Employment terms are being forced to change!
As businesses continue to suffer broadening and unforeseen interruptions to their operations due to the COVID-19 crisis, we have received many, seemingly complex (and often interrelated) questions as employers explore their business survival options due to financial challenges.
70% of the recommended contingency measures currently being explored by most employers, in one way or the other, involve change or variation of employment terms. These include;
- Implementing salary cuts / half pay
- Pay for piece work
- Withdrawal of benefits
- Sending staff on unpaid leave
- Change of working hours
- Transfers and relocation
While these measures are good for business sustainability, they are in most cases, neither covered in employment contracts or company policy. These are but knee jerk reactive measures being introduced to mitigate the impact of business disruption as a result of the COVID-19 pandemic.
Despite the obvious circumstances that genuinely necessitate employers to revise employment terms, whether temporarily or permanently, employers MUST be mindful of the legal framework on fair labour practices in accordance with Article 41 of the Constitution of Kenya and The Employment Act, 2007.
- For variation of employment contracts to be lawful, there should be mutual agreement between the employer and employee (or if their representatives where there is organized labour).
- Unilateral variation of the employment contract without consent of the employee would be unlawful and amounts to a breach of contract or repudiation.
- An employee’s consent can be express or implied e.g. From conduct such as continuing to work without protest after revised terms.
Some of our frequently asked questions include;
How should an employer legally change employment contract terms e.g. effecting half pay ?
Under S.10 (5) of the Employment Act 2007, the laws of Kenya, where any particulars of the employment contract change, the employer shall, in consultation with the employee, revise the contract to reflect the change and notify the employee of the change in writing.
Consent should be willful and free from vitiating factors such as duress, misrepresentation, undue influence or illegality.
We recommend the following steps (subject to case-by-case circumstances);
- Clearly communicate the impact of COVID-19 to the business(not all businesses have been impacted the same).
- Communicate the extent and scope of the intended change e.g. 50% pay cut for all staff in job grade E and above for the next X months.
- Consult and negotiate with the affected staff either individually or through their group representatives. (consider virtual meeting platforms and e-correspondence).
- Do individual staff notification on the intended change with an consent/acceptance clause for the staff to sign.
- Implement the change. (For permanent change, amend the employment contract).
How can we ensure that consultations are ‘proper’ when our staff are currently working from home?
The employer should ensure that the proposed change is clearly explained and understood by the employee. There needs to be room for discussion, negotiation and feedback as much as possible and the employer should take into consideration the views and opinions of the employee.
Where necessary, in complex cases, employers can engage experts such as employment lawyers to explain to staff the impact of the proposed change.
Also, many companies are now revising their communication policies to align with staff working from home and embracing social media and virtual meeting platforms.
What if staff do not consent to the proposed change of terms?
Without mutual agreement, neither party can lawfully vary the terms of employment. The employer must consider other alternatives.
(*With exception to variations made in compliance with the law and government directives).
We issued a circular to all staff notifying them that due to financial challenges, we shall be effecting half pay in the coming months. Is this in order?
No! Instead of communicating a final decision, propose the change to the staff in writing and with their consent implement the change. Otherwise, you risk unlawfully withholding staff salaries.
Are the changed terms permanent or temporary?
Currently, most of the variations in employment terms are contingency measures taken to reduce the effect of business disruption is a result of COVID-19 and are therefore temporary in nature. Parties should therefore revert to the old terms once the business rebounds. This should be well understood and agreed.
However, if the change is permanent, both parties must agree and amend the employment contract accordingly.
What options do employees have when an employer tries to impose a unilateral variation of employment contract terms?
Depending on the nature of the proposed change, employees have the following choices;
- Agreed to the variation(either expressly or by continuing to work without protest).
- Resigning and complain for an unfair constructive dismissal.
- Refuse to work under the new terms and force the employer to take such steps as it thinks appropriate.
- To stand and sue, i.e. Continue working under protest and seek damages.
In the prevailing circumstances both employers and employees must be reasonable and understanding of each other. Proposed changes should be fair, human and aimed at preserving the employment relationship.
This post is meant for information purposes and should not be misunderstood as legal advice. For queries, clarifications or legal advice, please contact Elizabeth Koki , our managing partner, at firstname.lastname@example.org or email email@example.com to get in touch with any of our employment lawyers.