Ius Variandi is the capacity within their managerial authority that allows the employer to unilaterally modify working conditions.
The Second Chamber of the Supreme Court of Justice has defined it as follows:
"Ius variandi has been referred to as the employer’s potestative right to unilaterally modify working conditions, within certain limits, regarding the form and modalities of the service provided. In other words, this employer’s power of ‘change’ is limited, as any variations made must not substantially alter the employment contract nor be arbitrary to the detriment of the worker. Therefore, if the employer modifies the conditions of the employment contract of their employees, it must be based on a genuine necessity that justifies the measure with a view to improving the service provided (in this regard, see this Chamber’s rulings No. 227, at 10:00 AM on April 13, and No. 294, at 9:35 AM on May 11, both from 2007). It is important, then, to determine, in each specific case, whether the changes conform to the principles of reasonableness, necessity, and indemnity of the worker (as they must not result in financial or moral harm) and whether they respond to the organization’s needs or an exceptional situation, of course, without infringing upon the essential clauses of the contract." (Ruling 831-2010 of the Second Chamber of the Supreme Court of Justice at 3:40 PM on June 10, 2010).
However, this authority is not unrestricted and has three limits:
- Reasonableness: The employer cannot modify the employment contract by making demands that exceed the bounds of logic and sound judgment.
- Necessity: There must be a requirement to address a shortcoming in the service or in the tasks necessary for the proper continuity of operations.
- Indemnity of the worker: No financial or moral harm should be caused to the worker.
On this matter, the Second Chamber has stated:
"Such changes must conform to the principles of reasonableness, necessity, and indemnity of the worker (as they must not result in financial or moral harm) and respond to the organization’s needs or an exceptional situation, of course, without infringing upon the essential clauses of the contract." (Ruling 134-2008 of the Second Chamber of the Supreme Court of Justice at 9:40 AM on February 20, 2008).
The modification of an essential element of the employment contract that lacks reasonableness or necessity, or that causes harm to the worker, may be considered abusive ius variandi:
"In this regard, the claim that the reduction in the hourly rate was an agreed-upon term between the parties is not true, as the witness [Name 005] stated: ‘…a lawyer arrived with an administrative officer from (…), they changed our contract, I believe welders were earning $15, and they lowered it to $12… it was even said that those who did not sign would be dismissed, and as you know, one needs the job, so it was almost mandatory.’ For this reason, the salary reduction applied as of November 1, 2014, in which the hourly wage was reduced from $15 to $12, is considered illegitimate, constituting an abusive ius variandi, as it affected an essential condition of the employment contract, namely remuneration, being a unilateral decision by the employer lacking a valid justification." (Ruling 2084-2019 of the Second Chamber of the Supreme Court of Justice at 10:40 AM on November 8, 2019).
On this matter, the courts have established that abusive ius variandi may constitute a form of constructive dismissal, as it places the worker in a situation where continuing the employment relationship becomes untenable. Likewise, it entitles the worker to request the correction of the situation causing them harm and, if this does not happen, to terminate the employment relationship with employer liability within a period of six months. However, it is important to evaluate each case individually, as in certain working conditions, where the harm caused is severe, the worker could terminate the employment contract without first requesting correction of the situation.
Therefore, before making a change that affects the essential elements of the employment contract, it is advisable to communicate the change to the worker well in advance, clearly, and to take one of the following actions to mitigate the risk of claims:
a) Terminate the employment contract with employer liability and provide the corresponding severance payment, followed by a rehire under the new conditions.
b) The signing of an addendum to the employment contract documenting the mutual agreement of both parties to implement the change, accompanied by a partial settlement of labor benefits to compensate for the harm caused.
Through these practices, the parties’ consent to the changes is documented, so it ceases to be a unilateral modification, and the resulting impact is compensated, thus reducing the risk of potential claims.
Finally, properly drafting the employment contract from the outset, anticipating these changes within the legal parameters that make them permissible, is another, and perhaps the best, way to prevent future claims.
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