In our previous article, we examined the disclosure and content of the essential terms of employment, as they were formed after the very recent Law 5053/2023. We also dealt with the differentiation of the essential terms from the (not defined by law) basic terms of the employment contract. As well as with the (excessively) complicated way and time of their notification to the employees. In the present article we will examine the employer’s managerial right and the (sometimes unilateral-damaging) change in the employee’s working conditions.
The Managerial Right of the Employer
Law 5053/2023 incorporated into the national legal order the 2019/1152/EU Directive on transparent and predictable working conditions in the EU. The need to define working conditions is indeed necessary and ensures the interests of both the employee and the employer. However, in a steady legal relationship, as is the employment relationship, the detailed and unequivocal definition of the terms of employment in the individual contract is not at all realistic. Clearly, not desirable either – at least from the business’ side.
The specification of working conditions (should) take place through instructions from the employer to the employee during the employment relationship. Practically, through the exercise of the former’s managerial right, which is transformative in nature. This exercise, however, in order to be legal, should be subject to specific conditions.
Content of the Managerial Right
As is consistently accepted by jurisprudence, “the employer, exercising their managerial right, according to article 652 of the Civil Code, has the authority to determine the content of the employee’s obligation to provide work by determining the conditions of its provision, the place, the time and manner, if these terms have not been determined by legal rules or by the employment contract. In other words, they have, as the manager of the entity, the authority to organize and manage their business based on the criteria they consider to be the most effective for it” (ind.: 906/2023 Supreme Court, NOMOS legal database).
Limits & Limitations of the Managerial Right
Therefore, the exercise of the managerial right (must) take place within specific limits and restrictions (ind.: 1248/1993 Supreme Court, NOMOS legal database). It must not, in any case, contradict the sources of formation of working conditions that have a regulatory nature (: law, Collective Work Agreements, arbitration decisions, labor regulation). Also, with the provisions of the individual employment contract. In fact, the more the last (: individual employment contract) specifies the terms of employment, the more (unfortunately for the employer) the managerial right is limited. Whereas, the broader the working conditions become (within tolerable limits, always), the more expanded (fortunately for the employer) the limits of the managerial right become. At the same time, the employer can expand, explicitly through contractual clauses, the limits of the managerial right.
In those cases, e.g., where the employment contract describes in detail the provision of work, the limits of exercising the managerial right in terms of the type of work due are extremely narrow. Conversely, the contract may mention the employee’s specialty/position and its subject, without a detailed description of their duties. Or, even better for the employer, to have reserved in their favor, through a contractual clause, the ability to assign, at their discretion, the employee to perform “inferior” tasks. Therefore, the escalation in the expansion of the limits of the managerial right in terms of the type of work due becomes clear.
The exercise, however, (also) of the managerial right is subject to an abuse control of article 281 of the Civil Code. It cannot, in other words, exceed the limits imposed by good faith or morals or the social or economic purpose of the right.
More specifically, the unilateral determination of working conditions attempted by the employer based on their managerial right must serve their purposes: the optimal utilization of work and the most convenient organization of the business. The unilateral determination of the provision of work, is a possibility that does not aim at the realization of the specific purposes but other, unrelated, pursuits of the employer. As such they could be the satisfaction of motives, reprehensible (also) by the legal order (eg empathy towards the employee). In this case, there is no utilization, but abuse of the managerial right. And this, because good faith obliges the bearer of the right to take into account, during its exercise and to the extent required by the circumstances, the justified interests and justified expectations of the other party (ind.: 1326/2017 Supreme Court, Nomos Legal Database).
As long as any changes to the working conditions on the part of the employer constitute a legal exercise of the managerial right, they are not only tolerable but also permissible. More precisely, the employer acts within the contractual terms and it is not, literally, a change in the terms of employment. The employee, therefore, undertakes to follow the relevant instructions of the employer and to provide, based on them, their services.
An issue, however, arises in those cases in which the employer exercises their managerial right in excess of its limits.
Unilateral Change of Employment Terms
In the event that the employer exceeds the limits of the exercise of managerial right, the employee is not obliged, according to the jurisprudence, to follow their instructions. Any change, therefore, of the working conditions on the part of the employer, by abuse of the managerial right or, similarly, in a manner contrary to the aforementioned sources of formation of the employment relationship, provides the employee, disjunctively, with the following possibilities:
(a) To accept the change. In this case, a new employment contract is concluded, amending the original one. This will prove to be valid as long as it does not contradict a prohibitive provision of the law or the principles of morality. The acceptance may be express (written or oral) or be implied (eg through the employee’s provision of work on the basis of the new terms of employment – unconditionally).
(b) To consider the employment relationship as terminated (for an open-ended contract) or to terminate (for a fixed-term contract).
In particular, in the event of a change in the working conditions by the employer in breach of the contract or in excess of the limits of the managerial right, the employee is entitled:
In the case of an open-ended contract, to consider the unilateral change as a harmful and disorderly termination of the employment contract by the employer. [Let us note here that any change in working conditions which causes, either directly or indirectly, material and/or moral damage to the employee is considered harmful (1426/2004 Supreme Court, NOMOS Legal Database). In fact, in the case of the employee leaving their job, they are entitled to demand the payment of the legal severance pay (art. 7 Law 2112/1920).
In the case of a fixed-term contract, to terminate the employment contract and claim compensation (according to article 673 of the Civil Code). [This, in light of the fact that the unilateral harmful change constitutes an important reason for the early termination of the contract (art. 672 Civil Code)].
(c) To adhere to the contractual conditions, offering its services according to the conditions before the change. [In this case, if the employer does not accept the services of the employee, they become overdue regarding the acceptance of the work and owes overtime wages (656 Civil Code). The employee has the right, of course, to provide the new job while expressing, at the same time, their opposition; in this case, a parallel appeal before the competent court is necessary, with a request that the employer be obliged to employ them in accordance with the conditions in place before the change].
Unilateral Prejudicial Change in Terms of Employment vs Abusive Exercise of Managerial Right
We must stress that in the case of a unilateral harmful change to the terms of the contract, the employer modifies, without the employee’s consent, these terms, without the relative freedom granted to them by the contract or the law. On the contrary, in the case of the abusive exercise of the managerial right, the unilateral change takes place in accordance with the terms of the contract, however, in excess of the limits imposed by good faith, good morals, the social or economic purpose of the relevant right.
Notice of Terms vs Employment Contract
The labor legislation (of course also the above-recent labor law) aims – by disclosing the essential and basic terms – to ensure transparent and predictable terms of the work. Beyond the requirements set (also) by the new law, however, the need for adaptability of working conditions to the changing conditions of the permanent employment contract remains. More precisely: It becomes necessary! With express provisions, in fact, in the employment contract, which will provide, in a lawful manner, the possibility of changes in the employment relationship – without the risk of being evaluated as harmful. From the employment contract, after all, derives (also) the scope of the content of the managerial right. A content, which can ensure the necessary flexibility of the working relationship, without affecting the employee’s rights. The individual employment contract, therefore, is reduced to a necessary lever to ensure the functionality of the employment relationship but also, sometimes, the development and survival of the company itself.
We have repeatedly examined, in the context of our articles, the value and importance (especially for the company) of the existence of a dependent labor contract against the simple disclosure of the essential (and still unknown basic) working conditions of its employees. Then, in fact, and from the recent labor law, the (obvious) necessity of written (and tailor made) employment contracts. If there are no such contracts in place, businesses are at great risks. In any case: the risks of characterizing a unilateral change in working conditions as harmful can be drastically reduced.-
P.S. A brief version of this article has been published in MAKEDONIA Newspaper (November 5th, 2023).
Disclaimer: the information provided in this article is not (and is not intended to) constitute legal advice. Legal advice can only be offered by a competent attorney and after the latter takes into consideration all the relevant to your case data that you will provide them with. See here for more details.