Changing an employee’s contract with modification clause

Employment contracts are usually based on mutual agreement. However, certain circumstances, such as reorganisation, restructuring of job roles, or the implementation of new company policies, may lead an employer to seek changes to existing employment terms. If the employment contract includes a modification clause, the employer may have the legal right or option to make unilateral changes. But even then, strict conditions apply.

What is a modification clause?
A modification clause (or unilateral change clause) is a provision in an employment contract that grants the employer the right to alter specific terms of the agreement without the employee’s consent. This may include changes to duties, work location or working hours, among others. However, the existence of such a clause does not grant the employer an unrestricted right to modify the terms of the employment contract unilaterally. Aside from the requirement that a modification clause is explicitly written in the employment contract, Dutch employment law also stipulates that any such modification be reasonable, necessary, and legally justifiable.

Legitimate business interest required
To invoke a modification clause, the employer must demonstrate a legitimate business interest, in Dutch legal terms, zwaarwichtig belang. This means the reason for the change must be compelling and of considerable importance. Examples include:

• Organisational restructuring to improve efficiency
• Financial difficulties requiring cost-saving measures
• Technological developments that render current roles redundant
• Legal or regulatory changes requiring new operational procedures

The employer must show that the proposed change is necessary to achieve the business objective and that this interest clearly outweighs the employee’s interest in maintaining the original contract terms. Courts assess this balance carefully and do not accept vague or purely strategic reasons.

What does the process involve?
Even when a modification clause exists, employers must carefully manage the change process . Key steps include:

• Consultation: start by discussing  the proposed change with the employee. This is not a mere formality; genuine dialogue is expected.
• Reasonable offer: present a fair and reasonable proposal that considers the impact on the employee. For instance, if the change affects salary or work location, consider offering compensation or support.
• Clear justification: Provide a transparent explanation of why the change is necessary, supported by documentation or business rationale.

Skipping any of these steps or implementing changes without sufficient justification may expose the employer to legal risks, including the possibility that the change will be overturned by a court.

Avoid pressure
Do not coerce employees into accepting changes on the spot. Instead, give them time to consider the proposal and encourage them to seek independent legal advice. This respects their rights and strengthens the legal groundwork for the proposed change.

Conclusion
A modification clause can offer employers flexibility in a changing business environment, but that flexibility is limited by law. Any unilateral change must be rooted in a legitimate and urgent business interest and must be implemented with care, fairness and transparency. When in doubt, consult a legal expert to ensure your approach complies with Dutch employment law and safeguards both your organisation and your employees.