What is an amending agreement and an annex to an employment contract, and how does an amending notice differ from them?

Employment contract agreement and annex
Piotr Kłodziński|
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What is an amending agreement and an annex to an employment contract and how does an amending notice differ from them?

 

An annex to the contract of employment

The tools available to the employer include, for example, presenting the employee with a proposal to conclude a contract an amending agreement or an annex to the employment contract (these are the same concepts!). It is simply a proposal from the employer to change the conditions agreed by the parties in the employment contract. The employee does not have to accept such an offer and there is no legal rigor in this respect. Whether or not he signs such a document depends on the individual assessment of the Employee, who alone (or with a lawyer) should assess what is beneficial for him.

The advantage (but also a disadvantage for the employer) of submitting a proposal to conclude an annex or amending agreement is the fact that its acceptance requires the employee's voluntary consent. An agreement - as the name suggests - is an expression of the unanimous will of the two parties who concluded the contract. As a result, the employee may not agree to the new working and pay conditions specified by the employer. It should also be remembered that, of course, the employee has such a right, but it is up to the employee to assess in advance what the consequences will be of his refusal to accept the terms proposed (amicably) by the employer.

Amending notice

The situation is different with the second tool that can be used by the employer to change the employee's employment conditions - which is amending notice. While the above-mentioned the amending agreement requires the employee's consent, however, the employee's lack of consent to the terms proposed in the amending notice results in complete termination of the employment contract within the time and manner provided for therein. The institution of amending notice is regulated directly in the Labor Code.

As we know, every employment contract contains certain mandatory elements which (apart from the obvious elements such as the parties to the contract, the type of contract or the date of its conclusion), generally speaking, refer to the definition of working conditions and pay, i.e.:

  • type of work;
  • place of work;
  • remuneration for work corresponding to the type of work, with an indication of the remuneration components;
  • working hours;
  • start date of work.

At the same time, in terms of details regarding the type of work performed (especially in larger companies), the provisions of the contract often refer to the internal regulations of a given workplace (such as company work regulations). However, the amount of remuneration and work hours should result directly from its content. The contract is therefore the basic document on the basis of which we perform work. Its provisions should clearly indicate:

  • the nature of the work we will be obliged to provide - taking into account its size (e.g. full-time, ½-time, etc.) and
  • the remuneration we are entitled to expect after properly performing our professional duties.

As we know, recently unexpected and sudden situations have occurred very often and can quickly change the situation in mutual relations, regardless of the quality of mutual cooperation. These include, of course, the situation (which many companies are currently struggling with) of the company's worse financial condition caused by the spread of the epidemic, fear and both legal and factual restrictions.

One of the rights of an employer in connection with an employment contract concluded with an employee, which may be particularly used during the pandemic, is the possibility of changing the conditions contained in this contract using a "tool" called amending notice. This involves (in simple terms) changing the working and pay conditions, failure to accept which by the employee results in the termination of the employment contract.

The rules for applying the institution of amending notice are regulated in the Labor Code, so you should refer to the applicable provisions. According to them, if the employee refuses to accept the proposed working or remuneration conditions, the employment contract is terminated upon the expiry of the notice period. At the same time, if the employee does not submit a declaration of refusal to accept the proposed terms and conditions before the expiry of half of the notice period, he or she is deemed to have agreed to these terms and conditions. The employer's letter terminating working or pay conditions should include instructions on this matter. In the absence of such instruction, the employee may submit a declaration of refusal to accept the proposed conditions by the end of the notice period.

For example: Jan Kowalski runs a business in which he sells women's shoes in 3 locations in 3 neighboring towns (these are 3 small boutiques in local small shopping malls). In each of the boutiques he employed 2 people dealing with customer service. Due to the current pandemic and the forced closure of shopping malls, he decided to start an online business and opened an online store. He was satisfied with his staff and (hoping to improve the entire situation) did not want to completely break off cooperation with them, but leaving the matter unchanged would have a negative impact on his (already not the best) financial situation. So he decided to change the terms of the contract, reducing his employees' working hours by half (everyone was employed full-time, so they would work half-time) and thus their remuneration was also to be halved. At the same time, the nature of the work was to change, because it included the above-mentioned employees would provide service and support in running the online store. The difficult situation meant that Jan Kowalski did not have time or opportunity for negotiations, so he handed his employees notices of change in which he specified changes in working and remuneration conditions on the terms presented above. Each employee was legally entitled to one month's notice. The amending notice was prepared in writing and handed to the employees on October 31; at the same time, it did not contain the instruction that if the employee does not submit a declaration of refusal to accept the proposed conditions before the expiry of half the notice period, he is deemed to have agreed to these conditions. 

Due to the above, the notice period for each of the above-mentioned employees ends on November 30 and by that date they have the right to submit a declaration of refusal to accept the terms proposed by the employer (if the above-mentioned notice included the instruction referred to in the regulations, employees could submit such a declaration by November 15; after that date the employer would have the right to assume that they agree to the proposed terms). At the same time, submitting the above-mentioned a declaration of refusal to accept the new conditions would result in the employment contract being terminated on November 30.

Pursuant to the regulations, notice of the current working or remuneration conditions is not required if the employee is entrusted, in cases justified by the employer's needs, with work other than that specified in the employment contract for a period not exceeding 3 months in a calendar year, if this does not result in a reduction in remuneration and corresponds to the qualifications. worker's.

For example: Online business of the above. Jana Kowalski is doing very well, and as a result, the company's financial situation is in better condition despite the closure of stationary stores. Due to the above, it does not intend to reduce the remuneration of its employees, but only due to the inability to run its business in stationary mode and switch to the "virtual" mode, it plans to temporarily (i.e. for the period of forced closure of shopping malls) change the nature of the services provided by these employees. work. Namely, instead of providing work involving customer service in stationary stores, they will, for this period (though no longer than three months in a calendar year), deal with the operation of the online store (including: operating the company's website, fulfilling orders and shipping them, cooperation with courier companies, complaint handling, etc.). 

In the above case, the employer is not obliged to provide employees with an amending notice if:

  • the change results from its justified needs (the need to change the way the company operates as a result of external circumstances - e.g. the current pandemic);
  • is temporary and does not exceed a period of 3 months in a calendar year;
  • does not result in a reduction in remuneration and corresponds to the employee's qualifications.

Until all of the above. conditions are met, the employer does not have to use the institution of amending notice or conclude an annex to the employment contract.

A circumstance such as a change in working conditions and pay for a longer period of time may be "formalized" by proposing an annex to the employment contract or an amending agreement (mentioned above). Of course, in any case, the employee may not agree to the proposed changes. However, then the employer may (forced by the situation) hand it to him termination of the employment contract or if he still sees hope for an agreement and further harmonious cooperation - an amending notice, which in the event of refusal to accept its terms - has the effects typical of a typical notice of termination, i.e. ends with the termination of the employment contract.

Salary reduction

For example: ABC, a company providing coach transport services throughout Poland, is beginning to suffer large financial losses due to the epidemic situation in the country. The company notes a significant reduction in public interest in using the services it provides - both for interregional travel (due to the closure of e.g. the hotel industry) and for travel to and from work (a significant portion of existing passengers work remotely from home or choose transport by their own car from security reasons). Therefore, in order to generate savings, ABC plans to reduce the number of trips and, consequently, reduce the workload of drivers. So he decides to propose to his employees a change in working conditions and pay by:

  • reducing the amount of work they have performed so far by ¼ and (consequently) 
  • reduction by ¼ of the current remuneration.

In the above example, people who were employed full-time would be employed ¾-time, and people employed ½-time would be employed ¼-time.

Of course, the above situation is an example of an offer based on the employer's good will and, logically speaking, a fair approach - a reduction in the amount of work performed and, therefore, a proportional reduction in remuneration. 

In other cases, however, there may be situations in which the intention is simply to reduce remuneration, without any resulting reduction in work hours. Employees will therefore be offered the opportunity to work in the same way as before, but for less pay. The nature of the amending agreement may vary and does not have to take into account the above. aspects. It may concern:

  • the amount of remuneration the employee will receive;
  • working time or part-time;
  • the type of position the employee is employed in;
  • place of work or official position;
  • Other changes are also possible, such as a longer severance pay period or a greater number of vacation days, but, as a rule, they should be more beneficial to the employee than stipulated in the provisions of the Labor Code.

Amending notice (or its milder form in the form of a proposal to conclude an annex or an amending agreement) is a tool that, due to the current reality, has become increasingly popular among employers. It does not have to mean ill will towards a specific employee or employees. Often, a notice of change, e.g. reducing the employee's remuneration, may constitute the existence of a given employer.

As we know, we do not live in an ideal world, hence this tool can also be abused or used intentionally without a really justified reason. However, in the current situation, assessing intentions may be difficult because regardless of how well a company is doing, a crisis in many industries is inevitable. And companies, taking a long-term view, may want to take specific steps (aimed at minimizing expenses) before there is an actual threat to their condition.

Therefore, if the proposal for changes received from the employer raises any doubts, it is worth seeking help from a law firm. Experienced in labor law matters Legal Counsel can fully analyze the employee's situation and recommend appropriate actions.

So what is more beneficial for the employee - an amending notice or an amending agreement or an annex to the employment contract?

This, of course, depends on their content, and not only on the form of presenting the change in the terms of cooperation. Most often, a much better solution for both parties will be an amending agreement or an annex - in such a case, the employee can try to negotiate its terms, and submitting such a proposal means that the employer is not currently considering terminating the employee's employment contract and does not raise the issue knife edge.

Both solutions constitute an offer from the employer to the employee, a proposal to change the terms of the employment contract. One of them (the one containing the word notice) assumes that the employment contract will be terminated if the offer is not accepted by the employee. The second one (a proposal to conclude an annex or an amending agreement) is a proposal that the employee may accept or not, without assuming in advance the negative consequences of not accepting it.

However, leaving aside the intentions and returning to the institution of the amending notice itself, it is worth remembering that the employer (especially in the face of financial difficulties) may enter into negotiations with employees regarding proposed changes to the working conditions and pay specified in the employment contract. In terms of the above, firstly, while still at the stage of considering whether to accept (or not) the employer's proposal, it is worth bearing in mind the fact that the employer may have been forced to make such a move. So perhaps sometimes a better solution is to agree to slightly worse conditions, but maintain the employer's functioning and current job, than to cause the employer's bankruptcy or your own dismissal. Unless we have a better job offer and are willing to change it.

We warn employers that the use of a notice of change that worsens working and pay conditions brings tangible economic benefits and is often the only solution, but it usually leads to increased staff turnover and related costs.

We cordially invite you to initial consultation in matters related to labor law. We conduct consultations both stationary at the office and online, and the cost of a half-hour initial consultation is PLN 200 gross.

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