We are not aware if this specific case concerns a worker in the education sector, however, the details of the case itself is interesting in that it provides clarification as to your position if, for example, your employer sought to dismiss you on your current terms of conditions of employment to later re-engage you on less favourable terms. This would be under the disguise of making costs savings within work.
It has recently been reported that some local authorities have issued dismissal notices to their entire staff, offering to immediately re-engage them at a lower rate of pay. A recent decision of the Employment Appeal Tribunal considered the correct test to be applied when considering the fairness of a dismissal in these circumstances.
The employer in this case needed to cut costs and improve profits. In order to avoid redundancies, it asked all 77 of its employees to accept a pay cut of 5%. All but one of them eventually agreed. The claimant was dismissed and brought a claim for unfair dismissal against the company, which was upheld by the Employment Tribunal.
See also: Your rights: Dismissal (Worksmart)
Tina Maxey, a Solicitor at Steeles Law, commented:
“A dismissal in these circumstances is potentially fair for ‘some other substantial reason’ (within Section 98(1) Employment Rights Act 1996). The Tribunal was satisfied that the employer could establish ‘some other substantial reason’ for the dismissal, but was critical of the consultation process it had followed. It concluded that it was reasonable for the claimant to seek to maintain his original terms and conditions.”
The man’s claim for unfair dismissal was upheld. On appeal, the EAT concluded that the Tribunal had applied the wrong test. It was not the case, as the Tribunal had incorrectly believed, that an employer could only impose a reduction in pay and benefits if the financial situation was so desperate that the very survival of the business depended on it. In addition, the EAT said the Tribunal erred by asking what it was reasonable for the claimant to do in the circumstances. The focus should have been on the reasoning and reasonableness of the employer, rather than the claimant, it said.
Tina Maxey said:
“A Tribunal is also required to consider whether the dismissal is ‘in accordance with equity’, which might, for example, include taking into account whether management are also proposing to take a pay cut and whether there were other potential cost saving measures.”
The case was remitted to be heard by a different Tribunal.
“Introducing new terms and conditions for employees, particularly where it involves a decrease in pay, is a legally complicated process. Generally speaking, changes to terms and conditions cannot be imposed unilaterally by the employer, and in the first instance it is best to seek employees’ consent to the changes.
“Where consent is not given, an employer might have to resort to giving notice of dismissal to employees, with an offer to immediately re-engage them on the new, less favourable terms. If 20 or more employees are involved, it is technically regarded as a collective redundancy situation which requires a statutory consultation process to be followed. Even with fewer than 20 employees, employers will need to be careful to follow a fair procedure to avoid a finding that the dismissals were unfair.”