THE employment relationship is founded upon contract. Once an employer and employee agree on the terms and conditions governing their relationship, each party is generally entitled to expect those terms to be honoured. However, employment relationships operate within changing economic and business environments. Companies restructure, financial circumstances change, technology develops, and employees may assume new responsibilities over time.
The general principle
An employer cannot simply impose new terms and conditions of employment because it considers them desirable or convenient. Just as agreement is required to create contractual obligations, agreement is ordinarily required to modify them.
However, employment contracts present unique challenges. Unlike ordinary commercial agreements, employment relationships are continuing relationships affected by changing economic and operational circumstances. A strict application of the common-law rule could, in some cases, prevent employers from responding to genuine business challenges.
Business necessity as a justification for variation
Businesses operate in environments where change is unavoidable. Market conditions, financial difficulties, technological developments and restructuring may require employers to adjust operations and, in some cases, propose changes to employment conditions.
The Supreme Court recognised this reality in Chirasasa & Ors v Nhamo NO 2003 (2) ZLR 206 (S). On page 220, Malaba JA (as he then was) observed:
“The appellants perhaps failed to appreciate that a contract of employment cannot remain static throughout the whole of its existence regardless of the changes in the fortunes of the business. Refusal to accept a change in the terms and conditions of employment necessitated by the commercial interests of a business may be a good enough reason for terminating a contract of employment on notice.”
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The significance of this decision is that it recognises that employment contracts cannot exist in isolation from commercial realities. Where changing business circumstances genuinely require adjustments, an employer may be entitled to propose changes to existing employment arrangements.
However, Chirasasa does not give employers unlimited authority to alter contracts whenever they wish. A legitimate business reason does not automatically make a contractual variation lawful. The employer must still act within the requirements of the law and ensure that the process is fair.
The requirement of prior consultation
Consultation is one of the most important safeguards against unfair contractual variation. Although employers may have legitimate reasons for proposing changes, employees are entitled to be engaged before alterations affecting their contractual rights are introduced.
Changes may relate to remuneration, allowances, job responsibilities, reporting structures, working hours or place of work. Where such changes affect existing contractual rights or legitimate expectations, meaningful consultation should ordinarily occur.
The importance of consultation was emphasised by the Supreme Court in Stewart & Ors v The Vice-Chancellor of the University of Zimbabwe & Anor SC 97/2001.
In that matter, the employer introduced new salary scales which resulted in the abolition of certain allowances previously enjoyed by employees. The changes were implemented without prior consultation. The court held that employees retained the right either to continue under the revised salary structure without the allowances or to revert to their previous salary structure together with the allowances.
The decision demonstrates that even where an employer has valid operational reasons for introducing changes, the process followed remains legally significant. Managerial authority does not permit an employer to simply remove contractual benefits without engaging affected employees.
Consultation does not necessarily mean that parties must always reach agreement. However, failure to consult may indicate that an employer acted unfairly or attempted to impose changes unilaterally. Courts will, therefore, consider both the reason for the proposed variation and the fairness of the process followed.
Clearly defining the proposed changes
Where a variation becomes necessary, the proposed changes must be clearly communicated. Employees must understand precisely what terms are being altered and how those changes affect their existing rights.
Clarity protects both parties. For employers, clearly defining the proposed changes reduces disputes and uncertainty. For employees, it allows an informed decision about whether to accept or challenge the proposed variation.
An employee cannot meaningfully consent to a change that has not been properly explained. Similarly, an employer cannot later rely upon an alleged agreement where the scope of the variation was unclear.
Role of variation clauses
Employment contracts sometimes contain provisions allowing certain terms to be varied in specified circumstances. These are commonly referred to as variation clauses.
A variation clause provides flexibility by allowing agreed aspects of the employment relationship to be adjusted without requiring the parties to negotiate a completely new contract whenever circumstances change. In such cases, the parties have already provided consent to future variations falling within the scope of the clause.
However, a variation clause does not give an employer unlimited authority to introduce any changes it wishes. Such clauses remain subject to principles of legality, fairness and public policy. An employer cannot rely on a variation clause to justify arbitrary, unreasonable or fundamentally unfair alterations to an employee’s contractual rights.
Tacit/implied consent
Although contractual variation generally requires agreement between the parties, that agreement does not always have to be expressed in writing. In certain circumstances, consent may be inferred from the conduct of the parties.
Tacit consent arises where the actions of a party demonstrate acceptance of a new contractual arrangement. However, courts approach such cases carefully because acceptance cannot simply be assumed from silence or continued employment alone.
This principle was considered by the Supreme Court in Mawire v RioZim Limited (Private) Limited SC 13/21.
In that matter, the employer issued an internal memorandum altering the employee’s remuneration by removing certain allowances. The employee continued receiving payment under the revised structure for approximately five years without challenging the change.
In reaffirming the earlier decision in Smith v Hughes L.R. 6 Q.B. 597, the Supreme Court stated:
“It is trite that consent can either be express or implied. For five years the respondent accepted a salary, in terms of a memorandum which had no provision for any allowances. By such conduct he accepted the variation of the terms of his contract of employment. If he genuinely felt that the memorandum breached his contractual rights, he ought not to have accepted the salaries and ought to have mounted his challenge at the pertinent time or within the permitted period. In the absence of any challenge to the variation of the contract, it is clear that after variation of the contract of employment, there was acquiescence by the appellant.”
The court held that the employee’s prolonged acceptance of the revised remuneration structure amounted to acceptance of the variation.
Courts will consider the surrounding circumstances, including whether the employee knew of the change, whether there was an opportunity to object, whether objections were raised, and whether continued employment was effectively the only practical option available.
Limits on the power to vary employment contracts
Although employers may have legitimate commercial reasons for proposing changes, their power to vary employment contracts is not unlimited.
Employment is not merely an exchange of labour for remuneration. It also involves professional identity, dignity, status and legitimate expectations developed during the employment relationship. A variation that substantially undermines these interests may be unlawful, even where the employer can demonstrate operational reasons.
This limitation was recognised by the Supreme Court in Sagandira v Makoni Rural District Council SC 70/2014, where the court held that contractual variation may be necessary to reorganise an employer’s operations provided that it does not result in the substantial downgrading of the status and dignity of the employee or is in breach of a legitimate expectation of the employee.
The principle established in Sagandira confirms that employment flexibility has boundaries. Employers may adjust duties, reporting structures or work arrangements to meet genuine business needs, but they cannot use operational requirements as a justification for fundamentally diminishing an employee’s professional standing.
For example, an employer may, depending on the circumstances, reallocate duties or modify responsibilities. However, a qualified professional cannot ordinarily be reduced to a substantially inferior position that undermines their qualifications, status or dignity simply because the employer wishes to restructure operations.
Similarly, attempts to reduce remuneration, remove established benefits or impose significantly inferior conditions of service must be carefully examined to determine whether they constitute legitimate adjustments or an unfair erosion of contractual rights.
The courts will, therefore, consider several factors, including:
- the reason for the proposed variation;
- whether meaningful consultation occurred;
- the nature and extent of the change;
- whether the employee consented expressly or impliedly; and
- the effect of the variation on the employee’s status, dignity and legitimate expectations.
The law on changing employment contracts seeks to balance two competing interests: the employer’s need to adapt to changing business circumstances and the employee’s right to protection against unfair changes.
The general rule remains that an employer cannot simply change an employee’s contract without consent. However, changes may be lawful where they are justified by genuine business needs, properly consulted upon, authorised by the contract, or accepted by the employee through their conduct.
Employers should, therefore, approach contractual changes carefully, ensuring that they communicate clearly, consult affected employees and respect their contractual rights. Employees, on the other hand, should understand that not every workplace change is unlawful, particularly where it is introduced fairly and for legitimate reasons.
Ultimately, a fair approach requires both employers and employees to engage openly and reasonably when dealing with changes in the modern workplace.
*Panashe Donzwambeva is a Zimbabwean lawyer with keen interest in legal research and public legal education. He is reachable on:
+263 776 881 963/+263 779 769 420
