Crises such as a pandemic can push employers to try to introduce changes to employees’ contractual terms and even, as in Khatun v. Winn Solicitors Ltd ET/2501492/2020, to dismiss, if an employee does not accept the change. This case reminds us that no matter how critical and urgent the situation, and even if the proposed change might be a reasonable measure in the circumstances, employers must still act reasonably and follow a fair process if they are going to treat refusal to agree the change as justifying dismissal.
To manage the economic impact of the COVID-19 pandemic, a firm of solicitors decided to change their staff’s employment contracts, to enable the firm, in the future, to unilaterally place employees on furlough or reduce their pay and hours, by giving employees five days’ notice. The staff were told to agree to these non-negotiable variations within 24 hours or face likely dismissal. Out of more than 300 staff members, only the claimant refused to agree to these changes. She said that she was willing to consider accepting the amendments should the need arise in the future. However, although there were some discussions, the employer simply restated its position and dismissed the claimant with immediate effect – just two days after proposing the amendments. The firm initially failed to make any payment in lieu of notice or holiday pay, but did so some three months after termination.
Why was the dismissal unfair?
The employment tribunal decided that the dismissal was unfair. It accepted that the employer had legitimate business reasons to take the steps it did and that the claimant’s refusal to agree the contract variation was capable of being a potentially fair reason (some other substantial reason, or SOSR) for dismissal. However, the employer had not, in this case, acted reasonably, in all the circumstances, in treating her refusal as a sufficient reason. In reaching this conclusion, the tribunal noted the procedural issues in the employer’s decision-making process:
- There was no meaningful consultation. The tribunal noted that the degree of consultation will vary with the circumstances and it is usually important that employees have a meaningful chance to be involved in the process. In this case, as nearly the entire workforce had agreed to the amendments, the employer only needed to engage in more detailed discussions with the claimant, rather than the whole workforce. The tribunal noted that, in the conversations with the claimant, the employer simply repeated its position and did not engage with the claimant. These conversations did not, therefore, amount to consultation.
- The employer did not reasonably explore alternatives to dismissal. It was clear on the evidence that the employer’s intention was to go straight down the dismissal route without any due process if the claimant refused to agree to contractual amendments. The tribunal noted that dismissal should have been a last resort.
- The claimant was not given an opportunity to appeal against her dismissal. Irrespective of whether the Acas Code of Practice on Disciplinary and Grievance Procedures applied to the claimant’s SOSR dismissal, a right to appeal would have been a reasonable step toward resolution.
What does this mean practically?
While this is only a first instance decision, it is an important reminder that, to avoid successful claims for unfair dismissal, an employer must establish both a fair reason and that it has acted reasonably in treating that reason as sufficient to justify dismissal. Even if there are sound and urgent reasons to vary employees’ contracts (and the tribunal agreed that there were), employers must follow a fair procedurein implementing those measures (particularly, in deciding to dismiss, if an employee refuses to accept). What a fair procedure entails will depend on the circumstances. In response to unprecedented circumstances such as the COVID-19 pandemic, tribunals may accept that it is not viable for employers to enter into protracted or extended consultation with hundreds of employees. However, a degree of consultation will always be required, especially where there are employees who are reluctant to agree to the proposed changes. Understandably, finding the balance between business needs and fairness could be difficult in the heat of a crisis. This is why it is important to have safety nets. An appeal process, with the luxury of more time and the benefit both of hindsight and legal advice, can allow employers to rectify previous procedural flaws in past decisions.