My employer has announced the termination of all annual holidays exceeding those referred to in the Annual Holidays Act

My employer wants to decrease my salary because of my reduced performance and terminate the payment of the annual sports and health premium. Furthermore, my employer has announced the termination of all annual holidays exceeding those referred to in the Annual Holidays Act. Does the employer have the right to reduce my salary and benefits? Do I lose my extra week of holiday in winter?

Any agreements made on employment shall be binding, whether they are individual employment contracts or collective labour agreements. Thus, an employer has no right to make unilateral changes to the terms and conditions of employment, but all changes must be agreed upon with the employee. However, the employer is entitled to make unilateral changes to the terms and conditions of employment if the employer’s legal grounds for terminating the employment are met. In such a case, the employer may offer employment on new terms and conditions as an alternative to the termination of employment. The employee has the right to accept or refuse the employer’s offer, but if the employee refuses the offer, his/her employment will terminate after the period of notice. The old terms and conditions shall apply during the period of notice. Naturally, the employee shall have the right to contest the grounds for the termination of employment even in the case described above.

The risk is that the employee might silently “accept” the new terms after changes made by the employer. In such a case, it could be considered that the new procedure has replaced the terms and conditions recorded in the employment contract.

The employer has the right to manage and supervise work performance. However, the employer’s legitimate authority – the so-called direction power – does not cover making changes to the actual terms or conditions of employment, but the employer should exercise his/her power within the limits set by the employment contract. All express provisions in the employment contract, including provisions on salary or annual holiday, are always considered essential terms and conditions of employment. Usually, employers tend to make any agreements on duties, working hours and locations as general as possible, in order to make the direction right as extensive as possible. In exceptional situations, the employer may have the right to make temporary changes to the terms and conditions of employment, for a justified reason.

If the employer changes in connection to a transfer of business, the terms and conditions of employment shall remain valid with the new employer. The new employer has no better right to change the terms and conditions of employment than the old employer. However, a transfer of business often leads to a new collective agreement, which might result in a lawful deterioration of the terms and conditions of employment.

The amount of salary in euros is one of the essential terms and conditions, and your employer may not reduce your fixed salary. However, if you are governed by a salary system by virtue of, for example, a collective agreement, the amount of personal bonus included in your salary may change. Even in this case, the employer must assess your performance appropriately, using the criteria of the system, and be able to justify the reduction of your salary.

If you are entitled to a sports or health premium on the basis of your contract, your employer has no right to make unilateral changes to it. But if the premium is a so-called personnel benefit that has not become standard practice, your employer may change or withdraw the benefit anytime. The replacement of the collective agreement applicable to your case is the only justified reason for re-assessing your existing entitlement to extended annual holiday.