Changing an employment contract is not an easy task – but it is possible
On November 25, 2022, the Supreme Court ruled in a case involving the question whether an employer was allowed to change agreements that he had made with a group of employees. This involved gradually increasing the pension premium to be paid by these employees, from 0 to 3.5% of the pensionable salary. What was striking about this case was that this group alone did not want to pay a pension premium: their colleagues who were employed after January 1, 2003 had to do so (even 10%). Nevertheless: in employment law you cannot simply treat everyone the same.
What may be confusing to anyone reading Dutch law is that there are various statutory provisions that can play a role in the answer to the question whether an employer may make a unilateral change. But there seems to be have been shed some light in the darkness now. Below I will show what the current legal state of affairs is.
Good employer and good employeeship as a basis for change
A general article that covers all markets is Article 7:611 of the Dutch Civil Code: employer and employee must behave on both sides as “a good employer” and “a good employee”. It is important to note that this provision has given rise to a lot of case law on the possibility of changing the employment contract. In the Stoof/Mammoet case from 2008, the Supreme Court considered that the test of Article 7:611 of the Dutch Civil Code should not be equated with the general test of contract law, which is included in Article 6:248 paragraph 2 of the Dutch Civil Code. This latter test is very strict and requires it to be demonstrated that upholding the existing agreement is unacceptable. In other words: the test of being a good employer and employee can be less strict than that, and usually is. This is not surprising, because an employment contract is usually an agreement of a somewhat longer duration, and in fact regulates for many people a significant part of their weekly hours (unlike a newspaper subscription or buying a train ticket, which are, in fact, also agreements).
The criterion involves more than just the attitude of the employee. Good employership and good employeeship have a certain relationship with each other. This is evident from the fact that the Supreme Court ruled that it must be investigated whether the employer “as a good employer” could have found reason to make a proposal to change the employment conditions and whether the proposal he made is reasonable. What is reasonable must take into account all circumstances of the case, "including the nature of the changed circumstances that have given rise to the proposal and the nature and drasticness of the proposal made, as well as – in addition to the interests of the employer and the company he runs – the position of the employee concerned to whom the proposal is made and his interest in the employment conditions remaining unchanged.” Due to this 'holistic' approach, the interests of the employee are sufficiently protected, according to the Supreme Court. In fact, all facts and circumstances are weighed. This may give the test some uncertainty as far as the outcome is concerned, but it does give it a lot of flexibility.
Individual and collective
In the ruling of November 25, 2022, the Supreme Court ruled that the criterion of good employership and good employeeship applies both to individual changes – such as the adjustment of an employee's position – and to collective changes – as in this case, which involved to increase the pension premium for a group of employees. This had also been ruled by the Supreme Court in 2004, known as the Parallel Entry ruling. It was remarkable that the Supreme Court in that case was of the opinion that the test of Article 7:611 of the Dutch Civil Code came down to the test of Article 6:248 paragraph 2 of the Dutch Civil Code – i.e. the severe, strict test. This probably played a role in the fact that the case concerned a very important employment condition: seniority/seniority, which is very important in the aviation industry where this case occurred. What we can conclude from this is that Article 7:611 of the Dutch Civil Code constitutes a so-called “gliding scale”. After all, as the Supreme Court has ruled, it involves a weighing of all interests. Sometimes this leads to a relatively simple change. This could include adjusting the fiscally permitted kilometer allowance from 19 to 17 cents (the example is of course fictitious). In other cases, the test is strict and resembles or is equal to that of Article 6:248 paragraph 2 of the Dutch Civil Code, such as in the case of a collective pay cut, or, as in the Parallel Entry case, the loss of a significant part of seniority. Article 6:248(2) of the Dutch Civil Code, which applies to all contracts, is therefore far less flexible than Article 7:611 of the Dutch Civil Code.
The amendment clause of Article 7:613 of the Dutch Civil Code
With a change clause, the employer informs the employee in advance (in writing) that the employer can change the employment contract. To prevent abuse of such a provision, the legislator requires that the employer demonstrate compelling interests so that “the interest of the employee that would be damaged by the change must give way to standards of reasonableness and fairness.” So there are two requirements:
1. The reason for the employer to change must be compelling.
2. The interests of the employee must give way to that reason.
Sometimes it is stipulated (or practice) that the employer will first ask the works council for advice or consent before implementing a change. In practice, this ensures that the employer can have an "edge" in the discussion whether there is a compelling interest. However, it does not offer the employer any certainty.
The question of whether Article 7:613 of the Dutch Civil Code also applies to both individual and collective changes has unfortunately not been answered unequivocally. The text of the law appears to allow both, but the Supreme Court ruled in the aforementioned Stoof/Mammoet judgment that Article 7:613 of the Dutch Civil Code “rather” relates to changes in employment conditions not only with regard to an individual employee, but with regard to several employees. It is unclear what we should do with the word “rather”, but it does not rule out an individual test.
Why would one (still) make use of the amendment clause?
After the ruling of November 25 2022, you may wonder why one would still use a written change clause, if a weighing of all circumstances based on employer and employee status can offer you the same result. In addition, Article 7:611 of the Dutch Civil Code does not require a substantial reason/interest. However, there are still a few reasons to include a change clause in the employment contract (or an applicable personnel guide provided to the employee).
1. According to the Supreme Court, the test of Article 7:611 of the Dutch Civil Code requires a “change in the circumstances at work”. The amendment clause of Article 7:613 of the Dutch Civil Code does not impose this requirement. It may therefore be the case that the employer cannot rely on Article 7:611 of the Dutch Civil Code but can rely on a change clause.
2. For a slight change, especially if it is for an individual, the test is of article; 7:611 BW is often lighter than that of Article 7:613 BW. After all, a successful appeal to Article 7:613 of the Dutch Civil Code requires a compelling interest, and that bar might not be met. Article 7:611 of the Dutch Civil Code only requires a weighing of interests, taking into account all circumstances. But beware: sometimes the test of Article 7:611 of the Dutch Civil Code is actually more stringent, as I have argued above. Then it is sometimes more beneficial to invoke the amendment clause
3. The amendment clause also has a strong signaling function. The employer warns the employee in advance that what they have agreed could be changed in the future. In this way, the employee is less likely to be surprised than if the employer believes that the employee must “behave as a good employee” and agree to the change.
In short: the safest course for the employer is always to agree on a change clause and then, where appropriate, to invoke good employer and good employee behavior. On the one hand, this offers the most flexibility, and on the other hand, it certainly does not mean that the employee is not protected. Article 6:248 paragraph 2 of the Dutch Civil Code, the general provision of contract law, does not play a role in the employer-employee relationship, but it does play a role in other parts of labor law, such as in the relationship between trade unions and employer(s). For example, the provision has played a role in breaking open current collective labor agreements.
What Flott can do for you
Changing employment conditions is not easy under Dutch law, and things often go wrong in practice. In this blog I gave you the main points. You may still have questions. Flott closely monitors case law on this subject. If you have a case involving this theme: we are ready to help you. Send an e-mail to: info@flottadvocatuur, or check out the website: www.flottadvocatuur.nl.