause the law requires a written agreement and that this requirement is met, because it is included in the profit sharing arrangement. The Law does not require that the unilateral amendment clause is also recorded in the contract itself. It is sufficient that the contract refers to the profit-sharing, thus making the profit-sharing arrangement part of the employment contract. Protection of the employees, according to the Supreme Court, is sufficiently guaranteed by the requirements set by law on the application of a unilateral amendment clause by the employer and also because the workers council has to approve an amendment.


Comments

The Supreme Court’s judgment does not fully clarify if it is sufficient for an employer who creates a rule laying down the conditions of employment, and who wants to reserve the authority to unilaterally amend the rule, to state so in the rule. In any case the Supreme Court requires that the employment conditions agreement becomes part of the employment contract, since the contract refers to the agreement. If it is also required that, as was the case here, that the workers council needs to approve the amendment is not clear either.



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