Changing the terms of employment

Last updated 6.10.2023

The employment contract is binding on both the employer and the employee. As a rule, the employer cannot unilaterally change the terms of an employment contract. 

The terms of employment can be changed either by agreement with the employee or unilaterally by the employer. The employer may change the terms of employment unilaterallyon the basisof the right to direct work.

However, the right to direct work cannot be used to change the key terms of employment agreed in the employment contract. The scope of the right to direct work varies.

For example, the employer may transfer an employee to other duties if the employment contract does not specify the duties in detail. The employer usually has the right to terminate the employment contract if the employee refuses the transfer.

The employer may also change the terms of employment using the termination procedure, for example, if no agreement can be reached on the change and the employment contract restricts the employer’s exercise of the right to direct work. In this case, the employer must have a valid grounds for dismissal and the notice period must be observed.

In practice, this means that the employer terminates the employment contract and, after the notice period, offers the employee work on the new terms. Another option is to notify about the changes in accordance with the notice period and let the employee accept the changes. If the employee does not accept the new terms, the employment relationship usually ends after the notice period.

Changes to work duties

How work duties are defined in the employment contract determines whether the employer has the right to unilaterally change the duties. For example, if the employment contract states that the employee performs the tasks assigned by the employer at any given time, the employee can usually be transferred to other duties on the basis of the right to direct work. If the employee has performed many kinds of work and no work is specifically excluded from the duties, new duties can be assigned on the basis of the right to direct work.

If, on the other hand, the employment contract clearly specifies the duties (such as a certain job title or a list of duties), the employer usually does not have the right to assign the employee to other duties on the basis of the right to direct work alone. Duties may also be determined based on established practice, in which case the established job description cannot be changed solely on the basis of the right to direct work.

Temporary transfer to other duties, such as in the case of an illness, falls within the scope of the employer’s right to direct work. 

Changes to working hours

Working hours can be shortened by temporarily laying off the employee. In this case, a temporary reduction of working hours can be done by switching to a shortened workday or workweek, for example.

The Working Hours Act specifies the conditions for extending working hours. Additional and overtime work are subject to a separate compensation and require the employee’s consent.

If it has been agreed in the employment contract that the working hours are on weekdays from 7 am to 4 pm, for example, the employee cannot be ordered to work on evenings or weekends. If the employment contract does not include a precise definition of working hours or it has been agreed that hours are determined by the employer, the employee may also be required to work evening shifts, for example.

As a rule, changing working hours requires the consent of both parties. However, the employer has the right to unilaterally change a full-time employment relationship to part-time if the employer is justified to terminate the employment contract on production-related, financial or reorganisation grounds and the employee cannot be reassigned or trained to other duties. The change will not enter into force until the end of the notice period, and if the employer has at least 20 employees, a co-operation negotiations must be conducted before changing the working hours.

Changes to the place of work

If a place of work is specified in the employment contract, the employer usually cannot reassign the employee to another location. An exception to this rule are short-term and temporary assignments to another place of work.

Depending on the nature of the work, the employee must agree to a temporary change of the place of work. In most cases, the employee may refuse to work outside the agreed place of work entirely only if the significance of the place of work is specifically emphasised in the employment contract.

Changes to pay

If a certain hourly wage or monthly salary has been agreed with the employee (and nothing is agreed explicitly about the employer’s right to change the grounds for remuneration, etc.), the wage or salary cannot be reduced even if the duties become less demanding at a later date.

Employee benefits are also part of the employee’s pay, meaning that the employer cannot take them away on the basis of the right to direct work. In some situations, it may be possible to replace an employee benefit with a monetary compensation.

Pay supplements or benefits that have become established practice also cannot be reduced solely on the basis of the right to direct work. However, such benefits do not include, for example, sports or hobby benefits that are not based on the employment contract or collective agreement.

The pay can be reduced if the employer has grounds for dismissal and the reduction in pay is a less severe measure from the employee’s point of view than dismissal. However, such a measure must be necessary to safeguard the company’s operating conditions and cannot be used solely as a restructuring measure.