Change in remuneration conditions and the obligation to amend the employment contract
Appropriate shaping of employees' remuneration is one of the conditions for effective management of the employed staff. Decisions made by the employer in this regard may concern the entire staff as well as individual employees. Does any such decision have to be documented to be effective - and if so, how? Does a change in remuneration conditions, e.g. awarding a new remuneration component, provided for in the remuneration regulations, oblige the employer to make an appropriate change in the employment contract?
The content of the employment contract
According to Art. 22 § 1 of the Labor Code, by establishing an employment relationship, the employee undertakes to perform work of a specific type for the employer and under his direction and at the place and time designated by the employer, and the employer - to hire the employee for remuneration.
In order for the cooperation of the parties to the employment relationship to be harmonious, it is necessary to precisely define the terms of the contract that binds them - in particular, the terms of remuneration.
In art. 29 § 1 of the Labor Code lists important elements that should be included in each employment contract, including the determination of the remuneration for work corresponding to the type of work, with indication of the remuneration components.
The form of the employment contract
Pursuant to Art. 29 § 2 of the Labor Code, an employment contract is concluded in writing, and if it has not been concluded in writing, the employer, before allowing the employee to work, confirms to the employee in writing the arrangements for the parties to the contract, the type of contract and its terms.
Judgment of the Provincial Administrative Court in Rzeszów of December 6, 2017, II SA / Rz 1188/17)
„The obligation to conclude an employment contract in writing does not mean that failure to comply with this form will invalidate the contract. The written form of the employment contract is only a form for evidence purposes. An employment contract concluded orally is therefore effective, the employer is only obliged to under Art. 29 § 2 sentence second of the Labor Code, which states that if the employment contract has not been concluded in writing, the employer, before allowing the employee to work, confirms to the employee in writing the arrangements regarding the parties to the contract, the type of contract and its terms”
The requirement of a written form applies not only to the conclusion of an employment contract, but also to making changes to it (Article 29 § 4 of the Labor Code).
Pursuant to Art. 78 § 1 of the Labor Code, remuneration for work should:
- correspond to the type of work performed,
- meet the qualifications required for its performance,
- take into account the quantity and quality of work performed.
Moreover, it may not be lower than the minimum remuneration referred to in the Act of 10 October 2002 on the minimum remuneration for work.
It is also worth recalling the Code principle of the employee's right to receive fair remuneration (Article 13), as well as the principle of equal treatment of employees in terms of remuneration, according to which employees have the right to equal remuneration for equal work or work of equal value. Works of equal value are works, the performance of which requires comparable professional qualifications, confirmed by documents provided for in separate regulations or by practice and professional experience, as well as comparable responsibility and effort (Article 183c § 1 and § 3 of the Labor Code).
see resolution of the full composition of the Chamber of Labor and Social Insurance of the Supreme Court of October 30, 1985, III PZP 33/85)
The concept of remuneration for work includes not only the basic salary, but all its components, such as a function allowance, an internship allowance, a special allowance, bonuses, etc.
Determining the terms of remuneration - collective labor agreement or remuneration regulations
The terms of remuneration for work are determined by collective labor agreements, in accordance with the provisions of section eleven of the Labor Code. An employer who employs at least 50 employees not covered by the collective labor agreement is obliged to define the terms of remuneration for work in the remuneration regulations. On the other hand, an employer employing fewer than 50 employees not covered by a collective labor agreement may introduce remuneration regulations, although there is no such obligation. However, if the employer employs at least 20 and less than 50 employees, not covered by the collective labor agreement, and the workplace trade union organization applies for the determination of the remuneration conditions in the remuneration regulations, the employer is obliged to introduce such regulations (Article 771, Article 772 § 1). , § 11, § 12 of the Labor Code).
Change in the terms of the employee's remuneration
An individual change in the terms of remuneration of a given employee may have its source in various decisions of the employer. Firstly, such a change may result from a change in the content of the remuneration regulations - from the introduction of remuneration rules other than before. Then, the provisions of the regulations that are more favorable to the employee as of the date of their entry into force replace, by operation of law, the existing terms of the employment contract. However, when there is a change in the terms of remuneration that is less favorable for the employee, it is introduced by terminating the existing terms of the employment contract, the so-called an amending notice (Article 24113 in connection with Article 772 § 5 of the Labor Code).
The new remuneration regulations set higher lower levels of the basic salary. Previously, the salary scale provided for the following "brackets" in individual grades:
category I from PLN 2,700 to PLN 3,200,
category II from PLN 2,900 to PLN 3,400,
category III from PLN 3,100 to PLN 3,600.
After the change, the tariff is as follows:
category I from PLN 2,900 to PLN 3,400,
category II from PLN 3,100 to PLN 3,600,
category III from PLN 3,300 to PLN 3,800.
Due to the fact that the amendment to the remuneration regulations is a change to the benefit of employees, the basic salaries of employees, which before the change of the regulations were lower than PLN 2,900 (in category I), PLN 3,100 (in category II) and PLN 3,300 (in cat. III), by virtue of the law themselves, they are increased accordingly to these amounts - without the need for the employer to terminate the current terms of remuneration to individual employees.
A change in remuneration conditions may also result from an individual employer's decision regarding a specific employee. As indicated above, the determination of remuneration is one of the essential elements of each employment contract (employment relationship), the conclusion of which takes place by submitting unanimous statements of its parties - the employer and the employee - about the conclusion of the contract and giving it such and no other content. According to Art. 11 of the Labor Code, establishing an employment relationship and determining the terms of work and pay, regardless of the legal basis for this relationship, requires a joint declaration of will by the employer and employee.
Remember that both the conclusion of the employment contract and its change must be in writing.
Therefore, each individual decision regarding the change or introduction of any component of the remuneration of a specific employee (e.g. basic salary, functional allowance, bonus) - to become effective - must be introduced by making an appropriate change in the employment contract. Start a free 30-day trial period with no strings attached!
Annex or amending term
The first way to change the content of an employment contract is its so-called annexation, i.e. signing by the employer and the employee of an agreement - often referred to as an annex to the contract - regarding changes to the employment contract.
The employer offered the employee a promotion to a managerial position where - in accordance with the remuneration regulations - in addition to the basic salary, he / she is entitled to a function allowance, which the employee had not previously received. The employee accepted this offer. In order for the above-mentioned change in working conditions (promotion to a managerial position) and pay (increase in remuneration as a result of granting a new component) to become effective, the employer and the employee signed an annex to the contract introducing relevant changes to it.
In cases where the parties to the employment relationship cannot reach an agreement on the establishment of new working conditions or remuneration for some reason, e.g. when the proposed new conditions are perceived by the employee not as a promotion but as a demotion, the employer may unilaterally make such a change, in the form of a changing notice, which consists in offering the employee new working / pay conditions in writing. In the event of the employee's refusal to accept the proposed conditions, the employment contract is terminated upon the expiry of the notice period. On the other hand, if the employee accepts the proposed terms, they become applicable after the period of notice (Art. 42 of the Labor Code) expires.
Let us remember that in accordance with the principle expressed in art.11 of the Labor Code, establishing an employment relationship and determining working and pay conditions requires a joint declaration of will by the employer and the employee. Therefore, the rule is each time a written amendment to the employment contract is to be amended, if any of its provisions are to be changed - including the terms of remuneration. Other ways of making changes to the employment contract are exceptional and must result from a legal provision (e.g. the aforementioned change of remuneration conditions as a result of an amendment to the remuneration regulations in favor of employees or the application of a notice of amendment).