VARIATION OF CONTRACT OF EMPLOYMENT

By Stephine Opiyo Obong’o (pictured) – [PHOTO COURTESY]

The employment environment has significantly changed due to the Covid-19 pandemic. It is evident that many organizations are facing operational challenges and as such some have reduced their scales of operation; others have temporarily shut down while others are struggling with the impact albeit with escalated challenges. These scenarios are bound to affect employment relationships significantly. Even though there is a clear framework which guide employment relationships in the form of regulations. Employers may find such regulations  including :  the International Labour Organization (ILO) conventions and recommendations, the Constitution, various labour laws, collective bargaining agreements (CBA), employer policies and procedures, employment contracts, organizational best practices among others difficult to  implement fully. This exposes employers as well as employees.

The big question is how employers and employees can navigate these challenges and ensure a win-win platform post Covid-19. The reality is that strict adherence to the regulatory provision may not be tenable to a number of organizations. Unless it is dealt with utmost reasoning, employment relations may be materially damaged. These times present the greatest need for dialogue, employee involvement and engagement as the only possible solutions. Why is this important? Employees must recognize that even though the employers are bound by the regulations stated above, in the event of dispute, the court will consider a number of factors key among them  being  the rule of natural justice and secondly capacity of the employer. This leaves the employee with one key card at their disposal – to be reasonable in their demands during and post Covid-19 especially with regard to its impact on businesses.

What is the unfortunate or fortunate card at the disposal of the employers?  They must act reasonably with the employees, apply the rule of natural justice, engage employees as much as possible and consult with them on material changes that are likely to affect them and as far as possible explore all avenues to protect their employees. Where employees materially disregard and it is reasonable, the employer may have no option but to initiate separation.

However, where the employer and the employee have reasonably agreed to work together, the employer should be guided by the following provisions to ensure that the variations are backed by law.

Changes in the employment contract – variations: Generally, changes are made on the original contract of employment from time to time. There is always no issue when the changes relate to promotion or betterment of the contract. Problems and disputes arise when such variations are to reduce employees’ benefits. Employment Act 2007 Sec. 13 provides guiding principles on variation of contracts. The guiding principles in contract variation are:

1. To be effective, the change must be notified to the employee and he or she must consent to it.
2. Consent may be inferred or express. If express, it must be in writing.
3. 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.
4. The unilateral variation by one party to the other on a material change will not amount to variation in the absence of an agreement.

Variation may be on some part and the other may remain intact. A clause such as – all other conditions remain unchanged- may be added. To ensure optimal value:

1. All variation must be agreed by both parties.
2. A variation that is relevant is that which changes a contractual provision / obligation to a non-contractual obligation. If the obligation is not a contractual obligation, the employer is under no commitment.
3. The employer may revise the contract to reflect the variation and notify the employee in writing. This must be done after consultation with the employee.
4. Any variation must not fundamentally change the contract; otherwise it will be construed to be a new contract.
5. Where the employee notices a variation in which he has not been consulted but does not do anything and continues to work, it does not amount to consent if the employer did not involve the employee. Where an employee is in complete disagreement, he can resign and allege constructive dismissal/termination.

It should be noted that 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.

The writer is a CPA – K and CHRP(K). He holds an MBA, BBA 1^st Class Hons. HDHRM, BD ; currently undertaking doctoral studies at UON.

He is a lead consultant (HR & Finance) at Capman Consultancy.

Email: soobongo@capmanconsultancy.co.ke