10 mistakes when changing the terms of an employment contract

November 13, 2019

Adviсe

Changes to employees' working hours or location, their responsibilities or salary must be reflected in their contracts. At the same time, making adjustments to documents often becomes the reason for employees to go to court due to violation of their rights

In case of changes in production technology or organizational reshuffles, the Labor Code provides for a clearly regulated procedure for making adjustments to employment contracts. At the same time, the Labor Code of the Russian Federation primarily protects the employee. Despite this, the number of court cases related to violations of employee rights when amending contracts can only be rivaled by the number of cases of illegal dismissal.

In this article we will look at how to make changes to employment contracts and avoid the main risks of employees challenging this procedure.

How are adjustments made to an employment contract?

Let’s imagine that your company has updated its production equipment, carried out a structural reorganization and combined several departments into one, and switched from the 1C accounting program to SAP or Navision. In this case, the working conditions of workers have become different: this may be a change in working hours or place, job responsibilities, wages, etc. And since these conditions are reflected in the employment contract, amendments must be made to it. There are two ways to do this1:

• amendments to the contract by mutual agreement of the employee and employer. This method is the most preferable because it is quick (the changes come into force on the same day), and most importantly, the employee himself agrees to the changes and in the future will be able to challenge them only if he was forced to enter into such an agreement, which is difficult to prove;
• amendments to the contract at the initiative of the employer. This method is designed for cases where an employee may potentially not agree to work under new conditions. We will look at it below.

Rules and contents of the document

An agreement on an amendment to an employment contract must be drawn up in writing with the consent of all parties. The employee and employer receive the originals of such an agreement with the signatures of the parties. Compliance with such an agreement is mandatory. The number of additional contracts concluded agreements are not limited by law.

In the case where the employment contract is notarized, then the additional agreement concluded. the agreement must also be confirmed by the signature and seal of a notary.

The document itself must contain:

• number and date of the employment contract,
• date and place of the agreement,
• full name of the employer and employee details,
• points agreed upon by the parties,
• date and signatures of the parties.

In what cases does an employer have the right to change an employment contract on its own initiative?

The Labor Code, with its characteristic laconicism, indicates two cases when an employer can initiate adjustments to an employment contract on its own initiative: a change in organizational and technological working conditions.
At the same time, the Labor Code of the Russian Federation does not answer the question of what is meant by organizational and technological changes in working conditions. And it is this fact that provokes many legal disputes. In this case, let us turn to judicial practice - although it is not a source of law in Russia, it nevertheless allows us to test the waters.

Organizational conditions include2:

• management structure of the organization;
• forms of labor organization (team, rental, contract, etc.);
• work and rest schedule;
• labor standards;
• loads on departments or specific positions.

Technological working conditions include:

• production technologies;
• machines, units, mechanisms;
• workplaces and working conditions there;
• manufactured types of products;
• technical regulations of work.

This list is not exhaustive. This means that there may be other working conditions, in connection with changes in which the employer has the right to unilaterally change employment contracts with employees. For example:

• transition from maintaining paper reports to using software for maintaining these reports (technological condition)3;
• reduction of position and redistribution of responsibilities for this position among other employees (organizational condition)4;
• internal reorganization that caused the transfer of jobs to another region (organizational condition)5;
• reorganization of departments and divisions, optimization of production technology, which entailed a redistribution of responsibilities between employees (organizational and technological changes)6;
• introduction of professional standards and specification in this regard of the job responsibilities of employees (organizational change)7.

However, the employer does not have the right to change the terms of the employment contract on his own initiative under the following circumstances:

• a decrease in demand for the employer’s products and services, a lack of sufficient volume of work, the difficult financial situation of the employer and, in connection with this, a reduction in the wages of employees in order to optimize its expenses8;
• redistribution of parts of wages (salary reduction and the introduction of bonuses), if this is not related to the implementation of labor standards9.

Reasons for changing working conditions

Working conditions may change over time, the reasons for them may be due to:

• internal changes in the specifics of the organization’s work, change of owner of the organization;
• external factors: changes in legislation or personal needs of the employee.

The first specific basis we indicated is indicated in Article 74 of the Labor Code of the Russian Federation (hereinafter referred to as the Labor Code of the Russian Federation). An organization can eliminate its branch, reorganize, merge or divide its divisions. Also, the specifics of the work can be changed technologically: re-equipment, technology improvement.

Regardless of the type of base, additional the agreement is concluded only with the consent of the parties on a voluntary basis.

Salary change

The terms of remuneration must be specified in the employment contract; any changes in the salary amount must be documented in an additional agreement to the contract. If the salary increases, the employee and the employer enter into an additional agreement in which they indicate the new salary amount; it must be greater than that specified in the initially concluded employment contract. Notification of the employee about the salary increase is not required.

In the event of a salary reduction, the procedure for registering it is more complicated. The initiative to reduce the salary comes from the employer; he is obliged to notify the employee 60 days before the additional date of entry into force. agreements. But if the employer is an individual, this period is reduced to 14 days, if a religious organization - 7 days.

The employee learns about the salary reduction from a notice in which he must sign. If the employee does not agree to a salary reduction, the employer offers him in writing, against signature, a list of equivalent and lower positions with salary amounts.

An employer cannot offer an employee a position in another location, unless a collective agreement has been concluded with him. If there is no suitable position or the employee refuses the ones offered, the employment contract with him is terminated.

After signing the add. agreement to change the official salary, the employer issues an order, it is drawn up in free form, which the employee familiarizes himself with. It must indicate:

• reasons for salary changes;
• Full name of the employee and salary amount;
• instructions from the accounting department to pay the specified employee a new salary;
• Instructing the HR department employee to familiarize the employee with this order against signature;
• signature of the head of the enterprise and a note about familiarization with the employee’s order.

Combination of positions

The combination of positions by an employee is provided for by the Labor Code of the Russian Federation; this is when an employee performs his direct duties under an employment contract and also performs additional duties for another position on the staff, receiving additional payment for this.

This combination occurs in three cases:

• an employee from a combined position is temporarily absent;
• the volume of work has increased;
• service areas have expanded.

In the first case, the employee is temporarily absent, but his position remains; he is on vacation, on sick leave or on a business trip; the performance of his duties along with his own is a combination of positions. In other cases, the employee performs the same duties as in his position, only to a greater extent.

The conditions for combining positions must be specified in additional information. agreement. Typically, the initiator of assigning additional responsibilities to an employee is the employer, about which he submits a written proposal to the employee, in which he indicates:

• full-time position and responsibilities,
• duration and content of the work;
• its volume;
• the amount of additional payment for performing these additional duties.

After reading this proposal, the employee agrees or refuses to perform the proposed duties. This decision must be made in writing.

Changing the operating mode

The working hours may be reflected in the employment contract between the employee and the employer and in the internal labor regulations.

In the first case, a change in operating mode can be accepted by additional. agreement of the parties to the employment contract. It is drawn up in writing by mutual agreement of the parties.

The employer also issues an order to change the operating mode at the enterprise, which indicates the circumstances and reasons for the changes, the scope of the new operating mode. All employees affected by the change in work schedule are familiarized with this order.

Renaming an organization

Renaming an organization entails changing the employer’s data specified in the employment contract. But the law does not provide for the mandatory issuance of additional information. agreements to the employment contract when renaming the organization.

Regarding this issue, jurists are divided into three parts:

1. Some believe that additional an agreement does not need to be concluded, since renaming the organization does not change the employee’s working conditions; this is information that can be entered directly into the previously concluded employment contract;
2. The latter are of the same opinion, but rely on the fact that renaming does not affect labor relations.
3. Still others are inclined to believe that it is necessary to conclude an additional agreement to the employment contract, due to the fact that only the missing information, but not changed, can be included in the employment contract itself according to the Labor Code of the Russian Federation.

The decision on how to formalize the renaming of the organization is placed in the hands of the employer. It is imperative to make a new entry about the name of the organization in the work book, otherwise, when terminating the employment contract, difficulties will arise in determining the length of work experience.

How should an employer act when changing the terms of an employment contract on its own initiative?

The sequence of actions is as follows10:
1. Preparation of documents justifying and confirming changes in working conditions, which will entail adjustments to employment contracts11.

2. Issuance of an order on the upcoming amendments to contracts.

3. Notification of employees against signature about amendments to their contracts indicating all upcoming changes12. This notice is served no later than two months before amendments to the contracts13. To avoid legal disputes, it is recommended that it specify the rights and obligations of the employee during the notice period, the timing of the employee’s decision and the consequences of his consent or refusal to continue working under the new conditions.

If the employee refuses to familiarize himself with the notice, an act to this effect should be drawn up in the presence of one or two witnesses.

4. Obtaining the employee’s consent or refusal to continue working under new conditions.

5. If the employee agrees, sign an additional agreement with him on amending the employment contract at the initiative of the employer. At the same time, before the expiration of the two-month period, the employee has the right to withdraw his consent to work under the new conditions14.

6. In case of refusal of the employee or withdrawal of previously given consent, offer the employee other vacant positions that he can occupy taking into account his qualifications, and in their absence - lower and lower paid positions, as well as positions at “full” and “part-time” rates. Job openings must be in the same area as the employee's current job. It is better to offer vacancies in writing. In this case, it is necessary to indicate not only the names of positions, but also responsibilities, working conditions and pay15.

If the employee agrees to take the proposed position, then an additional transfer agreement is signed with him. If the employee refuses or the employer has no vacancies, then the employment contract is terminated, but only after two months from the date of notification of the upcoming change in its conditions16. In addition to the usual payments upon dismissal (payment for time worked, compensation for unused vacation), the employee is additionally due severance pay in the amount of two weeks’ average earnings17.

Please note: only one condition of the employment contract cannot be changed at the initiative of the employer in the manner described above - this is the employee’s labor function (profession, specialty)18. For this purpose, the Labor Code of the Russian Federation provides for a separate procedure - transfer to another job, which provides its own guarantees of respect for the rights of employees.

Agreement of the parties and amendments

At the legislative level, a special procedure is provided that entails changing the terms of the employment contract determined by the parties. It can be divided into several stages:

• At the initial stage, the employer will have to decide which employees may be affected by the changes and which contract terms should be changed by concluding an additional agreement.
• The next stage assumes that the employer must send a notice of changes to the terms of the employment contract to all employees affected by such changes. The notification should contain information not only about the upcoming changes, but also about the reasons that caused them. Employees must be informed at least 60 days in advance. After this time, the parties must enter into an additional agreement, and the employer must issue an order.
• The next stage occurs only if the employee refuses to work under the updated conditions. In case of refusal, the employer must offer such a person a job that corresponds to her qualifications; a vacant position that is paid lower may also be offered. If agreement is reached on this issue, the stage also ends with the signing of an additional agreement and its execution with the appropriate order.
• The fourth stage occurs if it is impossible to provide an employee with work that meets legal requirements, or if the employee refuses the work offered to him. In such a situation, labor relations are completed in accordance with Article 77 of the Labor Code of Russia, namely clause 7, part 1.

A change in the terms of an employment contract determined by the parties can be initiated by both the employer and the employee. If the initiator is an employee, he draws up his proposals in the form of an application, in which he sets out a proposal to create additional working conditions or change them.

Making changes at the initiative of the employer begins with the preparation of an order to change working conditions. The order must indicate the nature, grounds and date from which the changes introduced will be relevant.

It is important to remember that employees must be notified of the change no later than two months in advance (Article 74 of the Labor Code).

Article 306 of the Labor Code determines that if the employer is an individual, the employee must be warned 14 days in advance, and according to Article 344 of the Labor Code, if the employer is a religious structure - a week in advance.

If the employee does not refuse to work under the new conditions, as well as in the absence of a refusal on the part of the employer (if the initiator is the employee), both parties must sign an additional agreement to the contract.

An additional agreement to the contract, which reflects upcoming changes in basic working conditions, is prepared in two copies. Both copies of the additional agreement must be signed by one and the other party. The first version of the additional agreement is handed over to the employee for storage, the second version of the additional agreement is stored at the enterprise. The storage period is 75 years. An additional agreement can be drawn up by analogy with an employment contract; it must indicate:

• Title of the document;
• its number and date;
• the place where it was signed;
• data that will allow us to identify who the parties to the contract are;
• signatures of both parties.