A change in the terms and conditions of employment means a change in the terms and conditions of the employment contract, either at the initiative of the employer or the employee. As a general rule, contracts are binding as they stand and cannot be unilaterally modified without just cause or the consent of both parties. The essential terms of the employment relationship are those expressly agreed in the employment contract, such as job description, salary and working hours. In addition, established practices in the employment relationship, which have been developed through a long-standing and regular practice and have acquired a contractual binding character, may also be considered essential terms.

For example, in KKO 2021:76, the Supreme Court held that a clear break practice that had been consistently followed between the parties for a long time had become a binding condition of the employment relationship. Since 1995, the workplace had a practice whereby employees doing heavy sorting work were allowed to take daily paid breaks of 23 minutes in total, longer than the statutory breaks and the breaks provided for in the collective agreement, which were part of their working time. As the breaks were an essential condition of employment, the employer was not entitled to change the practice by unilateral order.
Three ways in which the terms and conditions of employment can be changed are discussed below.

1. Change by agreement

If the employer wants to change the essential terms and conditions of the employment relationship, the employee's consent is required. If the employment contract does not provide for the possibility to change the terms of employment, it is strongly advisable to make use of good communication and negotiation skills and to try to negotiate the change in agreement with the employee. However, it should always be borne in mind that collective agreements and mandatory legislation may impose restrictions on the employer's ability to change the terms and conditions of employment.

2. Changes under the right to manage work

Within certain limits, the employer has the right to unilaterally change the terms and conditions of employment by exercising its right to manage the work. The extent of the right to manage can be determined by looking at the employment contract and seeing first where it bends and whether a practice has become established. An essential term cannot be changed simply on the basis of the right to manage work.
In the Supreme Court decision KKO 2023:76, the employer's right to change the working hours of its employees and add a half-hour unpaid lunch hour to the working day was assessed on the basis of the right to manage work. The Supreme Court held that the working time condition was material and held that the employer had acted in breach of the employment contracts by unilaterally ordering a change in the working time pattern as described in the case.
In the light of the Supreme Court's ruling, as in previous rulings, the extent of the employer's right to direct the work is essentially determined by what is agreed in the employment contract. When drafting an employment contract, it is therefore advisable to avoid writing down overly detailed provisions in order to maintain flexibility in the event of any future changes.

3. Change on grounds of dismissal

In certain situations, the employer can unilaterally change the terms of employment if it has grounds for dismissal. The grounds for dismissal may be personal or collective, based on production and economic reasons.
In practice, this means that if the employer could dismiss the employee on these grounds, it is also possible to offer a less severe alternative, such as a change in the terms and conditions. However, this type of modification can only come into force after the modification negotiations and the notice period under the Collective Bargaining Act. The modification of an essential term of an employment contract is effectively tantamount to terminating the old employment contract and offering a new employment contract.
The Supreme Court has ruled that a unilateral modification of the essential terms of an employment relationship is tantamount to a reduction in the workforce, also for the purposes of the obligation to pay compensation under the Collective Bargaining Act. In case 2021:17, the employer had unilaterally changed the employees' meal break and the starting time of working hours on the basis of the right to manage work and had only conducted so-called "light" collective bargaining. The Supreme Court held that the employer's action had been a change of conditions on the grounds of dismissal of the employee, which was equivalent to dismissal of the employee. Since the employer had not followed this procedure, the workers were ordered to pay compensation even though their employment relationships were not terminated. In uncertain situations, it is advisable, as a precautionary measure, to engage in "reduction negotiations" tied to deadlines and quantitative forms in order to avoid risks. 

Finally

Changing the terms and conditions of employment is not a simple process, with many legal constraints and difficult issues. In principle, the contract between employer and employee is binding on the parties and cannot be changed unilaterally. If a change is necessary, it can be made either by agreement, within the framework of the right to manage employment or on the basis of dismissal.

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- Alexa Kavasto, employment lawyer