Open Norms and the psychological dimension of employment relationships (2012 ELLJ)

European Labour Law Journal, Volume 2 (2011), No. 3 225

oPen noRMs AnD tHe PsyCHoLoGICAL DIMensIon oF eMPLoyMent ReLAtIonsHIPs*

aline Van Bever**

Abstract

Taking into account the incomplete and relational nature of employment contracts, this article examines to what extent so-called “open norms”, such as good faith or abuse of power, bear the potential to legally validate the legitimate expectations and psychological perceptions of the employee or the employer respectively in comparison to the formal a priori drafted rules that traditionally regulate the employment relationship. It assumes that, despite the possible criticism against the use of open-texture norms, these norms are better able to give effect to the dynamic reality of the employment relationship and its concealed interests in comparison to labour law’s current concepts. A consideration of the grounds and extent of the employer’s power to modify the terms of the contract of employment supports this assumption.

Keywords: good faith, reasonableness & fairness, implied terms; psychological contract theory; variation of contract of employment

1. iNtroductioN

Employment contracts are complex. They are incomplete, relational, and hide a complex psychological reality. They conceal ‘hidden patterns’, such as perceived promises between employer and employee that have never been brought to the surface.

* This article could not be written without the help and support of many. The author wishes to thank her promoter Prof. F. Hendrickx, and co-promoter, Prof. s. stijns, for their critical comments. special thanks also go to Prof. H. collins for his inspiring comments and suggestions. as regards the part on the psychological contract theory, the co-operation of dr. N. de cuyper of the Faculty of Psychology of the Ku Leuven was much appreciated. Finally, a word of thanks goes to m. merrigan and s. de dier for their linguistic review.

** assistant and Phd researcher, institute for Labour Law, university of Leuven.

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The question is whether or not these patterns are fully taken into account by the formal a priori drafted rules that traditionally regulate the employment relationship. if not, the legitimate expectations of the employee or the employer may be harmed. does a role then exist for the judge to do justice in the concrete case by deviating from the strict rules of contract, using open norms as an a posteriori applicable corrective tool? open norms are defined as behavioural norms with an open texture, which are – contrary to the a priori determined bright-line rules – intuitively attributed with an ad hoc interpretation.1 The norms of good faith, abuse of power, and the ideas of trust and confidence are examples of such open norms.

in this contribution it is suggested that Belgian employment law often disregards the use of open norms as a solution for cases in which neither the contract nor the law provides a suitable answer. after all, open norms give rise to various problems: vagueness, judicial activism, legal uncertainty, etc. Nevertheless, as a result of their ad hoc interpretation, open norms may be more able to give effect to the dynamic reality of the employment relationship and its concealed interests and expectations in comparison to labour law’s current concepts. a consideration of the grounds and the extent of the employer’s power to modify the terms of the contract of employment can illustrate that possibility.

2. tHE EmPLoYmENt coNtract as iNcomPLEtE, rELatioNaL aNd PsYcHoLoGicaL

The incomplete nature of the employment contract can be explained by reference to several factors. Not only are the transaction costs of complete contracts of employment too expensive, but the capacity of the employee and the employer to foresee future situations and to express every detail are also restricted. They are limited by the principle of bounded rationality,2 as well as by the fact that information that is relevant for the conclusion of the contract may be divided asymmetrically. moreover, and this touches the root of the employment relationship as an ‘authority relationship’,3 the employer (and employee) may deliberately leave aspects of their

1 in this context, open norms may not (automatically) be equated with general principles of law. although the Belgian Cour de Cassation has acknowledged some of the open norms envisaged in this contribution, such as the prohibition of abuse of power, as general principles of law, the category of open norms is much broader, for it encompasses all the ‘norms’ or (legal) notions which have an open texture, such as, for example, the term ‘reasonable’ in the requirement of a ‘reasonable notice’.

2 H. simon, Models of man: social and rational, New York, macmillan, 1961, 198 (hereafter H. simon, Models of man).

3 H. simon, Models of man, 184–185; o. Williamson, m. Wachter and J. Harris, “understanding the employment relation: the analysis of idiosyncratic exchange”, Bell.J.Econ. 1975, vol. 6, no. 1, 267–269.


open Norms and the Psychological dimension of Employment relationships

contractual relationship vague.4 indeed, the more the contract leaves undecided, the more important the employer’s prerogative to manage his enterprise, and the larger his discretionary power to give instructions.

Next, the contract of employment can be regarded as a relational contract,5 distinct from the discrete contract located at the other end of the spectrum in macneil’s relational contract theory.6 according to macneil, ‘contract’ means the ‘exchange relations’; it is more than a specific promise, a distinct agreement or an isolated transaction.7 in that view, there are no completely discrete relationships, which is the reason why macneil criticises (neo)classical contract law for its focus on planning and presentation through the principle of party autonomy, and its emphasis on the express or fictive agreement.8 indeed, the (neo)classical conception of contracts as fully defined agreements does not correspond to the reality of the flexibility that characterises many contracts, such as contracts of employment. since every transaction is embedded in complex relationships, understanding any transaction requires a deeper insight into the essence of those enveloping relationships.9

That proposition also applies to the analysis of the employment contract as a relational contract. Given the fact that the employee and the employer often commit themselves for an indefinite period, and that the on-going exchange between them implies a mutual expectation of trust and future cooperative behaviour, contracts of employment indeed contain many relational aspects. These aspects are only acknowledged if one does not solely focus on the terms of the contract, but rather takes the entire relationship as a reference point for the analysis.10 in macneil’s relational approach, besides the express contract terms, norms deriving from the contractual

4 Cf. H. simon, “a formal theory of the employment relationship”, Econometrica 1951, vol. 19, no. 3, 293–305.

5 Cf. r. Bird, “Employment as a relational contract”, U.Pa.J.Lab. & Emp. Law 2005, vol. 8, no. 1, 149–217 (hereafter, r. Bird, “Employment as a relational contract”); m. Freedland, The personal employment contract, oxford, ouP, 2003, 268–289.

6 Cf. i. macneil, “contracts: adjustment of long-term economic relations under classical, neoclassical, and relational contract law”, Nw.U.L.Rev. 1978, vol. 72, no.6, 854–905 (hereafter, i. macneil, “adjustment of relations”); i. macneil, “relational contract: what we do and do not know”, Wis.L.Rev. 1985, vol. 3, 483–525 (hereafter, i. macneil, “relational contract”); i. macneil, “relational contract theory: challenges and queries”, Nw.U.L.Rev. 2000, vol. 94, no. 3, 877–908 (hereafter, i. macneil, “challenges and queries”); i. macneil, “reflections on relational contract theory after a neo-classical seminar” in d. campbell, H. collins and J. Wightman (eds.), Implicit dimensions of contract. Discrete, relational and network contracts, oxford, ouP, 2003, 207–217 (hereafter, i. macneil, “relational contract theory”).

7 i. macneil, “challenges and queries”, 878.8 i. macneil, “adjustment of relations”, 862–886. For another critical approach of classical law,

d. campbell and d. Harris, “Flexibility in long-term contractual relationships: the role of co-operation”, J.Law & Soc. 1993, vol. 20, no. 2, 166–191.

9 i. macneil, “challenges and queries”, 881.10 i. macneil, “adjustment of relations”, 890. see, also, J. Feinman, “relational contract theory in

context”, Nw.U.L.Rev. 2000, vol. 94, no. 3, 737–748.

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relationship also determine how that relationship evolves.11 The essence of that approach, known as the essential contract theory,12 is that ten common contract norms, linked to the idea of cooperation, constitute the core of all exchange behaviour.13 contrary to the (neo)classical approach, which focuses on what has been promised in the contract, macneil thus argues in favour of relational thinking, emphasising the complex patterns of human interaction that inform all exchange.14

applying that idea to the employment contract, the employee and employer, and in case of conflict, the judge, should also acknowledge the relational norms deriving from the employment relationship. otherwise, the reasonable expectations of one or both parties may be harmed. Those relational norms are ‘the understandings and commitments made by both the employer and the employee that underpin their willingness to supply productive effort (…).’15 They follow from the organisational culture, company codes and the psychological contract of employee and employer.16 over time, these norms establish themselves through express and implied behaviour, and force employee and employer to subordinate their individual interests and strive for utility maximisation to focus on mutually shared collective interests and the common employment goal.17 if one of them neglects these norms by exceeding the discretion given to him by internal relationship practices, relational opportunism occurs, harming justified expectations and infringing good faith demands.18

as already indicated, besides the formal employment contract, the employment relationship is also built on the psychological contracts, existing in the minds of the employee and the employer.19 rousseau defines the psychological contract as ‘an individual belief regarding the terms and conditions of a reciprocal exchange agreement between that focal person and another party. Key issues here include the belief that a promise has been made and a consideration offered in exchange for it, binding the parties to some set of reciprocal obligations.’20 important in this definition is the idea of reciprocity. indeed, a psychological contract only emerges if one party perceives

11 Cf. “In a contract, not everything is contractual” (E. durkheim, The division of labor, New York, Free Press, 1984, 158).

12 i. macneil, “challenges and queries”, 892–894.13 For an overview, i. macneil, “adjustment of relations”, 895; i. macneil, “relational contract theory”,

212.14 i. macneil, “relational contract”, 483–525.15 G. Hogbin, Power in employment relationships. Is there an imbalance? Wellington, New Zealand

Business roundtable, 2006, 20.16 r. Bird, “Employment as a relational contract”, 165. Bird, however, only mentions the employee’s

psychological contract.17 r. Bird, “Employment as a relational contract”, 198–199.18 r. Bird, “Employment as a relational contract”, 199 and 202–203.19 For that reason, most research on psychological contracts focuses on the perceived promises within

the employment relationship.20 d. rousseau, “Psychological and implied contracts in organizations”, Emp. Responsibilities & Rts. J.

1989, vol. 2, no. 2, 123 (hereafter, d. rousseau, “Psychological and implied contracts”).



that the contributions he makes oblige the other to reciprocity.21 it implies that an employee and employer respectively adjust their input and investments to what they perceive to be promised in exchange. These perceptions arise out of patterns of past behaviour, through vicarious learning, as well as through factors that the employee and employer take for granted, such as fairness and good faith.22

However, if reality does not match the promises perceived, the damaged party may believe his psychological contract to be broken, and adjust his own efforts as a reaction. That do ut des-nature of the psychological contract makes of the employment relationship an on-going exchange. Through ‘repeated cycles of each party fulfilling its promises to one another’23 it directs the behaviour of the employee and employer, and thus establishes a form of internal control.24 moreover, psychological contracts lend structure to expectations concerning future exchanges, thereby filling in the gaps of the legal employment contract, and reducing uncertainty.25

3. HiddEN PattErNs iN EmPLoYmENt rELatioNsHiPs, oPEN Norms aNd tHE JudGE

From the presentation of the employment contract as an incomplete, relational and psychological contract follows that employment relationships conceal a lot of hidden patterns: legitimately risen expectations, implicitly accepted relational norms, and perceived promises of mutual obligations, etc., which all influence the course of dealing between the employee and the employer. The question now arises as to whether existing employment law also legally acknowledges these hidden patterns.

3.1. tHE ‘riGiditY’ oF BELGiaN EmPLoYmENt LaW

Belgian employment law originated as a reaction to the application of general contract law to the relationship between a worker and his employer. The finding that the liberal principles of contractual autonomy and party equality contrasted with the reality of economic dependence and legal subordination of the employee towards his employer urged the lawmaker and the social partners to enact a set of formal and mandatory a

21 d. rousseau, “Psychological and implied contracts”, 124.22 s. robinson and d. rousseau, “Violating the psychological contract. Not the expectation but the

norm”, J.Organ.Behav. 1994, vol. 15, 246.23 N. conway and r. Briner, Understanding psychological contracts at work. A critical evaluation of

theory and research, oxford, oxford university Press, 2005, 32 (hereafter N. conway and r. Briner, Understanding psychological contracts).

24 c. Freese, Organizational change and the dynamics of psychological contracts. A longitudinal study, ridderkerk, ridderprint offsetdrukkerij, 2007, 28; L. mcFarlane shore and L. tetrick, “The psychological contract as the explanatory framework for the employment relationship” in c. cooper and d. rousseau (eds.), Trends in organizational behaviour, Londen, John Wiley & sons, 1994, 93.

25 r. schalk and r. roe, “towards a dynamic model of the psychological contract”, JTSB 2007, vol. 37, no. 2, 168.

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priori fixed rules regulating the employment relationship.26 over time, Belgian labour law and – as a part thereof – Belgian employment law evolved as a sort of separate branch of law with its own goal and functions, and its own nature, structure and techniques. it was primarily concerned with the protection of the ‘weaker’ employee, and through the use of mandatory rules it tried to correct the unequal bargaining power between employee and employer.

From that primarily protective perspective follows a general distrust regarding open norms, such as good faith, the abuse of rights, good employership/employeeship, and the duty of trust and confidence. indeed, because of their vagueness and ad hoc interpretation, open norms create legal uncertainty, often at the expense of the individual employee. moreover, the judge’s use of open norms bears the risk of judicial activism.

3.2. tHE PotENtiaL oF oPEN Norms iN EmPLoYmENt LaW

The question arises as to whether or not that distrust is justified, given the earlier presentation of the employment relationship. First of all, it seems that the dynamic character of that relationship in reality is much more complex than can be caught in a priori determined norms. it conceals a pattern of mutual expectation between employer and the employee which does not reveal itself through the formal agreement, and which turns the employment relationship into a relationship of trust.

moreover, in situations in which neither the formal contract nor the strict rules of employment law provide a ‘suitable’ answer, open norms may do justice to the concrete case (Einzelfallgerechtigkeit) and guarantee the respect for legitimate expectations, thus recognising the hidden patterns of the employment relationship. Thanks to their a posteriori or ad hoc application, they may be able to validate the dynamic nature of the employment contract, and to enforce the on-going exchange between the employee and the employer. The suggested potential of open norms finds its origins in the evolution of general Belgian contract law. There, open norms are often used on two levels. Firstly, they fulfil a substantial role by addressing lacunae in contractual and legal provisions, and thus, by making the legal system more coherent. secondly, they generate consequences at the operational level by providing rules of conduct for the parties and guidelines for the judge.

Given the potential of open norms in general contract law and the distrust regarding them in Belgian employment law, it can be questioned whether the latter has removed itself too much from contract law. That question gains importance now labour law faces the criticism of being too rigid or – at least – not being adapted to the flexibility

26 Cf. B. chlepner, Cent ans d’histoire sociale en Belgique, Brussels, Ed. de l’université de Bruxelles, 1972, 13–107; J. dhondt, Geschiedenis van de socialistische arbeidersbeweging in België, antwerp, ontwikkeling, 1960, 626 p.



challenges resulting from the evolutions in the labour market.27 considering the fact that Belgian contract law was able to modernise itself precisely by using open norms, often as correction mechanisms, should Belgian employment law not be equally reoriented towards a more generalised use of open norms?

Nevertheless, one should not forget the criticism with which the use of open norms is confronted. That is why, first of all, it should be stressed that this paper does not defend the ‘end’ or ‘death’ of existing employment law. For historical reasons, those rules remain important for regulating of employment relationships; besides, open norms in themselves are not the answer to everything. Therefore, the potential of open norms is only tested in the hypothesis that neither the fixed rules of employment law, nor the formal employment contract, provide a clear answer.

moreover, if one defends a more generalised use of open norms in a branch of law, such as labour law, one should also provide some guarantees for legal certainty and for the absence of judicial arbitrariness. From a normative perspective, those guarantees could be attached to the functions of labour law and the normative criteria of human dignity and commutative justice from which those functions derive. This means that a judge who appeals to open norms to settle an employment conflict should always ensure that he respects the foundations of labour law, and thus realises the law’s objectives. What those functions, foundations and objectives of labour law consist of is, however, not discussed in this paper. First and foremost, the judge needs some practical guidelines to deal with the vagueness of open norms and to provide them with a predictable content. in what follows, inspiration is sought in the psychological contract theory in order to construct a framework for the judge when he is faced with the application of such open norms.

3.3. tHE PsYcHoLoGicaL coNtract as a FramEWorK For tHE JudGE

3.3.1. Focus on the dimensions of the psychological contract

in psychological contract theory, the focus lies on the perceptions of the individual employee. after all, it can be easily determined who the employee is, whereas it is more difficult to define who represents the larger organisation and who can be identified as

27 Cf. B. caruso, “changes in the workplace and the dialogue of labor scholars in the ‘global village’”, Comp.Lab.L.& Pol’y J. 2007, 522–530; H. collins, “Labour law as a vocation”, LQR 1989, vol. 105, no. 3, 484; H. collins, “regulating the employment relation for competitiveness”, ILJ 2001, 17–47; r. Epstein, Simple rules for a complex world, cambridge, Harvard university Press, 1995, 151–169; r. mitchell, “Where are we going in labour law? some thoughts on a field of scholarship and policy in process of change”, Working Paper No. 20, Victoria, monash university, 2010, 4–5; s. sciarra, ‘Modernization’ of labour law: a current European debate, Genève, iLo, 2007, 11 p.; a. supiot, Au-delà de l’emploi. Transformations du travail et devenir du droit du travail en Europe, Paris, Flammarion, 1999, 321 p.; P. van der Heijden, “Post-industrial labour law and industrial relations in The Netherlands” in Lord Wedderburn (ed.), Labour law in the post-industrial era. Essays in honour of Hugo Sinzheimer, aldershot, darthmouth 1994, 134.

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the employer.28 if psychological contract theory is taken as the basis of a framework that is to guide the judge in balancing the perceptions and reciprocal obligations of the employee and employer (as proposed in this paper), it would seem, however, equally important to reconstruct the psychological contract of the employer. The question that arises now is how those perceptions and the corresponding needs and interests of the employee and the employer respectively can be detected.

on the side of the employee, the parameters necessary to define his psychological contract are found in the employment contract, as well as in some personal characteristics. These parameters correspond to the so-called dimensions of the psychological contract on the basis of which a distinction is drawn between transactional and relational contracts.29

First of all, the content and focus of his employment contract will arouse some expectations, and will consequently influence the employee’s conduct and behaviour. an occasional worker or working student who only works in exchange for the wage he earns will have other expectations and needs than an employee who attaches more importance, to, for instance, trust and personal development. The more the employee is inspired by economic considerations, the more instrumental his employment relationship, and the smaller his devotion to the organisation seems to be.30 The opposite is true for employees whose expectations mainly concern socio-emotional work aspects.31

Next, the time frame in which the employee operates will determine his psychological contract. The longer the employee expects to participate in a certain organisation, the more he will probably establish personal contacts, but also the greater the risk of role

28 Kotter argued against the so-called ‘anthropomorphising of the organisation’: not organisations, but only the individuals within them can hold perceptions (cf. J. Kotter, “The psychological contract. managing the joining up process”, California Management Review 1973, vol. 15, no. 3, 91–99). Building on that critique, rousseau only focuses on the psychological contract of the employee (cf. d. rousseau, “Psychological and implied contracts”, 123). Guest describes the problem as ‘the agency problem’, referring to the fact that the contract of employment is signed between the employee and an agent of the organisation (cf. d. Guest, “is the psychological contract worth taking seriously?”, J.Organ.Behav. 1998, vol. 19, no. 1, 652). Cf. N. cullinane and t. dundon, “The psychological contract: a critical review”, IJMR 2006, vol. 8, no. 2, 118; a. marks, “developing a multiple foci conceptualization of the psychological contract”, Employee Rel. 2001, vol. 23, no. 5, 457–458.

29 Cf. N. conway and r. Briner, Understanding psychological contracts, 85–86; J. mcLean Parks, d. Kidder and d. Gellagher, “Fitting square pegs into round holes. mapping the domain of contingent work arrangements onto the psychological contract”, J.Organ.Behav. 1998, vol. 19, no. 1, 704–715 (hereafter J. mcLean Parks, a.o., “Fitting square pegs”). Wellin goes even further in his typology of ‘personal deals’ (m. Wellin, Managing the psychological contract. Using the personal deal to increase business performance, Hampshire, Gower 2007, 93–111; hereafter m. Wellin, Managing the psychological contract).

30 Cf. G. salancik, “commitment and the control of organizational behavior and belief” in B. staw and G. salancik. (eds.), New directions in organizational behavior, chicago, st. clair Press, 1977, 20.

31 Cf. a. Kalleberg and J. rogues, “Employment relations in Norway: some dimensions and correlates”, J.Organ.Behav. 2000, vol. 21, no. 3, 321 en 331 (hereafter a. Kalleberg and J. rogues, “Employment relations”).



conflict. on the other hand, if the employment contract is concluded for only a limited period of time or for the fulfilment of a specific job or task, it may be presumed that the integration of the employee will be more difficult.32 moreover, employees with a contract limited in time or to a certain task, who experience their time frame as fixed or finite, exhibit different expectations and a different conduct or behaviour to employees with an employment contract for an unfixed period of time.33

The tangibility of other employment conditions, such as the function, concrete tasks and responsibilities of the employee will also affect his perception and behaviour. ‘tangibility’ refers to the ‘the degree to which the employee perceives the terms of the contract as unambiguously defined and explicitly specified and clearly observable for [hypothetical] third parties.’34 The more explicit his contract terms, the more he will perceive his own obligations as being observable to third parties. That will discourage him from deviating from his job description, not only in a negative, but also in a positive sense, implying that he is less likely to go beyond what the contract minimum requires.35 Very tangible employment contracts thus decrease spontaneous and innovative behaviour.36 However, a manager or researcher with a rather vague and ambiguous range of duties will feel himself more obliged to engage in extra-role behaviour.

The previous parameter is connected to the perceived scope of the contract of employment, viz. ‘the extent to which the boundary between one’s employment relationship and other aspects of his life is seen as permeable.’37 The more tangible the employee’s terms and employment conditions, the more strict he will probably perceive the barrier between his personal life and his professional life. This may delay or obstruct the integration of the employee in the organisation, and weaken his devotion towards the organisation.38 When the scope of the employment contract is, however, larger, because of the vagueness or importance of the employee’s tasks and responsibilities, the employer may become more important to the employee’s self-identity.39

a fourth dimension that characterises the employee’s psychological contract is its degree of stability. stable contracts are rigid, in the sense that they only evolve after an explicit formal renegotiation, whereas flexible contracts are spontaneously changed

32 Cf. J. mcLean Parks, a.o., “Fitting square pegs”, 713.33 Cf. J. mcLean Parks, a.o., “Fitting square pegs”, 713.34 J. mcLean Parks, a.o., “Fitting square pegs”, 708.35 Cf. J. mcLean Parks, a.o., “Fitting square pegs”, 709.36 Cf. B. staw and J. Boettger, “task revision. a neglected form of work performance”, AMJ 1990, vol.

33, no. 3, 538.37 Cf. J. mcLean Parks, a.o., “Fitting square pegs”, 707.38 J. mcLean Parks, a.o., “Fitting square pegs”, 708.39 Cf. J. mcLean Parks, a.o., “Fitting square pegs”, 708 with reference to r. Guzzo and K. Noonan,

“Human resource practices as communications and the psychological contract”, Human Resource Management, 1994, vol. 33, no. 3, 447–462.

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and implicitly adapted to the circumstances. Employee’s with a more standardised form of contract, encompassing a fixed job and task description, will perceive their contract terms and conditions as stable.40 When the contract is, on the contrary, drafted in more flexible terms, obliging the employee, for instance, to work in different departments or within a flexible work schedule, the employment relationship will be felt to be more dynamic, and thus be adjusted more easily to varying circumstances. if one focuses on the formulation of the contract terms in order to determine the degree of stability of the contract, then there seems to be a link between this and the previous dimension of the psychological contract. Nevertheless, there is a subtle difference: whereas tangibility refers to the employee’s expectations as regards the way third parties, like the judge, would observe his obligations and responsibilities to the employer, which is very much dependent on the way the contract is formulated, stability also depends on the formulation of the contract, but is also influenced by other factors, such as the customs and traditions in the company, or the nature of the job. Thus, an employee will possibly perceive his contract to be more flexible when job rotation is very common in the company. moreover, jobs which by nature imply more flexibility and change, like the job of a manager, are perceived to be more flexible than routine jobs, like that of a shop assistant.

Finally, one could look to the personal characteristics of the employee, such as his talents, capacities and personality, to define which promises he perceives and to determine his interests and needs. moreover, these perceptions will be influenced by certain characteristics of the organisation in which he is employed, such as the size of the company and the financial position of the employer. Those characteristics may be linked to a final dimension in the psychological contract theory, labelled particularism. That is ‘the degree to which the employee perceives the resources exchanged within the contract as unique and non-substitutable.’41 an employee who is employed because of his company-specific skills will have a more particular, and thus more relational, contract than one who can be easily replaced.42 The same goes for employees who deliberately choose to work for a certain company because of its unique position in the labour market.

on the side of the employer, the difficult issue of how to identify the person behind the employer/company may be surmounted by classifying different companies according to certain criteria, such as the company’s interest, the set company goal, the shareholder or stakeholder structure of the company, and specific characteristics regarding the company’s size and its financial position. once different companies are structured along these criteria, it becomes feasible to reconstruct their perceptions and expectations in the same way as is done in the mind of the employee. indeed, the employer’s and company’s conduct and behaviour is also influenced by the different

40 Cf. J. mcLean Parks, a.o., “Fitting square pegs”, 706.41 Cf. J. mcLean Parks, a.o., “Fitting square pegs”, 714.42 Cf. a. Kalleberg and J. rogues, “Employment relations”, 319–320 and 330.



dimensions mentioned above. if the employer is an individual, reference could be made to his own perceptions as regards the focus, time frame, tangibility, scope, stability, and the particularity of the contract. if the employer is a company, one can also construe a psychological contract along those dimensions, their precise content being dependent on the criteria according to which the company is classified. Thus, a company with a shareholder structure emphasising the interest of profit and setting mainly economic goals will be located at the transactional side of the continuum, away from the company that stresses the larger interests at stake, and that attaches more importance to the socio-emotional aspects of the employment relationship, thus having a more relational psychological contract.

moreover, the expectations of the employer may be different depending on the (class of) workers. Thus, it is not hard to imagine that the employer’s expectations of his managers and directors will be different than his expectations of (casual) workers. similarly, his expectations towards full-time or part-time employees may differ.

Putting the different dimensions of the psychological contract together in one scheme, one can clearly distinguish between so-called transactional contracts and relational contracts. However, it has to be noted that this distinction is not crystal clear. These two types of contract are only the ends of a continuum. most contracts contain aspects of both.43 Nevertheless, this scheme remains a meaningful tool to bring the hidden patterns of the employment relationship to light.

transactional (discrete) contract Relational contract

Focus Exchange of work for a wage→ focus on economic aspects

Work as a part of life (besides work/wage)→ focus on socio-emotional aspects

time frame short time/fixed period Long term/unfixed period

tangibility Precise tasks/responsibilities→ observable to third parties

Vague job description/great involvement→ emphasis on trust and confidence

scope Barrier between private/professional life

overlap between private/professional life

stability rigid/static→ formal renegotiation

Flexible/dynamic→ spontaneous adaptation

Particularism replaceable nature of the exchange unique nature of the exchange

43 m. Wellin, Managing the psychological contract, 97–98.

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3.3.2. Legal relevance of the dimensions of the psychological contract

What now is the legal relevance of the foregoing? How can the dimensions of the psychological contract function as a guideline or framework for the judge when he appeals to open norms to decide a case, because neither the contract nor the existing rules provide a ‘suitable’ answer?

if a judge is confronted with a legal conflict, he will normally consider the facts at hand and try to resolve the conflict on the basis of the legal contract combined with the relevant legal rules in force. He may not, however, deny the implicit dimensions or hidden patterns in the formal-legal contract. indeed, as macaulay argues, if one accepts that there is a text between the lines of the contract, but does not attempt to implement that implicit text, he in fact denies the reasonable expectations.44 to guarantee that the judge acknowledges that implicit text, and thus meets those expectations, macaulay pleads for a contract law that rests on standards rather than on bright-line rules.45 consequently, ‘[c]ontract law then will talk of “good faith” and “duties of cooperation” (…).’46 That plea fits perfectly in the aforementioned thesis concerning the potential of open norms.

However, in order for the judge to legally recognise the hidden patterns of the employment contract, he must not be distracted by particularities that do affect the essence of the case. These particularities may obscure how the judge analyses the case and, moreover, may make it difficult for him to compare the concrete case with other cases. The fact that the Judge should emphasise the complex patterns of human interaction – as macneil defends – does therefore not imply that he should give equal weight to every aspect of the employment relationship in deciding the case. He should, however, discover the relevant facts of the case and take those facts into consideration. in that exercise, the nature and different dimensions of the psychological contract become relevant. indeed, the so-called dimensional approach47 within the psychological contract theory makes it feasible for the judge to compare reasonable expectations of different employees and employers. on the basis of those dimensions the judge can decide which type of contract is brought before him and where the employment relationship is located on the continuum of transactional/relational contracts. difficulties may arise when the employee and the employer (or the organisation) have different psychological contracts, meaning that

44 s. macaulay, “The real and the paper deal: empirical pictures of relationships, complexity and the urge for transparent simple rules”, MLR 2003, vol. 66, afl. 1, 79 (hereafter s. macaulay, “The real and the paper deal”).

45 s. macaulay, “The real and the paper deal”, 44. see also, r. speidel, “characteristics of relational contracts”, 838: ‘(a) continuing challenge is for courts to recognize the special characteristics of relational contracts and to develop a set of default rules that are more responsive to the problems that those characteristics generate.’

46 s. macaulay, “The real and the paper deal”, 44.47 Cf. N. conway and r. Briner, Understanding psychological contracts, 85–86; c. Freese, Organizational

change, 30; J. mcLean Parks, a.o., “Fitting square pegs”, 705–715 and 725.



their perceptions regarding certain aspects of their employment relationship, such as training opportunities or for working overtime, do not correspond. indeed, it may be that an employer has more transactional ideas about the employment relationship than an employee who attaches great importance to socio-emotional or other relational elements. in that case, it is up to the judge to objectively determine which type of contract is at issue. For this purpose, he should rely on objective elements that characterise the employment relationship, such as its time frame and duration, and the degree to which the tasks and responsibilities are specified. in those difficult situations, it is thus up to the judge to reconcile the different perceptions of the employee and the employer on the basis of how he himself perceives their reciprocal obligations.48

once the judge has decided which type of employment relationship has been brought before him, he has a clearer picture of the relevant expectations, needs and interests of employee and employer, which consequently allows him to choose a proper approach to decide the concrete case. if the employment relationship is, for example, more relational in nature, considering, amongst other things, its scope, focus and time frame, then the judge will attach considerable value to the existing relationship between the employee and employer, and will underline duties of cooperation for it to endure. if, on the other hand, the employment relationship focuses on the exchange of labour for a wage and the tasks and responsibilities of the employee are defined in detail, preventing the relationship from changing spontaneously, then the judge will interpret the contractual terms as being of a more transactional nature, and he will give preference to a (neo)classical approach in deciding the case. The latter approach implies that the judge will base his reasoning on the more discrete relationship between the employee and the employer, and will attach great importance to the express terms and conditions in the contract of employment. contrary to the judge’s approach in respect of relational employment relationships, notions like trust, commitment and interpersonal attachment will hardly play a role in his reasoning.49

in short, it could be said that the different dimensions of the psychological contract provide the judge with an insight into the essence of the contractual relationship between employer and employee. it allows him to identify and acknowledge the reasonable expectations of both, which, in turn, can serve as a framework to make his reasoning more predictable and transparent. This way, the criticism with which open norms are confronted, can somehow be met.

48 rousseau speaks, in this context, of ‘the implied (psychological) contract’, being the way a third party, such as the judge, interprets the contractual terms between two individual contract parties (cf. d. rousseau, Psychological contracts in organizations. Understanding written and unwritten agreements, Thousand oaks, sage, 1995, 9).

49 Just like, in economic exchange theory, those notions are not incorporated into economic exchange frameworks (cf. r. Emerson, “social exchange theory” in m. rosenberg en r. turner (eds.), Social psychology. Sociological perspectives, New York, Basic Books, 1981, 35).

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4. tHE VariatioN oF coNtract tErms aNd coNditioNs as aN iLLustratioN

to illustrate the assumption that a more generalised use of open norms by the labour judge can modernise the existing employment law – or at least make it less rigid than it is often perceived – by introducing more flexibility into the employment relationship, the question of how open norms allow – but also limit – the employer to ‘unilaterally’ vary contract terms and conditions will be analysed.50 in so doing, attention is drawn to the way the labour judge ensures that reasonable expectations are met, and how his reasoning could possibly be linked to the theory of the psychological contract. departing from the – prima facie – inflexibility of Belgian employment law, the focus is broadened to include the way in which open norms facilitate contract variations in British and dutch law.51

4.1. tHE iNFLEXiBiLitY oF BELGiaN EmPLoYmENt LaW

4.1.1. The principle of the binding force of contract

The fact that the employment contract remains, in its essence, a contract implies that the general principles of contract law apply to it. one of those principles is that of the binding force of contract. That principle is enacted in the first and second paragraph of article 1134 of the Belgian civil code, and holds that legally concluded contracts cannot be terminated other than by means of a mutual consent or on legally acknowledged grounds. starting from the idea ‘qui peut le plus, peut le moins’, the principle also applies with regard to the variation of contract terms and conditions.52

Nevertheless, it is not hard to imagine situations in which the employer (or the employee)53 has an interest in varying the agreed contract terms and employment conditions to meet flexibility needs. certainly, in this rapidly changing world in

50 ‘unilaterally’ has been placed in inverted commas because the open norms on the basis of which the employer will effect a variation of the employment contract imply the consent of the (reasonable) employee, so that the variation is not really unilaterally implemented.

51 to refer to the applicable case law, the names of the relevant courts, tribunals and journal, articles are written in their original language and abbreviated in the manner that is applicable in the country of origin.

52 This analysis does not focus on the variation, or better, determination, of aspects related to the employment relationship that are left open or vague in the employment contract. indeed, these aspects may be filled in unilaterally by the employer on the basis of his authority derived from the employment contract and his right to give the employee instructions regarding his labour. in Belgium, that right is known as the employer’s ius dominandi (cf. P. Humblet, “ius dominandi of ius variandi: what’s in a name?” RW 1994–95, 241–247).

53 although the employee may also seek for flexibility, for example, to better combine his professional tasks with his personal or familial responsibilities, the focus of this paper lies on the power and possibilities of the employer to change contract terms and conditions.



which the globalised market and technical evolutions urge the employer to adapt his production methods and organisational structure to fast-changing demands, the possibility of varying contract terms and conditions is a matter of major importance. The employee, however, needs to be sure that his legitimate expectations regarding his terms and conditions are protected. That is why he may, in principle, refuse the modifications to the contract that his employer proposes, by referring to the binding force of their employment contract. if the employee refuses and there is no express flexibility or mobility clause in the employment contract, the question arises as to whether or not the employer could justify the variation of the contract on considerations of reasonableness. Here, the role of open norms, such as good faith, comes into play.

4.1.2. The contractual analysis of the Belgian Cour de Cassation

Before considering how the norm of good faith could justify (and limit) contract modifications, one should be aware of the strict approach or contractual analysis of the Belgian Cour de Cassation. two leading cases illustrate the court’s reluctance to accept unilaterally implemented modifications. in the first case the court ruled that article 1134 of the civil code prevented the employer from unilaterally varying the originally agreed wage conditions, even if that variation was favour of the employee. such variation cannot be justified by the employer’s authority and managerial power, or by the (long) period during which the employment contract is executed.54 in a second case concerning the unilateral variation of the employee’s function as a school teacher, the court linked article 1134 of the civil code to article 20, 1° of the Employment contracts act,55 which obliges the employer to offer the employee labour in the way and at the time and the place previously agreed.56 The court held that the employer could not, without frustrating his contractual obligations, unilaterally vary or revoke the contract terms and conditions, even if the variation was not important or was related to an inessential contract element. Thus, by focusing on the agreed contract terms, the court advocated a (neo)classical approach.57 under the pretext of the protection of the ‘weaker’ employee, the court rejected explicit good faith considerations, and consequently dismissed contract variations grounded in the economically driven flexibility needs of the employer.

54 cass. 20 december 1993, Arr.Cass. 1993–94, 1085, TSR 1993, 411 and Soc.Kron. 1994, 105, annotation H. Funck and J. degrauwe.

55 Employment contracts act of 3 July 1978, BS 22 august 1978.56 cass. 13 october 1997, Arr.Cass. 1997,400 and RW 1998–99, 502.57 see, for example: cass. 30 November 1998, Arr.Cass. 1998, 496; cass. 18 december 2000, Arr.Cass.

2000, 703; cass. 4 February 2002, JTT 2001, 121, annotation c. Wantiez; cass. 13 october 2003, RW 2006–07, 1537; cass. 7 may 2007, JTT 2007, 336, annotation c. Wantiez; cass. 23 January 2006, JTT 2006, 178; cass. 11 February 2008, JTT 2008, 250; cass. 11 october 2011, ar nr. ar s.09.0117.F, www.cass.be.

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on the other hand, if one takes a closer look at the decisions of the Belgian Cour de Cassation, it seems that the court, after all, reaches flexible solutions. The court, for example, interprets the contract terms in a more flexible way, thus giving the employer some room for adaptation.58 unfortunately, that approach causes uncertainty and creates a greater risk of judicial arbitrariness than if the court explicitly acknowledged good faith considerations as balancing the interest of the employer to change the contract conditions against the need for certainty of the employee. Thus, in the end, the contractual approach may be at the expense of the protection of the employee.

Given the fact that the Belgian Cour de Cassation implicitly does what it explicitly denounces, namely, balancing the interests of employer and employee, which would amount to abandoning its contractual approach, the question arises as to why it refuses to openly appeal to the open norm of good faith to reconcile the employer’s flexibility concerns with the search for certainty of the employee. This question has been picked up in Belgian doctrine and case law of the tribunals and lower courts, where it has developed into a theory on the employer’s power to implement marginal variations. moreover, examples are found in British and dutch case law, allowing contract variations on the basis of implied terms or the norm of good employership/employeeship.59

4.2. VariatioN oF coNtract tErms tHrouGH oPEN Norms aNd imPLiEd tErms

By examining how open norms meet the flexibility needs of the employer, it is apparent that open norms fulfil a double role. First, they can legally ground the employer’s variation right. moreover, they limit the employer in the exercise of his right to variation. Below, both roles are discussed by analysing the relevant Belgian, British and dutch case law.

4.2.1. Good faith and the employer’s right to implement marginal variations

as a reaction to the strict contractual analysis of the Cour de Cassation, Belgian doctrine and some lower courts and tribunals developed a theory according to which

58 a. Van Bever, “Goede trouw en belangenafweging in het arbeidsrecht. toepassing op de eenzijdige wijziging van arbeidsvoorwaarden”, TSR 2010, afl. 4, 520–521 (hereafter a. Van Bever, “Goede trouw en belangenafweging in het arbeidsrecht”). concordantly: d. cuypers, “Het injunctierecht staande de arbeidsovereenkomst” in m. rigaux, P. Humblet and G. Van Limbergen (eds.), Actuele problemen van het arbeidsrecht 7, antwerp–oxford, intersentia rechtswetenschappen, 2005, 19.

59 The possibility of changing contract terms on the basis of the norms of reasonableness and fairness (article 6:248 of the dutch civil code) is not discussed in this paper.



the functions of good faith support the employer’s right to vary contract conditions in a marginal manner.60, 61

a. Employee’s good faith demandsto begin, one could consider the problem of variation from the viewpoint of the employee. First of all, the interpretative function of good faith obliges the employee and the employer to read and to interpret the express contract terms and agreed employment conditions in a reasonable way. Thus, one could reasonably conceive the agreed place of employment as the initial place of work that could be transferred for technical or economic reasons insofar as that transfer does not cause any unacceptable disadvantage for the employee.62

moreover, good faith’s completive function can demand certain concessions from the employee. Beyond his contractual duty to do his work in a careful and precise manner, good faith obliges him to perform additional duties to guarantee the good management of the employer’s business.63 as explained below, the employer may not, on his part, abuse that situation, but should always respect the essence of the employment contract and the employee’s reasonable expectations.64

Finally, the limitative function of good faith, also linked to the prohibition of abuse of rights, could serve as a ground for variation.65 as mentioned, the binding force of the employment contract grants the employee the right to refuse the modifications that his employer proposes. He may not, however, abuse that right. indeed, the limitative

60 Those functions are the interpretative, completive and limitative function of good faith. The first obliges the parties (and the Judge) to interpret contract terms in a reasonable manner, i.e. with regard to the reasonable expectations of the parties. The second function implies that parties are bound by added duties of cooperation next to the strict letter of their contract. Finally, the limitative function of good faith prohibits a contract party from using his contractual rights in an abusive manner (cf. prohibition of abuse of rights).

61 Nevertheless, contra: arbh. Liège 16 February 1998, JTT 1998, 432; arbh. Brussels 22 may 2002, Soc.Kron. 2003, 182.

62 i. Van Puyvelde, “Het begrip bedongen arbeid in de individuele arbeidsovereenkomst: een beknopte analyse vanuit het Belgisch arbeidsovereenkomstenrecht” in W. rauws, a. Van oevelen and i. Van Puyvelde (eds.), De bedongen arbeid: notie en relatie tot de goede trouw en goed werkgeverschap, antwerp, intersentia, 2005, 61–62 (hereafter i. Van Puyvelde, “Het begrip bedongen arbeid”).

63 i. Van Puyvelde, “Het begrip bedongen arbeid”, 62. d. cuypers “de eenzijdige wijziging van de arbeidsvoorwaarden”, Or. 1990, 100.

64 For that reason, a unilateral variation of so-called essential employment conditions, i.e. wages, working hours, function and – depending upon the concrete circumstances – sometimes also the place of work, is almost always rejected, and may even amount to an implicit (‘constructive’) dismissal: arbh. Bergen 29 July 2003, Soc.Kron. 2010, 276; arbh. Bergen 7 June 2005, Soc.Kron. 2007, 404; arbrb. Bergen 2 december 2008, JTT 2009, 77; arbh. Brussels 7 september 2009, Ors. 2010, 27; arbh. Brussels 25 may 2010, JTT 2010, 359.

65 as appears from the judgment of the Labour tribunal of Ghent of 19 January 1996 (TGR 1996, 168), it depends on the concrete circumstances whether or not the limitative function can justify a unilateral variation. in the instant case, it was judged that the refusal by the employee to accept a reduction in his holiday time was not in violation of his duty to perform his employment contract in good faith.

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function of good faith and the general principle of the prohibition of the abuse of rights restrict how the employee can respond to a proposed change.66 although the employee may oppose such a proposal, the norm of good faith prohibits him from abusively declining it.67 That the employee should execute the contract of employment in good faith may, for example, imply that the employee, being a white-collar worker, should temporarily take up tasks of a blue-collar worker, as long as the extent of those tasks remains limited and the consequences of that shift are negligible, so that the variation does not amount to a demotion.68 marginal and necessary variations have to be accepted; otherwise, one abuses his right of refusal.69 another argument for this reasoning can be found in article 17, 1° and 2° of the Employment contracts act. These rules oblige the employee to perform his work in a careful, honest and accurate manner, and to act according to the employer’s commands and instructions as regards the execution of his employment contract. in other words, the employee should be loyal to his employer, which may reasonably imply that he accepts rather unimportant variations to his employment conditions if those variations are necessary in light of the needs and interests of the employer’s enterprise.70 The good faith norm and the demand of loyalty limit his right to appeal to his agreed work schedule if the performance of overtime is necessary because of weighty business reasons.71

attention should, however, be drawn to the term ‘abusively’, and the fact that it restricts the judge’s control power to a marginal one.72 only if the refusal of the variation implies a manifest unreasonable behaviour can the judge oblige the employee to exercise his refusal right properly. The judge cannot, however, force the employee to accept the modification.73

b. Employer’s good faith demandson the other hand, the question of variation could be tackled from the employer’s perspective. it is argued that, beyond the obligation to offer labour and pay a wage,

66 B. croimans and J. de Laat, “Eenzijdige wijziging van arbeidsvoorwaarden op grond van het instructierecht?”, NTSR 2008, 284.

67 P. Humblet, De gezagsuitoefening door de werkgever, antwerp, Kluwer rechtswetenschappen, 1994, 146 (hereafter P. Humblet, De gezagsuitoefening door de werkgever).

68 arbh. Brussels 23 may 1984, TSR 1985, 452.69 W. van Eeckhoutte, “de ondraaglijke onveranderlijkheid van de arbeidsovereenkomst” in W. van

Eeckhoutte and m. rigaux (eds.), Sociaal recht: niets dan uitdagingen, Ghent, mys & Breesch, 1996, 54.70 B. Van schoebeke, “de eenzijdige wijziging van arbeidsvoorwaarden en het gerechtelijk ingrijpen in

de arbeidsvoorwaarden: een evaluatie”, Or. 2002, 265.71 W. rauws, “de goede trouw in het arbeidsovereenkomstenrecht: een kwestie van marginale

toetsing”, TPR 1990, 486–487; i. Van Puyvelde, “Het begrip bedongen arbeid”, 62.72 arbh. antwerp 7 June 1990, JTT 1990, 439, annotation.73 But, if the employee is dismissed for refusing a reasonably proposed contract modification, his

behaviour could influence the Judge’s decision on whether or not that dismissal is justified in the hypothesis that the employee lodges a complaint for – in the case he is a blue-collar worker – arbitrary dismissal (cf. article 63 of the Employment contracts act) or for manifestly unreasonable dismissal (cf. prohibition of abuse of the employer’s right to dismiss).



the norm of good faith (article 1134, third paragraph of the civil code) binds the employer to the additional duty to manage his company properly, including the obligation to carry out necessary changes.74 He thus disposes of a right to implement marginal variations, based on the completive function of good faith.75

However, that right is not unlimited. First of all, the term ‘marginal’ suggests that the employer may only carry through contract variations that are necessary in the management of his business and that, moreover, only have a marginal impact on the employee. The necessity requirement implies that the employer has a legitimate reason for the proposed variation. The Belgian lower courts and labour tribunals, however, do not seem to require that the variation is absolutely necessary for the survival of the employer’s business. Less drastic reasons, such as mere economic business considerations76 or the prevention of collective conflicts or workplace bullying, are indeed accepted. in other words, a standard of reasonableness seems more appropriate, although – as explained – that standard will have to be applied in a rather strict way, considering the (purely) marginal control power the judge has to consider the reasonableness of the employee’s refusal of the variation. Further, the proposed variation should not cause the employee too much material or moral damage.77 Therefore, the employer should try to suggest the most favourable or least aggravating solution. Thus, one cannot expect that the employee accepts a variation of his work schedule if that would seriously interfere with the organisation of his family life, while the employer has alternative and more acceptable solutions at his disposal.78

moreover, the idea that the good faith based variation right of the employer is only a marginal one is linked to the limitative function of good faith and the prohibition of abuse of contractual rights.79 indeed, the employer has to use his variation right in a proper way, implying he may not abuse it. The limitative function of good faith thus prohibits him from exercising his rights in a manner that is contrary to what may be expected from a reasonable contracting party in the same situation,80 or, more precisely,

74 W. van Eeckhoutte, “de goede trouw in het arbeidsovereenkomstenrecht: een aanzet tot herbronning en reïntegratie”, TPR 1990, 1032 (hereafter W. van Eeckhoutte, “de goede trouw in het arbeidsovereenkomstenrecht”).

75 Humblet does not however believe that the norm of good faith lies at the basis of the variation right of the employer – in his opinion, good faith only limits it (P. Humblet, De gezagsuitoefening door de werkgever, 150).

76 arbh. antwerp 7 June 1990, JTT 1990, 439, annotation; arbh. Brussels 1 october 2010, JTT 2011, 122; arbh. Brussels 8 November 2010, JTT 2011, 117.

77 arbh. Brussel 1 october 2010, JTT 2011, 122; i. Van Puyvelde, “Het begrip bedongen arbeid”, 62.78 arbh. Liège 2 december 1980, JL 1980–81, 209.79 W. van Eeckhoutte, “de goede trouw in het arbeidsovereenkomstenrecht”, 65–66; i. Van Puyvelde,

“Het begrip bedongen arbeid”, 62.80 s. stijns, “abus, mais de quel(s) droit(s)?”, JT 1990, 35 (hereafter s. stijns, “abus”).

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that is manifestly unreasonable.81 to find out whether the employer has abused his right to implement marginal variations, the judge will rely on the specific criteria of the abuse of rights developed in Belgian contract law.82 one of these criteria, the principle of proportionality, is crucial in the case of a modification of contract terms and conditions, for it tries to guarantee a fair balance between the flexibility concerns and certainty needs of the employer and employee83 respectively, and thus gets to the very heart of employment law.84 indeed, the principle of proportionality requires that the advantage the employer enjoys through the exercise of his variation right must be in balance with the disadvantages and damages suffered by the employee,85 or, as already mentioned, the suggested variation may not unreasonably aggravate the employee’s situation. Whatever the employer does, he must respect the employee’s reasonable expectations.

again, it is important to stress that the judge can only control the exercise of the employer’s variation right in a marginal manner: he can only sanction the exercise of that right if the employer, by using it, manifestly exceeds the margins of reasonableness.86 That sanction consists of either the reduction of the exercise of the employer’s variation right to an adequate use, or the reparation of the damages caused by the abuse.87 in this context, the first is more appropriate, since it implies that the judge will impose a proper – i.e. reasonable – exercise of the employer’s variation

81 in the decision of 19 september 1983 (Arr.Cass. 1983–84, 52, JT 1985, 56, annotation s. dufrène and TBH 1984, 276, annotation W. rauws), the Belgian Cour de Cassation explicitly linked the limitative function of good faith to the general principle of the prohibition of the abuse of rights in contractual matters, ruling that: ‘the principle established in article 1134 of the Civil code that agreements shall be performed in good faith prohibits a contracting party to abuse the rights which this agreement has assigned to him.’ That link is strong, considering the court’s statement that a party that abuses his contractual rights necessarily acts contrary to good faith. This idea was later confirmed in the decision of 8 February 2001 (Arr.Cass. 2001, 245 and RW 2001–02, 778, annotation a. Van oevelen). Cf. s. stijns, “abus”, 36; W. Van Gerven and a. dewaele, “Goede trouw en getrouw beeld” in Liber Amicorum Jan Ronse, Brussels, story-scientia, 1986, 109; P. Wéry, Droit des obligations, 1, Théorie générale du contrat, Brussels, Larcier, 2010, nr. 111–112 (hereafter P. Wéry, Droit des obligations).

82 Those criteria are derived from the general criterion that abuse exists ‘if the limits of a normal exercise of a subjective right by a careful and cautious person placed in the same circumstances are manifestly exceeded ’ (cass. 10 september 1971, Arr.Cass. 1972, 31, concl. PG Ganshof van der meersch and RCJB 1976, 300, annotation P. Van ommeslaghe). For an overview of the specific criteria, s. stijns, Inhoud en werking van de overeenkomst naar Belgische en Nederlands recht, antwerp, intersentia, 2005, 87–94; P. Van ommeslaghe, Droit des obligations, i, Brussels, Bruylant, 2010, nr. 32–35; P. Wéry, Droit des obligations, nr. 114.

83 concordantly, W. Van Eeckhoutte, “Het belang van de werkgever”, TSR 1994, 45 (hereafter W. van Eeckhoutte, “Belang werkgever”).

84 a. Van Bever, “Goede trouw en belangenafweging in het arbeidsrecht”, 519; W. van Eeckhoutte, “Belang werkgever”, 45.

85 Cf. arbh. Brussels 9 June 2000, AJT 2000–01, 70; arbh. Brussels 8 November 2010, JTT 2011, 117.86 J. ronse, “marginale toetsing in het privaatrecht”, TPR 1977, 210–211; s. stijns, “abus”, 41.87 cass. 16 december 1982, Arr.Cass. 1982–83, 518; cass. 18 February 1988, Arr.Cass. 1987–88, 790,

RW 1988–89, 1226 and TBH 1988, 696, annotation E. dirix; cass. 11 June 1992, RW 1992–93, 373 and JT 1992, 676.



right.88 The judge cannot, however, deprive the employer of his variation right. The right itself still exists; only the exercise thereof is denied in the concrete circumstances for its manifest unreasonableness.89

c. Evaluation of the employer’s right to implement marginal variationscomparing the approach of the lower labour courts and tribunals and the viewpoints in Belgian doctrine with the contractual analysis of the Belgian Cour de Cassation, arguments favouring the former approach could be made. By explicitly focusing on the functions of good faith (linked to the prohibition of abuse of rights), thus recognising the need for a fair balance between the employee’s and employer’s interests, and the importance of the principle of proportionality, the theory on the employer’s right to implement marginal variations allows for the employment relation to become more flexible in a way that does not necessary imply legal uncertainty, or the risk of arbitrariness. only by directly weighing the flexibility needs of the employer against the employee’s expectations, the labour judge’s reasoning becomes transparent and consequently controllable and predictable.90

The possible criticism that the acceptance of a right to implement marginal variations would erode the principle of the binding force of the (employment) contract at the expense of the often weaker employee, has to be rejected. The good faith demand of article 1134, paragraph 3 of the civil code should not be opposed to its first two paragraphs that confirm the binding force of the contract and (could) consequently obstruct any unilateral contract modification. after all, the contract of employment should be the starting point in the labour judge’s reasoning; the demands of good faith only extend its express obligations or limit its unreasonable execution.91

However, to guarantee the protection of the employee who is confronted with a contract variation, there should be guarantees for legal certainty. moreover, the judge should acknowledge and protect the expectations the employee could have reasonably created. How to do that is a matter of fact, of which the British and dutch case law provide clear examples.

4.2.2. The variation of contract terms on the basis of implied terms

in British labour law the question also arises as to what extent open norms, or rather implied terms, justify (and limit) the contract variations. For the sake of a proper understanding, the following analysis begins with a word about the different types of implied terms.

88 The judge must impose an adapted sanction, considering the nature and form of the abuse (cf. P. Van ommeslaghe, “L’exécution de bonne foi, principe général de droit?”, TBBR 1987, 110).

89 s. stijns, “de matigingsbevoegdheid van de rechter bij misbruik van contractuele rechten in de Belgische rechtspraak van het Hof van cassatie” in J. smits and s. stijns (eds.), Inhoud en werking van de overeenkomst naar Belgisch en Nederlands recht, antwerp, intersentia, 2005, 98; P. Wéry, Droit des obligations, para. 488.

90 a. Van Bever, “Goede trouw en belangenafweging in het arbeidsrecht”, 475 and 526–527.91 a. Van Bever, “Goede trouw en belangenafweging in het arbeidsrecht”, 531.

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a. Implied terms in British labour lawamong the terms the judge can imply in a concrete contract, a general distinction is made between the terms he derives from the law and those he derives from concrete facts.92

The first type of implied terms, those that are implied by law, are almost automatically attached to a certain type of contract, such as the employment contract, irrespective of the parties’ intention.93 They are implied based on their qualification as legal incidents, unless they are expressly excluded.94 Possible sources are existing legislation,95 custom or trade usage96, judicial precedents97 and policy considerations.98 However, in the last case, the implication of the term must be necessary.99 Nevertheless, that strict requirement of necessity is often reduced to a test of reasonableness,100 so that the term implied on the basis of policy considerations resembles the duties, beyond the contract, that derive from the completive function of good faith in the continental law systems. Examples of terms implied by law in the context of the employment relationship are the employee’s duty to obey lawful and reasonable instructions101 and to cooperate,102 the employer’s duty to provide a safe working environment,103 and, of course, the mutual duty of trust and confidence.104

92 it should be remarked that, for the purpose of this analysis, attention is paid only to the terms implied by the judge, and not to those that are implied by statute.

93 Cf. HL 20 January 1955 (Sterling Engineering Co. v Patchett), AC 1955, 534.94 Their exclusion is however impossible if that would be contrary to public policy (s. Vettori, The

employment contract and the changed world of work, aldershot, ashgate, 2007, 51, hereafter s. Vettori, The employment contract).

95 Thus, in the Malik and Mahmud v Bank of Credit and Commerce International-case (12 June 1997, AC 1998, 20), the House of Lords recognised a duty of mutual trust and confidence to be implied in every contract of employment on the basis of the rights conferred to the employee by the Employment Rights Act (1996), more precisely, by referring to article 123 of that act.

96 on the condition that these are reasonable, certain and notorious (cf. ca 9 december 1930 (Sagar v Ridehalgh), 1 Ch 1931, 310; ca 21 June 2002 (Albion Automotive v Walker), All ER 2002, 170; Eat 31 July 2003 (Solectron Scotland v Ms Roper), IRLR 2004, 4).

97 in this case, the distinction with the terms implied by fact is unclear. indeed, the judge will often imply a term on the basis of the intention of the contract parties. after a while, that term implied by fact may become a judicial precedent that the judge attaches to a certain type of contract, irrespective of the parties’ intentions, and may thus qualify as a legal incident, just like an implied term by law.

98 s. Vettori, The employment contract, 59–64.99 Cf. HL 31 march 1976 (Liverpool City Council v Irwin), AC 1977, 239; HL 23 october 1991 (Scally v

Southern Health and Social Services Board), 1 AC 1992, 294.100 s. Vettori, The employment contract, 59–64. Thus, in the Liverpool City Council v Irwin-case (AC

1977, 239), Lord denning followed the criterion that the term should be reasonable. concordantly: Eat 4 February 1983 (Howman and Son v Blyth), ICR 1983, 416 (421).

101 Cf. ca 22 april 1959 (Laws v London Chronicle (Indicator Newspapers) Ltd), WLR 1959 (1), 698.102 Cf. ca 19 may 1972 (Secretary of State for Employment v ASLEF (No.2)), WLR 1972 (2), 1370.103 Cf. Eat 19 may 1997 (Waltons &Morse v Dorrington), IRLR 1997, 488.104 Cf. HL 12 June 1997 (Malik and Mahmud v Bank of Credit and Commerce International), AC 1998, 20.



contrary to terms implied by law, terms implied by fact are terms that the judge implies ad hoc on the basis of the parties’ intentions. consequently, they do not violate the sanctity of contract.105 For their implication, two tests can be applied.

The first is known as the business efficacy test.106 according to this test, the implication of the term must be necessary to give the contract business efficacy, and must consequently fit in with the (imputed) intention of the parties. as Lord Bowen has expressed: ‘In business transactions such as this, what the law desires to effect by the implication is to give such business efficacy to the transaction as must have been intended at all events by both parties who are business men (…).’107 Later, the test was further developed in the australian BP Refinery case, in which five requirements for a term to be implied were elaborated.108 First, the term must be necessary to give the contract business efficacy. Following more moderate judges, it is not however required that the contract should be unworkable without the term,109 but it suffices that the term implied is necessary ‘ for the reasonable or effective operation of the contract’,110 or that the term has ‘a sensible legal and practical effect.’111 secondly, if its implication seems necessary, then the question arises as whether or not the term is reasonable and equitable, so that it could be imputed to the intentions of reasonable parties.112 Putting it stronger, the concrete contract parties must also be assumed to have intended the implication of the term, given the fact that the implied term must be ‘so obvious that it goes without saying.’113 That third criterion developed into a test in itself, i.e. the officious bystander test discussed below. Fourthly, the term implied must

105 However, since the parties’ intentions on which the judge grounds the implication of the term are often only their imputed intentions, i.e. what the judge decides their intention is in order to achieve what he in casu considers to be the most fair result, their conformity with the parties’ actual intentions, and thus their respect for the sanctity of contract, is doubted (s. Vettori, The employment contract, 64).

106 The business efficacy test was developed by Lord Bowen in de Moorcock-case (ca 25 February 1889, 14 PD 1889, 64). For that reason, it is also often referred to as the Moorcock doctrine.

107 Lord Bowen, ca 25 February 1889 (The Moorcock), 14 PD 1889, 68.108 supreme court of Victoria 27 July 1977 (BP Refinery Westernport Pty Ltd v Shire of Hastings), 180

CLR 1977, 266 (267).109 different: ca 30 July 1891 (Hamlyn & Co v Wood & Co), 2 QB 1891, 488; ca 21 march 1911 (Biddell

Brothers v Clemens Horst), 1 KB 1911, 934; ca 24 January 1918 (Re Nott and the Cardiff Corp.), 2 KB 1918, 146; HL 21 october 1993 (Hughes v Greenwich), 4 All ER 1993, 577.

110 Cf. High court of australia 28 November 1995 (Byrne and Frew v Australian Airlines Ltd), 185 CLR 1995, 410 (573).

111 Cf. ca 1 July 1970 (Maredelanto Compania Naviera SA v Bergbau-Handel GmbH (The Mihalis Angelos)), 3 All ER 1970, 125. on the different meanings of this first necessity demand, see s. Vettori, The employment contract, 71–73.

112 Cf. supreme court of Victoria 27 July 1977 (BP Refinery Westernport Pty Ltd v Shire of Hastings), 180 CLR 1977, 266 (267): ‘It is not to be imputed to a party that he is assenting to an unexpressed term which will operate unreasonably and inequitable against himself ’.

113 Cf. High court of australia 11 may 1982 (Codelfa Construction Pty Ltd. v State Rail Authority of NSW), 149 CLR 1982, 337.

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be formulated in a precise and clear manner.114 Finally, it must be consistent with the express terms of the contract; otherwise the latter (principally) prevail.115

The second (already mentioned) test for the implication of terms is the officious bystander test.116 its core idea has been summarised as follows: ‘Prima facie that which in a contract is left to be implied and need not be expressed is something so obvious that it goes without saying; so that, if – while the parties were making their bargain – an officious bystander would suggest some express provision for it in the agreement, they would testily suppress him with a common “Oh, of course!”’117 in short, here, the implication of the norm is grounded in the fictitious intentions of the parties, who are assumed to be reasonable.118

analysing the British case law on contract variations, both types of implied terms are relevant. Therefore, it is first discussed when the employer is permitted to carry through a variation with reference to the employee’s implied duty of obedience, cooperation or trust and confidence, as well as how his own implied duty of trust and confidence restricts his modification possibilities. secondly, attention is paid to the way the judge sometimes derives from the facts an implied power to vary certain contract terms by recognising the presence of an implied flexibility or mobility clause.

Finally, it is noticed that almost all the cases discussed concern cases in which the employee lodges a complaint for unfair dismissal after being dismissed for refusing the employer’s variation proposal, or in which the employee believes to be compelled to resign because of the imposed variation and consequently claims damages for (unfair) constructive dismissal.119 indeed, although the employee can disregard proposed variations, so that in theory he could protest against contractual changes and affirm the existing terms, in practice he will most often resign and claim compensation,

114 The term must be clearly expressible (s. Vettori, The employment contract, 78). The implication of ambiguous terms is mostly rejected: divisional court 13 may 1947 (R v Paddington and St. Marylebone Rent Tribunal Ex p. Bedrock Invest.), KB 1947, 984.

115 s. deakin and G. morris, Labour law, oxford, Hart Publishing, 2009, nr. 4.6 (hereafter s. deakin and G. morris, Labour law ); s. Vettori, The employment contract, 79. Nevertheless, sometimes precedence is given to the implied term: ca 19 december 1990 (Johnstone v Bloomsbury Health Authority), ICR 1991, 269.

116 regarding the relationship between the business efficacy test and the officious bystander test, see s. Vettori, The employment contract, 76–79. in British courts, both tests are often used interchangeably.

117 ca 17 march 1939 (Shirlaw v Southern Foundries (1926) Ltd), 2 KB 1939, 206.118 Because of the fictitious nature of the parties’ intention, the test is often criticised for being artificial

(cf. N. Kornet, “The interpretation, implication and supplementation of contracts in England and the Netherlands” in J. smits and s. stijns (eds.), Inhoud en werking van de overeenkomst naar Belgisch en Nederlands recht, antwerp-Groningen, intersentia, 2005, 64), or – in the words of Lord Hoffmann – for being “a vivid bit of pantomime” (Lord Hoffmann, “The intolerable wrestle with words and meanings”, SALJ 1997, vol. 114, no. 4, 662).

119 in the O’Brien v Associated Fire Alarms case (ca 1 march 1968, WLR 1968 (1), 1916) and the Stevenson v Teesside Bridge case (divisional court 1 January 1970, All ER 1971 (1), 296), the employee, however, claimed damages for dismissal by reason of redundancy.



regarding the risk that by continuing to work, he will be assumed to have accepted the variation.120

b. Implied terms by law and contract variationsWhen discussing the employer’s variation options based on the implied terms by law, case law illustrates how the British judges reversed their approach from the focus on the duties of the reasonable employee to those of the reasonable employer. The sudden focus on the duties of the latter seems to favour the employer who wants to implement

i. The reasonable employee and contract variationsas already mentioned, the cases discussed are cases concerning unfair (constructive) dismissal. consequently, the judge has to decide whether the dismissal for the employee’s refusal to accept the variation or his own resignation for a contract change being imposed, can be considered fair.

in a first phase, judges assessed that question departing from the duties of a reasonable employee. in the Evans v Elemeta Holdings case, Browne-Wilkinson J stated: ‘The question (…) is whether the employers’ conduct in dismissing was reasonable. But, (…) that question necessarily required the industrial tribunal to find whether it was reasonable for the employee to decline the new terms of the contract. If it was reasonable for him to decline those terms, then obviously it would have been unreasonable for the employers to dismiss him for such refusal.’121 The fairness of the dismissal thus depended on the question of whether a reasonable employee in a similar situation would have refused the variation: if so, the dismissal is necessarily unfair. considering the simplicity of that idea,122 the focus was gradually shifted to the employer’s duties.

ii. The reasonable employer and contract variationsThat shift of focus is illustrated by the Chubb Fire Security v Harper case,123 in which it was held that: ‘[T]he correct approach was not to concentrate on the reasonableness of (the employee’s) belief that the new contracts were disadvantageous to him, but to examine the advantages to [the employer] of the re-organisation and decide whether it was reasonable to terminate existing contracts and offer new ones and whether [the

120 to strengthen his legal position, the employee can, however, seek a declaration that confirms the binding force of the original agreement (cf. Queens’ Bench 1 January 1984 (Burdett-Coutts v Hertfordshire County Council), IRLR 1984, 91).

121 Eat 27 January 1982 (Evans v Elemeta Holdings), ICR 1982, 323: ‘[S]ince it was not possible to reach a view, after analysis, that the employee was unreasonable in refusing to accept an unlimited obligation to work overtime and on Saturdays, his dismissal was unfair.’

122 c. Wynn-Evans, “dismissal for refusal to accept new terms of employment” (annotation under Eat 16 June 1992 (St John of God v Brooks)), Ind. L.J. 1993, vol. 22, no. 2, 141–142 (hereafter c. Wynn-Evans, “dismissal for refusal”).

123 Eat 1 January 1983 (Chubb Fire Security v Harper), IRLR 1983, 311.

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employer] had acted reasonably in deciding that the advantages to them of the re-organisation outweighed any disadvantage to [the employee].’124 The fairness of the dismissal no longer depended upon the sole appreciation of the proposed variation by the employee, but required a balancing by the employer of the variation’s advantages for him and its drawbacks for the employee, given his reasonable options and alternatives.

That approach was further developed in the Richmond Precision Engineering v Pearce case,125 in which the Employment appeal tribunal confirmed that it was improper to consider the question of fairness solely from the employee’s point of view: ‘The proper approach was to consider whether the employer acted reasonably or unreasonably in treating [the employee’s] refusal to accept the offered terms as a reason for dismissal. That question was to be determined in accordance with equity and the substantial merits of the case. The industrial tribunal erred in considering whether or not the offer was a reasonable one to [the employee] rather than whether it was a reasonable offer for [the employer] to have made in the circumstances. The fact of disadvantage to the employee was merely one factor to be considered in answering that question. Any reasonable industrial tribunal would have concluded that [the employer] acted reasonably and that [the employee] was fairly dismissed.’ consequently, the employee’s appreciation of the proposed variation was only one factor in the assessment of the dismissal.126 The focus must be on the reasonableness of the employer’s proposal.

in the Catamaran Cruisers v Williams case,127 the tribunal applied a two-stage test to assess the fairness of the dismissal. First, it questioned whether the employer had a sound business reason for the proposed variation that could serve, at the same time, as a substantial reason to justify the dismissal of the employee in the sense of section 98(1) of the Employment rights act 1996. secondly, it investigated whether, in light of that sound business reason, the employer had acted reasonably in dismissing the employee for refusing the new terms (cf. Era 1996, section 98(4)).128

in order to assess the reasonableness of the proposal and the refusal of the variation respectively, and thus on the fairness of the dismissal, the judge will shape and define the specific contract terms and possibilities of variation by general behavioural standards that are imposed on the employee and the employer as part of the implied content of their contract of employment.129 Thus, a standard of adaptability can be

124 The court of appeal followed a similar approach in the Hollister v National Farmers’ Union case (ca 19 march 1979, ICR 1979, 542).

125 Eat 1 January 1985 (Richmond Precision Engineering v Pearce), IRLR 1985, 179 (fair dismissal if the offer of the new contract is one which a reasonable employer would make in the circumstances).

126 ‘The task of weighing the advantages to the employer against the disadvantages to the employee is merely one factor which the tribunal have to take into account in determining the question (…). It does not follow that because there are disadvantages to the employee, the employer acted unreasonably in treating his refusal to accept the changes as a reason for dismissing him.’

127 Eat 15 February 1994 (Catamaran Cruisers Ltd v Williams), IRLR 1994, 386.128 s. deakin and G. morris, Labour law, nr. 4.39.129 m. Freedland, The personal employment contract, oxford, oxford university Press, 2003, 277

(hereafter m. Freedland, The personal employment contract).



built into the employee’s obligations, requiring some degree of flexibility.130 indeed, the enhancement of behavioural standards in the context of employment – of which the implied duty of trust and confidence is of utmost importance – intensified a more flexible approach that stresses the substantive merits of the case. This approach is both evolutionary and evaluative. it is evolutionary in that it focuses on the reasonable expectations of employee and employer, not by reference to the contract formation and express contract terms, but in light of the way the employment relationship has been conducted and has in fact evolved.131 moreover, it is evaluative because the outcome of the judge’s evolutionary reasoning is normative: it concerns what the parties ought to do and accept in light of their dealings.132 The question is whether the employer can fairly propose a variation, or whether the employee can reasonably maintain his original contract.

iii. Evaluation of the discussed variation rightcontrary to the Evans v Elemeta case, the new approach implies a ‘[m]ore flexible assessment of the conflicting interests involved in the context.’133 However, especially in the case of a collective variation or reorganisation, it may overemphasise the individual relationship between employee and employer, including their often opposing interests, so that it misjudges the whole context of the reorganisation. indeed, the focus on the reasonableness of the employer’s variation proposal could blur the generality of the assessment of the fairness of the dismissal.134

so, in the St John of God v Brooks case,135 it was decided that ‘[t]he industrial tribunal had wrongly directed itself that the crucial question was whether the terms offered were those which a reasonable employer could offer. It was necessary to consider all the surrounding circumstances, including whether other employees had accepted the offer. The question of reasonableness must be considered in the context of whether there was a sound business reason for the reorganisation.’ The Employment appeal tribunal thus stressed that it was not only necessary to focus on the proposal, but also to evaluate the whole context of the reorganisation, including the circumstances occurring after the presentation of the proposal, such as its acceptance or refusal by other employees.136 moreover, it brought to attention the situation in which the employer has a sound

130 consider, for example, the Cresswell v Board of Island Revenue case, in which Walton J expressed that ‘an employee is expected to adapt himself to new methods and techniques introduced in the course of his employment’ (chancery division 1 February 1984, IRLR 1984, 190). This case did not, however, concern a contract variation, but a variation based on the employer’s managerial power.

131 m. Freedland, The personal employment contract, 274.132 m. Freedland, The personal employment contract, 275.133 c. Wynn-Evans, “dismissal for refusal”, 142.134 c. Wynn-Evans, “dismissal for refusal”, 142.135 Eat 16 June 1992 (St John of God Ltd v Brooks), ICR 1992, 715.136 in the Catamaran Cruisers Ltd v Williams case (Eat 15 February 1994, IRLR 1994, 386) also, the

Employment appeal tribunal stressed the relevance of the large majority of employees accepting the variation (s. deakin and G. morris, Labour law, nr. 4.39).

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business reason for the proposed variation, but the employee has an equally legitimate interest in refusing it, considering the disadvantages it causes him, so that he deems the variation proposal unreasonable. in these situations, balancing both interests is a very delicate matter, and overemphasising the reasonableness of the proposal from the point of view of the employee might neglect the possibility of the employer having a real and sound business reason that touches the interests of all involved. in the St John of God case, the generality of the tribunal’s inquiry into all circumstances was restored.137

similar to the Belgian theory on the employer’s right to implement marginal variations, this approach stresses the principle of proportionality and the idea that a balance needs to be struck. However, contrary to the way the continental approach considers the personal needs of the individual employee, the balancing exercise between the reasonableness of the variation proposal and the degree of detriment it causes the employee seems to be in favour of the employer. indeed, when assessing the fairness of the dismissal, British judges almost always accept some business need for the variation, so that – combined with the employee’s refusal of the variation – in most cases the employer will be assumed to have ‘a substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held’, as obliged under Era 1996, section 98 (1). The issue then comes down to the assessment of the question – posed by Era 1996, section 98(4) – of whether it is also reasonable for the employer to dismiss the employee, given all the circumstances. That assessment usually results in the employer’s favour, for the judges give little weight to the employee’s needs and interests as regards the combination of his personal and professional life. That is clear in the Woods v WM Car Services case,138 in which Lord Watkins stated that: ‘[E]mployers must not (…) be put in a position where, through wrongful refusal of their employees to accept changes they are prevented from introducing improved business methods in furtherance of seeking for their enterprise.’ in sum, given the way judges apply Era 1996, section 98(1) and (4), employees are hardly protected against contractual variation by statutory law. Their only escape is to lodge a common law claim, which will, however, only afford them a small compensation – if any at all – for their dismissal, a price that is not hard to pay for most employers. compared to the Belgian employment system, the British system thus appears to be very flexible. Even stronger, because of the – from the point of view of the employee – harsh decisions to which that flexibility often leads, the British approach can be opposed to the strict contractual approach of the Cour de Cassation, emphasising the binding force of contract in favour of the employee.

despite the above criticisms raised regarding the protection of the employee in British case law, a nuance must be inserted. although the British approach to contract variations mainly benefits the employer, there seems to be a tendency to invoke implied

137 c. Wynn-Evans, “dismissal for refusal”, 142.138 court of appeal 28 June 1982 (Woods v WM Car Services (Peterborough) Ltd), ICR 1982, 693.



terms – as behavioural standards – as a ground for restricting contract variations – or at least the way the employer can implement them. so, in the French v Barclays Bank case,139 the court of appeal ruled that in varying the terms of a bridge loan to the employee’s detriment, the employer had neglected the employee’s legitimate expectations, and had thus violated the implied duty of trust and confidence. although this case did not concern a contract variation, but a variation on the basis of the employer’s managerial powers, conferred to him by the contract of employment, the restrictive (limitative) function of implied terms, such as the duty of trust and confidence, also applies to cases concerning contract variations. in these cases also, it is indeed necessary to respect legitimate expectations and strike a fair balance.

That balancing exercise integrates the perspective of both the employer and the employee by paying attention to their distinct duties and responsibilities, and by recognising their mutual expectations. so, Walton J’s decision in the Cresswell v Board of Island Revenue case was not a one-sided one, imposing only a standard of adaptability on the employee,140 By stating that ‘[i]n a proper case the employer must provide any necessary training’, he also imposed such standard on the employer.141 departing from the presumed intentions of the employer and employee, the court thus restricted the employer’s managerial power to introduce new methods and technologies on the basis of a term to be implied in fact, namely, the duty of the employer to provide instruction regarding the use of those new methods. However, like the French v Barclays Bank case, this case concerned a variation that fell within the employer’s contractual powers, and not a real contract variation.

another example of such an integrative approach is found in Henry v London General Transport Services.142 although this case discusses whether the individual employment contract could be varied through the incorporation of a (changed) collective agreement, it is interesting to see how it takes into account the needs, objections and interests of both the employee and employer, and transcends the individual relationship between both to capture the whole context of the reorganisation. The Employment appeal tribunal articulated all the background considerations and linked them to notions of flexibility, competitiveness and fairness.143 it opposed the ‘exigencies of commercial life’, impelling a speedy and reliable practical response and the fact that ‘the majority of employees had approved new and less advantageous terms’ against the need ‘to ensure that individuals are adequately informed and adequately consulted and that the less attractive terms are not imposed unfairly or without a real opportunity to protest against or reform or refuse them.’ so, a balance was struck.

139 ca 25 June 1998 (French v Barclays Bank), IRLR 1998, 646.140 chancery division 1 February 1984 (Cresswell v Board of Island Revenue case), IRLR 1984, 190. This

case did however not concern a contract variation, but a variation based on the employer’s manage-rial power.

141 m. Freedland, The personal employment contract, 278.142 Eat 30 November 2000 (Henry v London General Transport Services), IRLR 2001, 132.143 m. Freedland, The personal employment contract, 286.

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But, how is that quest for a fair balance made more certain and predictable in British case law? How do the courts and tribunals ascertain that reasonable expectations are taken into account?

Thanks to their explicit balancing of the interests and needs of the employer and the employee, British judges have developed a set of criteria that help to shape the reasonable expectations of the employer and employee, and thus to determine whether the variation proposal or its refusal is in line with them. These criteria assess, in particular, the formal material reasonableness of the (proposed) variation, by treating the way the variation is implemented as an important consideration.144

unfortunately, material criteria of reasonableness seem to be less important, so that the restrictive effect of the implied terms must be put in perspective: it seems that British judges rebut any claim for breach of such implied term as soon as the employer lives up to certain procedural standards.145 if the employer presents a good reason for the variation, consults and informs the employees, acknowledges their concerns and gives reasonable notice before implementing the variation, the judge will indeed almost automatically conclude that the employer acted reasonably, and will deem the dismissal of the employee for rejecting the variation fair.

c. Implied terms by fact and contract variations: implied flexibility clauses

i. recognition of implied flexibility clausesBesides behavioural standards, implied in the employment relationship as legal incidents, contract variations can also be justified on the basis of the presumed intentions of the parties. referring to the business efficacy test, the judge could recognise the employer’s implied power to vary employment conditions, unless such a power would be contrary to the express contract terms. in the Jones v Associated Tunnelling case146 it was decided that: ‘Where there is no express term regarding mobility, one has to be implied to give the contract business efficacy.’ slade LJ ruled similarly in the Courtaulds Northerns Spinning v Sibson case:147 ‘In order to give the contract of employment business efficacy a term had to be implied in the contract, as being a term which the parties, acting reasonably, would probably have agreed if they had considered the matter. Such a term will not vary the express terms. Here, that term

144 Cf. N. selwyn, Law of employment, oxford, oxford university Press, 2011, nr. 3.107 (hereafter N. selwyn, Law of employment), with reference to Eat 25 January 1978 (Hollister v National Farmers’ Union), ICR 1978, 712.

145 That is well illustrated in the Dryden v Greater Glasgow Health Board case (Eat 1 January 1992, IRLR 1992, 469), in which the employer’s respect for certain procedural safeguards rebutted the claim that by introducing a non-smoking policy the employer had breached his implied obligation of mutual trust and confidence. This case concerned, however, a variation based on the employer’s managerial power, given the fact that employers are entitled to make rules regarding the conduct of employees within the scope of their contracts.

146 Eat 1 January 1981 (Jones v Associated Tunnelling Co Ltd), IRLR 1981, 477.147 ca 25 march 1988 (Courtaulds Northern Spinning v Sibson), ICR 1988, 451.



is that the employer could for any reason direct the employee to work at any place within reasonable daily reach of his home.’ in other words, departing from the concrete facts and the (presumed) intention of employer and employee, both acting reasonably, a flexibility or mobility clause is implied.148

However, for a term to be implied in the employment contract, it must be fair and equitable, implying respect for the employee’s reasonable expectations. in the O’Brien v Associated Fire Alarms case,149 Lord denning therefore rejected an implied variation term. according to him, the employees ‘could not reasonably be expected to go off for months to a far place (…), leaving their wives and children behind and only getting home in the weekends (…).’ consequently, ‘the only term to be implied (…) was that they should be employed (…) within a reasonable distance of their homes.’ in the Jones v Associated Tunnelling case150 it was also stated that: ‘[t]he reasonable term to imply (…) was a power to direct (employees) to work at any place within reasonable daily reach of his home.’ in the recent Luke v Stoke on Trent City Council case,151 the Employment appeal tribunal further developed this reasonableness criterion, holding that: ‘[I]n exceptional circumstances, where the requirement was plainly justified, the work was suitable, the employee suffered no detriment in terms of contractual benefits or status, and the change in duties was on a temporary basis, there was no reason why such an implication could not be made.’ Thus, ‘[a]lthough [the] contract had specified [the] place of work to be the unit, a term could be implied that the local authority could reasonably require [the employee] to work at a different location on a temporary basis, provided that she did not suffer any detriment and the proposed place of work was within reasonable travelling distance from her home. It found that the local authority had acted reasonably, and that in light of [the employee’s] refusal (…), she was not entitled to the contractual salary.’ in sum, the reasonableness of the implied term is assessed by referring to the employer’s justification, the harm it causes the employee, the temporary or enduring nature of the variation, the suitability of the work offered in exchange and – in the case of a transfer – the travelling distance.

ii. Evaluation of the discussed variation rightonce again, British judges apply an evolutionary and normative approach in deciding whether the employer is granted an implied variation power.152 in doing so, they actually involve an evaluation of the parties’ reasonable expectations, formed during the course of the employment relationship. reference can thus be made to the officious bystander test, but one that is hypothetical: it does not answer the officious bystander’s

148 also in the Stevenson v Teesside Bridge-case (1 January 1970, All ER 1971, 296), the divisional court held that there was an implied mobility clause in the employment contract.

149 ca 1 march 1968 (O’Brien v Associated Fire Alarms), WLR 1968 (1), 1916.150 Eat 1 January 1981 (Jones v Associated Tunnelling Co Ltd), IRLR 1981, 477.151 Eat 15 december 2006 (Luke v Stoke on Trent City Council), IRLR 2007, 305.152 m. Freedland, The personal employment contract, 274–276.

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question at the outset of employment, but at some later time, considering the way the employment relationship has been conducted and has evolved.153

in order to determine the parties’ reasonable expectations, different circumstances may be relevant. in the Jones v Associated Tunnelling case, Bowne-Wilkinson J mentioned: ‘(…) the nature of the employer’s business, whether or not the employee has in fact been moved during the employment, what the employee was told when he was employed, and whether there is any provision made to cover the employee’s expenses when working away from daily reach of his home. These are only examples; all the circumstances of each case have to be considered.’154 moreover, in the Luke v Stoke on Trent City Council case,155 underhill J underlined that the implication of a variation term is rather exceptional, so that it cannot be derived from the Courtaulds case that a term can be implied, in all circumstances that an employer can reasonably require an employee to work at a location other than that specified in the contract. The focus should be on the concrete circumstances.156

d. Legal certainty and respect for reasonable expectationsin order to guarantee legal certainty and respect for legitimate expectations, the British judges seem to apply a multi-stage test. First, they examine whether the employer has a sound business reason for proposing the variation. as regards this reason, the Employment appeal tribunal clarified in the Catamaran Cruisers v Williams case157 that the employer cannot only propose less (favourable) terms if the existence of his business depends upon it:158 ‘[T]he tribunal had erred in applying a test which related to the survival of the employer’s business. It should consider the employer’s motives for the proposed changes and balance these against the effect on employees.’ consequently, less serious reasons, like mere efficiency considerations, can also justify a variation, which seems to tilt the balance in the employer’s favour.159 Thus, the following reasons have been accepted: the need to harmonise the employees’ employment conditions160 (after a takeover),161 the reduction of work162 or the decrease of sales

153 m. Freedland, The personal employment contract, 275.154 Eat 1 January 1981 (Jones v Associated Tunnelling Co Ltd), IRLR 1981, 480.155 Eat 15 december 2006 (Luke v Stoke on Trent City Council), IRLR 2007, 305.156 underhill J referred to the Millbrook Furnishing Industries v McIntosh case (IRLR 1981, 309) in

which the Employment appeal tribunal recognised the authority of the tribunal to find an implied term meaning that the employee may be obliged to perform duties which go beyond, or are different from, those expressly required by the contract, or to perform them at a different workplace.

157 Eat 15 February 1994 (Catamaran Cruisers Ltd v Williams), IRLR 1994, 386.158 in the St John of God Ltd v Brooks case (Eat 16 June 1992, IRLR 1992, 546) the proposed variation

could, however, be justified by the concern of the employer to avoid a compulsory closure and dismissals by reason of redundancy.

159 s. deakin and G. morris, Labour law, oxford, Hart Publishing, 2009, nr. 4.39.160 ca 9 march 1979 (Hollister v National Farmers’ Union), ICR 1979, 551; Eat 27 January 1982 (Evans

v Elemeta Holdings), ICR 1982, 328.161 Eat 1 January 1985 (Richmond Precision Engineering v Pearce), IRLR 1985, 179.162 ca 1 march 1968 (O’Brien v Associated Fire Alarms), WLR 1968 (1), 1916; divisional court 1 January

1970 (Stevenson v Teesside Bridge), All ER 1971, 296.



figures,163 the loss of subsidies or funding,164 the illness or physical incapacity of the employee,165 and the prevention of conflicts and harassments.166

in a second step, the focus can be on the reasonableness of the variation proposal. as regards the formal reasonableness of the way the employer handles the situation, the court of appeal underlined in the Hollister v National Farmers’ Union case167 that to decide whether what the employer did was fair and reasonable, one has to look at all the circumstances of the case. Thus, it judged that although the employer had carried through the variation without a proper prior consultation, he acted reasonably, for there was no union recognised for negotiation purposes. Nevertheless, the fact that the employer informs168 and consults the employee (or the union),169 and grants him a reasonable time for reflection,170 enhances the formal reasonableness of his proposal. The same goes for the degree to which the proposal considers the possible further consequences of the variation,171 mentions a transition period,172 or contains different reasonable alternatives.173 unfortunately, the fulfilment of those formal or procedural criteria of reasonableness often seems enough for the judge to decide that the employer has acted reasonably. This creates the impression that British case law does not really consider the material or substantive reasonableness of the proposed variation, resulting in decisions that (mostly) disadvantage the employee. Nevertheless, those material criteria reasonableness must also be taken into account.

The material reasonableness of the variation is dependent on the nature of the changed conditions. a stricter approach is taken if the variation concerns wages, working hours or holiday.174 as regards the place of work, the assessment of the variation depends on the uniqueness of it.175 moreover, the proposal is deemed more reasonable if it respects the employee’s expectations and position. Therefore, expressed

163 Eat 1 January 1983 (Chubb Fire Security v Harper), IRLR 1983, 311.164 Eat 16 June 1992 (St John of God Ltd v Brooks), IRLR 1992, 546.165 Eat 9 November 1988 (Hogg v Dover College), ICR 1990, 39.166 ca 25 march 1988 (Courtaulds Northern Spinning v Sibson), ICR 1988, 453–454; Eat 15 december

2006 (Luke v Stoke on Trent City Council), IRLR 2007, 305.167 ca 9 march 1979 (Hollister v national Farmer’s Union), ICR 1979, 542.168 N. selwyn, Law of employment, nr. 3.104.169 Eat 9 November 1988 (Hogg v Dover College), ICR 1990, 41; Eat 16 June 1992 (St John of God Ltd v

Brooks), ICR 1992, 717–718; N. selwyn, Law of employment, nr. 3.104.170 it 10 July 1981 (Evans v Elemeta Holdings), referred to in Eat 27 January 1982 (Evans v Elemeta

Holdings), ICR 1982, 326.171 so, for example, a transfer may not be detrimental to the employee’s status and contractual benefits

(Eat 15 december 2006 (Luke v Stoke on Trent City Council), IRLR 2007, 305).172 Eat 25 January 1978 (Hollister v National Farmers’ Union), ICR 1978, 712.173 Thus, in the Luke v Stoke on Trent City Council case the employer’s conduct was deemed reasonable,

considering the many redeployment proposals he had suggested to the employee (Eat 15 december 2006, IRLR 2007, 305).

174 it 16 January 1990 (St John of God Ltd v Brooks), referred to in Eat 16 June 1992 (St John of God Ltd v Brooks), ICR 1992, 721–722.

175 Eat 15 december 2006 (Luke v Stoke on Trent City Council), IRLR 2007, 305.

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intentions regarding contract stability or flexibility176 and contractual aspects implying stability or adaptability177 are included in the judge’s decision. The same goes for the way the employer preserves the employee’s original status and position. Therefore, the work offered after the employee’s relocation must, for example, be ‘suitable’.178 Finally, the presence of material compensation,179 and the fact that the employer has tried to encounter the employee’s objections,180 also promotes the reasonableness of the proposed variation.

in the last step, the focus is shifted to the conduct and behaviour of the employee in order to decide whether he should have reasonably accepted the employer’s reasonable variation proposal. The sustained unwillingness to cooperate will render his refusal rather formally unreasonable.181 Nevertheless, he may raise personal objections that can materially justify why he rejects the proposed variation. Those objections can be practical182 or can relate to his status and position.183

in brief, British judges explicitly weigh the needs and interests of the employee and employer up against each other. However, they almost always seem to decide the case in favour of the employer. The result of their balancing exercise can be compared to the dutch case law on contract variations, which seems to manage to strike a fair balance between the employee and employer.

4.2.3. Good employership/employeeship and the variation of contract terms

in dutch case law reference is made to two leading cases of the supreme court (Hoge Raad): the van der Lely v Taxi Hofman184 and Stoof v Mammoet cases.185 Both cases illustrate how the norms of good employeeship and employership of article 7:611 of

176 For example, the willingness of the employee, expressed at the time of his recruitment, to perform his work in different locations (cf. divisional court 1 January 1970 (Stevenson v Teesside Bridge), All ER 1971 (1), 296).

177 The provision of a payment of expenses in the employment contract can be an indication of the employee’s obligation to perform his work on different locations (Eat 1 January 1981 (Jones v Associated Tunnelling Co Ltd), IRLR 1981, 480). The same goes for specific contractual report duties (ca 25 march 1988 (Courtaulds Northern Spinning v Sibson), ICR 1988, 461).

178 Eat 15 december 2006 (Luke v Stoke on Trent City Council), IRLR 2007, 305.179 Eat 9 November 1988 (Hogg v Dover College), ICR 1990, 41–42; Eat 25 January 1978 (Hollister v

National Farmers’ Union), ICR 1978, 712.180 ca 1 march 1968 (O’Brien v Associated Fire Alarms), WLR 1968 (1), 1918, 1921 and 1923.181 Eat 15 december 2006 (Luke v Stoke on Trent City Council), IRLR 2007, 305.182 The employee can, for example, object that his relocation to a place of work at a distance of 120

kilometers from his home entails high travelling expenses and domestic difficulties (ca 1 march 1968 (O’Brien v Associated Fire Alarms), WLR 1968 (1), 1918, 1921 and 1923).

183 The transfer of the employee may not harm his contractual status and benefits, and the alternatively offered work must be ‘suitable’ (Eat 15 december 2006 (Luke v Stoke on Trent City Council), IRLR 2007, 305).

184 Hr 26 June 2008 (van der Lely v Taxi Hofman), NJ 1998, 767.185 Hr 11 July 2008 (Stoof v Mammoet), JAR 2008/204 and NJ 2011, 185.



the dutch civil code legally ground the right of the employer to carry through a reasonable proposed variation.186

moreover, a parallel could be drawn between the legal reasoning of the dutch Hoge Raad and that of the British courts. indeed, just as the British judges did when assessing the reasonableness of unilaterally implemented variations, the Hoge Raad shifted its focus from the perspective of the good employee (Taxi Hofman case) towards that of the good employer (Mammoet case).

a. Good employeeship and contract variationsThe facts of the taxi Hofman case are as follows: Van der Lely was originally employed by taxi Hofman as a driver. after a period of work incapacity he returned to work, but since his sickness rendered him unable to perform his previous work as a driver, he was re-employed as an operator. However, he became incapable of working again, and a new period of incapacity to work commenced. meanwhile, taxi Hofman reorganised his business, transferring van der Lely’s function of operator. as a consequence, when van der Lely returned to work, he could no longer work as an operator. However, since he had become fully capable again, the company proposed to him that he should resume his job as a taxi driver. Van der Lely rejected the proposal and refused to work any longer. taxi Hofman subsequently suspended the payment of van der Lely’s wages, leading the latter to bring the case before the judge.

What is the correct legal response to this issue? Neither the employment contract nor specific labour regulations deal with this situation. moreover, clinging to the work originally agreed upon seems unfair. Not only has the context in which the employment contract has to be executed changed drastically but it also feels unfair to ignore the constructive proposal made by the employer. The Hoge Raad searched for an answer based on the principles of reasonableness and fairness, translated through the notion of good employeeship.187 The Raad held that article 7:611 of the civil code obliges the employer and employee to behave as a good employer and employee respectively, implying that the employee should consent to ‘reasonable [variation] proposals of the employer, relating to the changed work circumstances’, and that he could only refuse such proposals ‘if his acceptance could not reasonably be required.’188 departing from the employee and employer’s pattern of expectation and the objective demand of reasonableness, the Raad thus stabilised the strained employment relationship. it opted for a flexible, open norm-based solution instead of

186 although interesting, the question of the extent to which the demand of reasonableness and fairness of article 6:248 of the dutch civil code could justify contract modifications is not discussed in this paper.

187 The norm of good employeeship (or good employership) of article 7:611 of the dutch civil code translate the demands of reasonableness and fairness in general contract law (cf. article 6:2 and 6:248 of the civil code) with regard to employment relationships (cf. m. de Wit, Het goed werkgeverschap als intermediair van normen in het arbeidsrecht, deventer, Kluwer, 1999, 17).

188 confirmed: Hr 28 april 2000 (Guiteneau v Midnet Tax bv), JAR 2000, 120 and Hr 14 November 2003 (Drie-S Invest), JAR 2003, 296.

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strictly following the contract, and could that way acknowledge the varied reality of the employment relationship.

Nevertheless, the so-called Taxi Hofman criterion was subject to a lot of criticism. First of all, it was attacked for being too broad: by only focussing on what could be expected from a good employee, it provided the employer with many variation options, at the expense of the protection of the former. moreover, it was not at all clear how the test of article 7:611, as developed in the Taxi Hofman case, related to the severe tests of other grounds of variation, like that of article 7:613 (flexibility clause) and article 6:246 paragraph 2 (limitative function of reasonableness and fairness) of the civil code.189

b. Good employership and contract variationsten years later the Hoge Raad finally responded to the double criticism of the Taxi Hofman criterion in the Mammoet case.190 in this case, due to a takeover, the employee, stoof, was faced with a change in his original function of technical director to that of advisor to the new director. stoof, however, objected to the variation and meanwhile refused to execute his contract. consequently, mammoet suspended the payment of stoof ’s wages.

after a long procedure the case was brought before the Hoge Raad. to respond to the first criticism (that the Taxi Hofman criterion only emphasised the duties of a good and reasonable employee), the Hoge Raad reversed its reasoning to start from what could reasonably be asked from the employer. after having stated that one should not focus unilaterally on what should be expected from a good employee, the Raad held that in order to decide what effects a change of circumstances can have on the individual employment relationship, one should primarily examine whether or not the circumstances could urge a good employer to propose a variation in the employment conditions, and (subsequently) whether or not the proposed variation is reasonable.191 only if the answer to that question is positive, should the employee’s conduct and behaviour be investigated. indeed, only if it is certain that the employee is protected against unreasonable variation proposals, should the judge have to examine whether or not acceptance of the proposed variation can be reasonably expected from the employee, given the circumstances of the concrete case. Following the revised criterion, the employee’s interest to retain his originally agreed employment terms is guaranteed sufficiently, despite the changed circumstances.192

moreover, as a reaction to the second criticism, the Hoge Raad emphasised that the test to decide whether or not the employee’s rejection of an in se reasonable variation proposal could be reasonably justified differed from that based on article

189 as stated, these variation grounds are not discussed in this paper.190 Hr 11 July 2008 (Stoof v Mammoet), JAR 2008/204 and NJ 2011, 185.191 Cf. consideration 3.3.2.192 Cf. consideration 3.3.2.



6:248, paragraph 2 of the dutch civil code. The Raad held that there is no reason to suppose that the employee only acts in violation of his duty to behave as a good employee with regard to the employer’s reasonable variation proposal if the refusal of such proposal is unacceptable, given the standards of reasonableness and fairness.193 in other words, contrary to the Belgian theory on the employer’s right to implement marginal variations, which grants the Belgian judge only a marginal control power to decide if the employee’s refusal amounts to a manifest unreasonable behaviour (cf. the limitative function of good faith), the dutch labour judge can examine in depth whether or not the employee should have reasonably accepted the proposed variation. in short, the Taxi Hofman criterion demands more flexibility from the employee than the Belgian theory on the employer’s right to implement marginal variations.194

c. Evaluation of the (revised) Taxi Hofman criterionJust as the good faith demand grounded as well as restricted the Belgian employer’s right to implement variations, the norms of good employeeship/employership fulfil a double function. First of all, the norm of good employeeship allows the employer to carry through reasonable variation proposals that the employee cannot reasonably refuse. secondly, by requiring both a motivation for the variation and a reasonable proposal, the norm of good employership guarantees that the employee’s interest to retain his original employment conditions is sufficiently protected.

Nevertheless, as expressed above, the acceptance of a variation right on the basis of norms, such as good employeeship/employership, may not erode the protection of the employee. Therefore, the employee (and the employer) should be provided with some certainty as to which circumstances justify a variation, under which conditions a variation proposal is deemed to be reasonable, and in the light of which criteria the employee’s refusal to accept it will be tested. moreover, the judge should acknowledge the ‘hidden patterns’ of the employment relationship by guaranteeing that reasonable expectations are respected.

The dutch case law, certainly that following the Mammoet case, seems to respond to both concerns. departing from the Hoge Raad’s reasoning, it developed a three-stage test that should guide the judge’s decision about whether or not the employer could reasonably realise a contract variation. This test, together with the formal and material reasonableness demands that dutch doctrine derived from it, guarantees respect for the reasonable expectations of the employee involved. moreover, because of their consequent use in dutch case law, they promote legal certainty. although the judge’s decision in cases concerning the variation of contract terms and conditions remains very dependent upon an ad hoc analysis of the concrete circumstances of the specific case, both the employee and the employer can find some guidelines for their

193 Cf. consideration 3.3.3.194 a. Van Bever, “Goede trouw en belangenafweging in het arbeidsrecht”, 528–529. concordantly: i.

Van Puyvelde, “Het begrip bedongen arbeid”, 66.

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conduct and behaviour in the repeated application of the three-stages-test and the thereto related criteria.

The first step consists of the examination of the changed circumstances, relating to work,195 in light of which the employer justifies the proposed variations. Questioning the employer’s reason for the proposed modifications determines the range of application of the Taxi Hofman criterion. an analysis of the relevant case law reveals that many situations have been qualified as changed circumstances relating to work, and thus many of the employer’s reasons have been accepted.196 Examples are takeovers and reorganisations,197 disappearance of the employee’s function,198 (ir)reproachable dysfunctioning of the employee,199 loss of authority of a managerial employee,200 legal changes,201 or a structurally disturbed employment relationship.202 moreover, dutch doctrine also mentions a change in the organisational or financial

195 contrary to article 7:613 of the dutch civil code, that concerns the ‘variation of employment conditions’ on the basis of an express flexibility clause, the (revised) Taxi Hofman criterion only speaks of ‘changed work-related circumstances’. That difference in terminology casts doctrinal doubts as to whether or not the employer that envisages a variation of the employee’s employment conditions – being, in essence, his wage, working hours or function – can rely on the Taxi Hofman test of article 7:611 of the civil code to compel the employee to accept the proposed variation instead of meeting the difficult burden of proof entailed in the test of article 7:613 of the civil code requiring a weighty reason for the variation (cf. N. Gundt, Wijziging van de arbeidsovereenkomst: een instrument voor interne flexibiliteit?, deventer, Kluwer, 2009, 34–41 (hereafter, N. Gundt, Wijziging van de arbeidsovereenkomst).

196 see, however, Ktr. sittard-Geleen 3 march 2010 (JAR 2010/137), where the judge did not find that there were changed circumstances.

197 Pres. Leeuwarden 21 march 2000, JAR 2000/99; Ktr. Haarlem 15 February 2002, JAR 2002/54; Hof arnhem 26 June 2006, JAR 2006/239; rb. Zutphen 8 october 2008, LJN BG6255; Hof Leeuwarden 17 march 2009, LJN BH9815; Ktr. maastricht 20 october 2010, LJN Bo1893.

198 Ktr. Zaandam 7 July 2000, JAR 2000/174; rb. Zutphen 25 July 2002, JAR 2003/13; Ktr. utrecht 21 april 2004, JAR 2004/126.

199 Ktr. amsterdam 13 october 1992, JAR 1992/108; Ktr. Hoorn 2 october 1998, JAR 1998/218; rb. utrecht 17 November 1999, JAR 2000/39; rb. Zutphen 16 may 2002, JAR 2002/224; Ktr. rotterdam 17 February 2005, JAR 2005/91; Hof Leeuwarden 30 september 2008, LJN BF3931; Ktr. Zutphen 13 November 2008, LJN BG6235; Ktr. Haarlem 27 march 2009, LJN Bi1029; Ktr. rotterdam 19 November 2010, LJN Bo3795; Ktr. Heerlen 4 december 2009, LJN BK8134; Hof ’s-Gravenhage 18 may 2010, LJN Bm8974; Ktr. Groningen 10 June 2010, LJN BN3538; Ktr. Gorinchem 14 June 2010, LJN Bm8174; Ktr. Leeuwarden 21 december 2010, LJN Bo9351. concordantly: s. Jellinghaus, Harmonisatie van Arbeidsvoorwaarden, in het bijzonder na een fusie of overname, deventer, Kluwer, 2003, 213 (hereafter s. Jellinghaus, Harmonisatie); J. van slooten, Arbeid en loon, deventer, Kluwer, 1999, 164 (hereafter J. van slooten, Arbeid en loon). differently: c. Jansen and c. Loonstra, “annotation under Hr 28 april 2000”, ArA 2001, 41 (hereafter c. Jansen and c. Loonstra, “Hr 28 april 2000”).

200 Ktr. rotterdam 17 February 2005, JAR 2005/91.201 Ktr. utrecht 5 November 1992, Prg. 1993, nr. 3790; Hr 25 February 2000 (FNV v Frans Maas), NJ

2000, 471; Ktr. Leiden 9 august 2006, JAR 2006/219.202 rejected: Pres. rb. Haarlem 30 december 1986, KG 1987, 58.



position of the employer’s enterprise,203 and the reintegration of the long-term sick employee.204

considering the broad range of situations that have qualified as entailing a change of work-related circumstances, the Taxi Hofman criterion seems to apply to almost any proposed variation. That conclusion may be deplored and criticised in light of the ideal of legal certainty.205 However, it does not deprive the Taxi Hofman criterion, or the norms of good employership/employeeship on which it is based, of their potential to make the employment relationship flexible in a predictable way, thereby respecting reasonable expectations. indeed, the legal certainty of the Taxi Hofman test is mostly provided by its second and third step.

The second step concerns the reasonableness of the employer’s proposal. to evaluate that, the Hoge Raad clarified, in the Mammoet case, that the judge should consider all the facts of the case, including the nature of the changed circumstances, the type and impact of the proposed variation, the interest of the employer and that of his enterprise, the position of the employee involved, and the latter’s interest to keep his employment conditions unchanged.206 By mentioning the interest and position of the employer and employee respectively, the enumeration of relevant considerations reveals the importance of reasonable expectations in the evaluation of the proposal. moreover, legal certainty is provided through the formal and material demands of reasonableness that dutch doctrine has inferred from the analysis of the relevant case law.207

as regards the formal reasonableness demands, attention is given to the type and impact of the proposed variation, and to the way the employer has communicated it to the employee involved. Labour judges thus attach great importance to the fact that the employer consulted the employee (or the trade union which he joined)208 and provided him with the relevant information in a timely fashion.209 moreover, the judge will examine whether the proposal has taken into account the possible secondary consequences of the proposed variation, such as the impact of the variation on the employee’s pension rights.210 Finally, the fact that the proposal mentions a transitional period that allows the employee to adapt his personal life to the changed

203 c. Loonstra, “Hr 28 april 2000”, 40; J. van slooten, Arbeid en loon, 163.204 c. Jansen and c. Loonstra, “Hr 28 april 2000”, 40–41; J. van slooten, Arbeid en loon, 163.205 concordantly, N. Gundt, Wijziging van de arbeidsovereenkomst, 39–40.206 Cf. consideration 3.3.2.207 N. Gundt, Wijziging van de arbeidsovereenkomst, 48–51; N. Gundt and W. rauws, “de wijziging van

arbeidsovereenkomsten volgens Frans, Belgisch en Nederlands recht”, TSR 2010, 217–218 (hereafter N. Gundt and W. rauws, “de wijziging van arbeidsovereenkomsten”).

208 Ktr. amsterdam 26 august 1991, Prg. 1991/3351; rb. ’s Gravenhage 19 January 2000, JAR 2000/9; Ktr. Groningen 12 may 2011, LJN BQ5383.

209 rb. utrecht 17 November 1999, JAR 2000/39; Ktr. amsterdam 12 June 2001, JAR 2002/48; Ktr. Eindhoven 25 may 2004, JAR 2004/139.

210 rb. arnhem 16 april 1998, JAR 1998/108.

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professional circumstances,211 or contains compensatory measures and alternative proposals,212 such as extracurricular childcare,213 promotes the formal reasonableness of the variation proposal.

contrary to the British case law, dutch judges attach a lot of importance to material demands of reasonableness.214 These demands not only consider the type and impact of the proposal, but also focus on the employee’s interest and position. Thus, the employer’s proposal is evaluated differently, depending on whether it bears on primary, secondary or tertiary employment conditions:215 proposals relating to wages are thus evaluated more strictly than those concerning the allowance for expenses.216 similarly, a variation in a concrete work schedule217 or the loss of the option to work overtime218 is more quickly deemed reasonable than a variation in working hours.219 Likewise, a variation in explicitly and individually granted rights, such as the use of a company car, is approached more strictly, in view of the subjective importance that the employee attaches to it.220 moreover, the judge will consider whether the employer proposes material compensations, such as the payment of travel expenses in the case of a transfer,221 or the fact that the demotion is implemented on full pay,222 in order

211 Ktr. Breda 16 February 1994, JAR 1995/3; Ktr. Hoorn 22 February 2002, JAR 2002/71; Ktr. Zutphen 27 april 2004, JAR 2004/127; Ktr. Nijmegen 1 march 2005, JAR 2005/127; Ktr. Leeuwarden 5 april 2006, JAR 2006/109; Ktr. Leiden 9 august 2006, JAR 2006/219; Ktr. amersfoort 4 september 2006, JAR 2006/246; Ktr. Zaandam 16 November 2006, JAR 2006/269; Hof arnhem 22 march 2011, LJN BP8529.

212 Vzr. Ktr. 12 June 2009, LJN Bi8561; Ktr. Nijmegen 15 July 2010, LJN BN1498. Cf. W. Zondag, “Wegen en wikken bij het wijzigen van arbeidsvoorwaarden. de betekenis van gezichtspunten in de lagere rechtspraak”, ArA 2006, 37 (hereafter W. Zondag, “Wegen en wikken bij het wijzigen van arbeidsvoorwaarden”).

213 Ktr. utrecht 21 april 2004, JAR 2004/126.214 N. Gundt, Wijziging van de arbeidsovereenkomst, 51–52; N. Gundt and W. rauws, “de wijziging van

arbeidsovereenkomsten”, 218–219.215 Examples of primary employment conditions are the wages, working hours, and function of the

employee. secondary conditions concern regulations regarding expenses, overtime and holidays. tertiary conditions relate to advantages offered by the employer, but are difficult to value monetarily. Examples are the opportunity of training, trips and excursions, luncheons, or good office space. regarding the distinction between primary and secondary/tertiary employment conditions, N. Gundt, Wijziging van de arbeidsovereenkomst, 35–38.

216 Ktr. amsterdam 19 march 1992, JAR 1992/26.217 Hof ‘s-Hertogenbosch 13 January 2009, LJN BH0699; Vzr. Ktr. Heerlen 28 may 2009, LJN Bi8757;

Ktr. utrecht 27 april 2011, LJN BQ3288. contrary to the hours of employment, the majority of dutch doctrine even refuses to consider the concrete work schedule as an employment condition (cf. N. Gundt, Wijziging van de arbeidsovereenkomst, 37).

218 Ktr. Groningen 12 may 2011, LJN BQ5383.219 W. roozendaal, “The times they are changing: Wijziging van arbeidstijden en het belang van de

werknemer”, SMA 2007, 50–51.220 Ktr. den Haag 27 June 2005, JAR 2005/237; Ktr. tiel 3 august 2005, Prg. 2005/166; Ktr. Gouda

28 september 2006, RAR 2007, 8; Ktr. amersfoort 4 september 2006, JAR 2006/246.221 Hof arnhem 22 march 2011, LJN BP8529.222 Ktr. rotterdam 17 February 2005, JAR 2005/91.



to protect the interests and the position of the employee. Thirdly, attention is paid to the way the proposal integrates the employee’s expressed objections. The judge will, for instance, examine in what way the proposal responds to the family-related difficulties possibly entailed in a transfer.223 Furthermore, the extent to which the proposal respects the employee’s acquired position, by taking into account, amongst other things, his standard of living and spending patterns,224 or the level at which the employee was originally employed,225 is assessed. Finally, the question of who bears the risk of the change of the work-related circumstances could influence the proposal’s reasonableness: if the change concerns the sphere of risk of the employee, then the proposal is often deemed reasonable, however, the fact that the employer should primarily bear the effects of the changed circumstances does not automatically render it unreasonable.226

if the judge deems the proposed variation formally and materially reasonable,227 he will thirdly balance the interests and needs of the employee against those of the employer and his enterprise.228 The explicit nature of this assessment makes his reasoning more transparent and predictable. The question guiding the assessment is whether acceptance of the reasonable proposal can be reasonably expected from a good employee. This time the employee’s conduct is tested on its reasonableness. The fact that the proposed variation is deemed reasonable does not, however, automatically imply that the employee must accept it.229

The employee’s conduct and behaviour will thus be considered to be formally reasonable if he takes a positive stance and declares his willingness to undergo the variation during a short trial period,230 or actively searches for alternative solutions.

223 Ktr. Harderwijk 20 February 1989, Prg. 1989, nr. 3059.224 Ktr. Zaandam 16 November 2006, JAR 2006/296.225 Gerechtshof ’s-Hertogenbosch 21 october 1991, NJ 1992, 146. Cf. J. van slooten, Arbeid en loon,

166.226 Hr 11 July 2008 (Stoof v Mammoet), JAR 2008/204 and NJ 2011, 185, consideration 3.4. see, also,

Ktr. rotterdam 28 october 2004, JAR 2005/73. Cf. N. Gundt and a. Van Bever, “de evolutie van het basisbeginsel van goede trouw uit het contractenrecht in het Franse, Belgische en Nederlandse arbeidsovereenkomstenrecht. toegespitst op de wijziging van arbeidsvoorwaarden” in i. samoy (ed.), De evolutie van de basisbeginselen van het contractenrecht in Ius Commune Europaeum, antwerp, intersentia, 2010, 54. more subtly, W. Zondag, “Wegen en wikken bij het wijzigen van arbeidsvoorwaarden”, ArA 2006, 49.

227 in the following cases, the reasonableness of the proposal was, however, rejected: Ktr. middelburg 23 July 2008, LJN BG3897; Ktr. utrecht 13 may 2009, LJN Bi3516; Ktr. rotterdam 13 November 2009, JAR 2009/294; Vzr. Ktr. utrecht 17 February 2010, LJN BL5021; Hof ’s-Gravenhage 26 october 2010, LJN Bo2078; Ktr. utrecht 1 december 2010, LJN Bo9909; rb. rotterdam 30 march 2011, LJN BQ0100.

228 Ktr. rotterdam 25 august 1993, JAR 1993/225.229 a. Bungener, Het wijzigen van de arbeidsovereenkomst in vermogensrechtelijk perspectief, deventer,

Kluwer, 2008, 191.230 rb. ’s-Hertogenbosch 24 april 2002, JAR 2002/114; Ktr. Hilversum 16 october 2002, JAR

2002/282.

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should the employee refuse any cooperation or assistance,231 or play a waiting game,232 then his refusal will be assessed as rather unreasonable.

moreover, material demands of reasonableness also determine whether or not the employee’s rejection violates his obligations under article 7:611 of the dutch civil code. more precisely, personal considerations could reasonably justify the employee’s refusal to accept the proposed variation.233 Examples are the psychological or mental condition of the employee,234 or the degree of self-respect and status that the latter relates to the maintenance of his original employment conditions.235 Practical objections are also taken into account, such as the employee’s old age, limiting him to perform during the night,236 or family responsibilities, obstructing a transfer or drastic variation of working hours.237 on the other hand, the employer could have sound reasons, such as security concerns,238 that urge him to implement a variation, despite the employee’s objections.

in the end, it seems that dutch case law makes a proper and – at least – transparent assessment of the different interests and needs involved. Partly thanks to the doctrinal surveys and analysis, resulting in a three-stage test and a set of formal and material reasonableness demands, it explicitly balances the advantages of the variation for the employer against the harm it causes the employee. it thus promotes legal certainty and recognises the hidden patterns of the employment relationship.

4.3. tHE rELEVaNcE oF tHE PsYcHoLoGicaL coNtract iN VariatioN casEs

Now it is clear how open and implied terms make the employment relationship more flexible, and at the same time guarantee respect for the reasonable expectations of the employee and employer, the question rises as to how the psychological contract theory fits into the aforementioned analysis.

Through the examination of British and dutch case law on contract variations, one can find some implicit references to the idea of the psychological contract. indeed, in his reasoning the judge sometimes distinguishes between categories of employers and employees, and follows a more or less flexible approach, depending

231 Ktr. Nijmegen 15 July 2010, LJN BN1498.232 Ktr. delft 24 February 2000, JAR 2000/49.233 s. Jellinghaus, Harmonisatie, 213 and 216.234 Ktr. Harderwijk 20 February 1989, Prg. 1989, nr. 3059.235 Ktr. Zaandam 7 July 2000, JAR 2000/174.236 Hr 28 april 2000 (Guitoneau v Midnet Taxi), JAR 2000/120, NJ 2000, 565.237 Ktr. Zevenbergen 11 march 1998, Prg. 1998/4947; Ktr. delft 1 march 2007, JAR 2007/130. in the

following cases the personal objections of the employee did not, however, obstruct the variation of the concrete work schedule: Hof ‘s-Hertogenbosch 13 January 2009, LJN BH0699; Vzr. Ktr. Heerlen 28 may 2009, LJN Bi8757; Ktr. utrecht 27 april 2011, LJN BQ3288.

238 Hof arnhem 22 march 2011, LJN BP8529; Ktr. Groningen 12 may 2011, LJN BQ5383.



on the (more or less relational) nature of the employment relationship. although judges do not explicitly refer to the continuum of transactional/relational contracts, they seem to intuitively depart from it when interpreting and applying the demands of reasonableness, developed to decide upon the reasonableness of the proposed variation and of its refusal.

in the ABN AMRO Bonus cases, the cantonal Judge of utrecht explicitly took into account the economic and financial position of aBN amro, and ruled that although the Bank suffered from the effects of the financial crisis, it could not unilaterally vary its severance and bonuses policy.239 although the judge did not directly compare aBN amro’s position to that of another employer, this reasoning suggests that his conclusion might be different in respect of an individual, less substantial employer, who has been seriously affected by the crisis. in any case, this case demonstrates the importance of the employer’s characteristics and the reasonable expectations arising from them.

moreover, in the Courtaulds case, the court of appeal explicitly compared the case of the employee who spends a great part of his working hours on the road to that of a shop assistant. it concluded that the stricter standard of flexibility needed to be applied to the former, given the fact that the workplace of the latter would probably be a particular shop in a particular locality throughout the working day.240 indirectly, it thus placed the former on the relational side of the continuum, because of his indefinite workplace and, more generally speaking, because of his ambiguous job description. contrary to the shop assistant, of whom the contract terms would be more precise and discrete, he could thus be expected to be sent to another workplace. in other words, the court rejected the approach followed by classical contract theory in favour of a less formalistic reasoning that evaluates the employment relationship and the reasonableness of a contract variation not in a static way, i.e. with reference to that single moment at which the employment contract is made, but evolutionary, thus acknowledging the way in which the employment relationship has evolved.

Nevertheless, it has to be admitted that the insights of the psychological contract theory do not (yet) guide the actual reasoning of the judge. Those insights may, however, be inspiring when reflecting on the way judges should decide cases when neither the contract nor the relevant regulations provide a suitable answer (so that they must seek a solution through an application of open norms). The relevance of the psychological contract theory remains, thus, a subject for further research.

239 Ktr. utrecht 9 october 2009, RAR 2009, 168, consideration 4.9.240 ca 25 march 1988 (Courtaulds Northern Spinning v Sibson), ICR 1988, 461–462.

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aline Van Bever

5. aN oPEN-ENdEd coNcLusioN

contrary to the approach of the Belgian Cour de Cassation, the British, and particularly the dutch, case law on contract variations departs from an explicit balancing exercise that considers the whole context. Through the development of a multi-stage test and a set of demands of reasonableness, they try to acknowledge the hidden patterns of the employment relationship, and seem to succeed in doing so. By expressly weighing up the justifications for the variation provided by the employer against the employee’s interests and needs, as inferred from his original position and expressed objections, they thus integrate both parties’ legitimate and reasonable expectations into their judicial reasoning, that way trying to legally recognise and respect the mutually perceived promises of obligations of both. moreover, by elaborating an evolutionary and normative approach to deciding whether or not the employer can reasonably vary the contract or the employee can reasonably refuse a variation, attention is drawn to the way the employment relationship has in fact been conducted and evolved. in doing so, this approach lays bare the relational norms that direct the conduct and behaviour of the employer and the employee as an implied (normative) part of the employment relationship. only that way, can the concern to acknowledge the ‘real deal’ – not only the paper deal – be met, and the incomplete, relational and psychological nature of the employment contract be respected. moreover, although it is not claimed that every risk of uncertainty and arbitrariness is excluded, the openness of this approach and the explicitness of the balance exercise make the judge’s reasoning a lot more comprehensible, and therefore more controllable and predictable. Perhaps a more explicit reference to the idea of the psychological contract could even enhance the actual, but implicit, integration of the transactional/relational distinction in the judge’s approach.

Open Norms and the psychological dimension of employment relationships (2012 ELLJ)

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