One of the rights afforded to an employer in connection with an employment contract concluded with an employee, which may be particularly useful in the era of a pandemic, is the possibility of changing the terms contained in that contract. An employer can do this by means of a contract addendum (amending agreement) or an amending termination notice. How do these documents differ and what do they mean for the employee?
💡 Key takeaways
- An annex to an employment contract (amending agreement) requires mutual, voluntary consent. The employee is not obliged to accept it, and its rejection does not terminate the contract prematurely.
- A notice of variation is a unilateral decision by the employer to change the terms of employment (e.g. a pay cut or reduction in hours). If the employee rejects these terms, the employment contract will be terminated.
- If the notice of change does not contain the required information about the deadline for refusal, the employee has until the end of the notice period to submit a declaration of refusal.
- An employer may temporarily assign an employee to different work (for a period of up to 3 months per year) without a notice of change, provided it corresponds to the employee's qualifications and does not result in a reduction of their remuneration.
A detrimental notice is a tool that has become increasingly popular due to the current crisis situation. It does not necessarily imply bad faith – often, a pay cut is the only way to avoid mass redundancies and company collapse.
Annex to the employment contract and notice of termination with changes
Appendix to the employment contract (Amending agreement)
The tools available to an employer include presenting the employee with a proposal to enter into an amending agreement or an annex to the employment contract (these concepts are identical!). The advantage of this solution is that its adoption requires the employee's voluntary consent. Consequently, the employee may not agree to the new terms. Legally, there is no risk of immediate dismissal from work for this, however, the employee must be aware that refusal may provoke the employer to issue a definitive termination notice in the future.
Amending notice
It is different with the second tool – amending noticeLack of employee agreement to the terms proposed in a notice of change results in the complete termination of the employment contract on the stipulated date. The employment contract is the fundamental document defining the terms of employment and pay (e.g. working hours, place of work, remuneration).
Rules for using a notice of contract variation – a real-life example
In accordance with the Labour Code, if an employee does not submit a statement refusing the proposed terms before half of the notice period has elapsed, it is considered that they have agreed to them. The employer's letter should contain appropriate instructions. In the absence of such instructions, the employee may submit a statement of refusal until the end of the notice period.
Example: A business owner who runs shops in shopping centres had to close their physical stores during lockdown and moved their operations online. To avoid redundancies, they issued their employees (who worked full-time) with amended contracts, reducing their working hours to half-time with a proportional decrease in salary and changing the nature of their work to handling the online store. Employees with a one-month notice period, who received the letter on 31st October (without the required notification!), can submit a statement of refusal up until 30th November. If they do so, their employment contract will be terminated on 30th November.
Assigning other work (without changing the contract)
Amending notice not required In the event of being assigned work other than that specified in the contract, if the following conditions are met:
- This is justified by the employer's needs,
- The entrustment is temporary (does not exceed 3 months in a calendar year),
- does not cause a reduction in salary,
- meets the employee's qualifications
Wage reduction and job protection
Financial crises (e.g., caused by a pandemic or a ban on operations in the transport or catering industries) often force companies to look for savings. Employers propose a proportional reduction in working hours and salary (e.g., from full-time to 3/4-time) or, in more difficult cases, a reduction in salary itself while maintaining the existing workload.
it with the relevant authorities. legal advisorwhich will assess the employer's intentions and the security of the documents.
Which is more advantageous: termination or agreement?
For an employee, it is usually better to amending agreement (addendum) – leaves room for negotiation and shows that the employer wants to avoid terminating the contract. In contrast, a dismissal with changes to the terms of employment is an "offer at knifepoint" – disagreement results in dismissal. When faced with a dismissal with changes to the terms of employment, one should consider whether it is better to agree to slightly worse conditions, thereby protecting the company and keeping one's job, or to reject the offer and look for a new position.