The Court in Overijssel recently had to determine if an employer had the right to unilaterally lower the salaries.
Salaries are a primary condition of employment and as a rule the employer is not free to unilaterally lower salaries. It is not disputed that between the parties there is no unilateral change clause on which the employer can rely. As such, an employee is in principle not obliged to accept proposals of an employer to change the employment conditions: agreement must be reached about this between employer and employee.
The employer took the position that the implemented salary moderation can in all reasonableness be demanded from the employees. The issue is therefore whether it is contrary to good employment practice not to agree to the salary proposal. This question must be assessed based on the standard as formulated by the Supreme Court in its judgment Stoof vs. Mammoet:
1.) whether the employer, as a good employer, could have found reason in the changed circumstances to make a proposal for change;
2.) if so, whether that proposal is reasonable in light of all the circumstances of the case;
3.) if so, whether the employee can reasonably be expected to accept that proposal.
When answering the question to what consequences a change in circumstances can lead to for an individual employment relationship, it must first be examined whether the employer, as a good employer, could have found a reason to make a proposal to change the employment conditions, and whether the proposal made by him was reasonable.
Within that framework, all the circumstances of the case must be taken into consideration, including the nature of the changed circumstances that gave rise to the proposal and the nature and radical nature of the proposal made, as well as the position of the employee concerned to whom the proposal is made and his interest in leaving the terms and conditions of employment unchanged.
Taking into consideration that it was a real risk that the employer, in the absence of any action, would have ended up in bankruptcy, this meant that the situation had changed so much that action had to be taken. As such the Court found that the employer had sufficiently substantiated with all this that it, as a good employer, could have found reason in the changed circumstances to make a proposal for a change.
The Court also found in light of facts and circumstances presented that it is not unreasonable to demand a wage sacrifice from employees such as this; part of it is temporary, there is a compensation arrangement, it was necessary for the continuity of the company, employees would keep their jobs and therefore their salaries, alternatives are not available, the shareholder had also sacrificed, and a careful procedure had been conducted.
As such the employer was in its right to unilaterally alter the salaries.
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