Employment News

News added on 28.10.2019

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Variation of terms

Changing terms and conditions of employment

“Thousands” of Asda employees are apparently facing dismissal in November 2019 if they refuse to sign a new employment contract that will require them to work flexible hours and lose paid rest breaks. If you want to change an employee’s terms of employment, is it as simple as dismissing them if they refuse to agree to the change?

Asda is proposing that the basic hourly rate of pay will increase for retail staff but in return their rest breaks will be unpaid, they will be required to work on five of the eight bank holidays and they must work any shifts demanded by managers. The new contracts were first introduced in 2017 as a voluntary measure but are now being made compulsory. The vast majority of Asda employees have signed the new employment contract but it is believed that approximately 12,000 of them have not yet done so. If they still haven’t done so by 2 November 2019, they face dismissal. According to the GMB trade union, those employees who refused to sign were given twelve weeks’ notice of dismissal and that notice period is due to expire on 2 November 2019.

If you want to change an employee’s terms of employment where the proposed change isn’t authorised by the employment contract and they refuse to agree to the change, one option potentially available, which is what Asda appears to have done, is to terminate their existing employment contract on due notice and at the same time offer them re-employment on the new terms (which they can then either accept or reject). However, the employee may still have a claim for unfair dismissal under the Employment Rights Act 1996.

Provided you’ve given the employee due contractual notice when terminating their existing employment contract, which should be no less than the statutory minimum notice period, you won’t be liable for a wrongful dismissal claim. However, the same can’t be said of unfair dismissal: even where you offer re-employment on revised terms, termination of the existing employment contract still constitutes a dismissal in law and so the employee is eligible to bring an unfair dismissal claim if they’ve been employed for two years or more. This remains the case even if they accept your offer of re-employment.

To defend an unfair dismissal claim, you’ll need to establish a potentially fair reason for dismissal and show that you acted reasonably in dismissing the employee for their refusal to agree to the change to their terms. Your potentially fair reason will be “some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held” (SOSR). Provided you have a sound and legitimate business reason for dismissing an employee who refuses to accept a change to their terms, i.e. one which a reasonable employer would consider sound, you should be able to establish SOSR. In Asda’s case, it says that it wants greater staff flexibility and to cut costs, so that it remains a sustainable business for its customers. As for the reasonableness of dismissal, this involves a balancing act in which the employment tribunal weighs your reasonableness in dismissing the employee against their reasonableness in refusing to agree to the change to their terms. The full context of the change will be looked at and your motives for introducing it will be set against the employee’s reasons for rejecting it. A key element in assessing reasonableness is also whether you’ve followed a fair procedure, incorporating full and fair consultation with the employee. If you’ve not done so, the dismissal is likely to be unfair.

In addition, if you’re proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less, the collective consultation obligations and the duty to notify the Secretary of State under the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) apply. “Redundancy” for this purpose is defined as a dismissal “for a reason not related to the individual concerned”. If you change employees’ terms through dismissal and re-engagement, those dismissals will count as redundancies under TULRCA and you would then be subject to the duty to collectively consult, depending on the number of employees involved.

Finally, if the change unfairly impacts on an employee, or group of employees, by reason of a “protected characteristic”, such as their sex, race, sexual orientation etc., this may give rise to an indirect discrimination claim under the Equality Act 2010.

No, it isn’t. The employee will be able to bring an unfair dismissal claim if they’ve been employed for two years or more. To successfully defend such a claim, you’d need to show both a potentially fair reason for dismissal and that you acted reasonably in dismissing the employee for their refusal to agree to the change to their terms, including following a fair dismissal procedure. In addition, if you’re proposing to change the terms of 20+ employees, collective consultation obligations will apply.

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