Changing employment conditions: is an employer allowed to do so unilaterally?

As an employer, there are times when you may wish to amend your employees’ terms and conditions of employment, for example by withdrawing a company car, revising the pension scheme, or modifying bonus arrangements. While this may seem logical from a business perspective, it is legally significantly more complex. Amending terms and conditions of employment can be risky. You cannot simply do this, but there are certainly possibilities, provided you follow the correct procedure. How can you approach this strategically and legally securely? That is what we explain here.

When is it permitted to amend terms and conditions of employment?

The law offers three routes: with the employee’s consent, through a unilateral amendment clause, or—in some cases, on the basis of the principle of good employment practice, i.e. reasonableness and fairness.

The safest route is consent: an employee must give explicit agreement to a change. Silence does not constitute consent. No consent? Then you must be able to rely on a contractual amendment clause. Such a clause allows you, as employer, some leeway, but only if you can demonstrate a compelling interest. Consider serious financial problems or necessary reorganisations. In such cases, the court will weigh your interest against that of the employee. Only if your interest outweighs the employee’s, may you proceed.
If such a clause is lacking, amendment is only possible if it is reasonable and fair—an open standard which is assessed differently in each case. It helps if you can demonstrate that you act as a fair employer, explain your reasons, offer scope for consultation, and, if necessary, provide compensation in return for the amendment.

Examples from practice

Do you wish to adjust working hours to schedule shifts more efficiently? In some cases this may be reasonable, especially if it fits within the collective labour agreement (CAO) or previous arrangements. However, if you want to discontinue a bonus arrangement or withdraw a company car, things quickly become more complex and the risk of conflicts or claims increases.
For pensions, a high threshold always applies: employees enjoy strong protection here. Without consent, it is virtually impossible to implement changes.

What can you, as employer, do?

Always start with a clear rationale: why is the amendment necessary? What risks does your business face if you do not implement changes? This reasoning is essential, not just for employees but also in any legal proceedings.

In addition, you should aim to build support. Involve your employees and any works council early on, listen to their concerns, and collaborate on solutions. Sometimes, offering a transitional arrangement or implementing changes gradually can help. This increases the likelihood that employees will consent, voluntarily or with some conviction. In any case, always record agreements in writing. Even if the employee agrees verbally, this will prevent discussions afterwards.

Avoid mistakes, think strategically ahead

Too often employers want to move quickly but skip crucial steps. This leads to unrest, resistance, or legal proceedings. Whereas a careful approach often yields results. So do not act in haste. If you wish to amend terms and conditions of employment, first check whether it is legally permitted and determine the best approach. This will save you time, costs, and reputational damage.

Are you planning a change or already in the middle of a discussion with your staff? Contact us, we will think strategically alongside you.