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Many employers have changed terms and conditions during the pandemic, whether to access the furlough scheme or to enable the survival of the business through economically unprecedented times. Some employees have been willing to agree to those changes, keen to avoid a redundancy situation. If an employee refuses to change their contractual terms, an employer cannot unilaterally make the change without breaching the contract. The safer method is to dismiss the employee lawfully from the old contract – by giving contractual notice – and offer to immediately reengage them on new terms. Provided the employer has a sound business reason for making the change, the dismissal may be fair based on ‘some other substantial reason’ (SOSR), one of the five potentially fair reasons to dismiss. The dismissal must be reasonable overall, which includes following a fair procedure. 

In Khatun v Winn Solicitors, the employer experienced a downturn in work due to the pandemic. It decided to furlough half its staff, with the other half retained to service the remaining work. All employees were required to sign new contracts or face dismissal. The new terms gave the firm the right to furlough staff or to unilaterally reduce their hours and pay on short notice. The employee refused to sign the new contract, saying she would consider furlough or a reduction in hours in future if the situation arose. The employee was urged to reconsider but she refused. She was dismissed without notice or accrued holiday pay because the COO was ‘fuming’. Her remote computer access was removed before she was even told about her dismissal. The employer later accepted they owed her notice and holiday pay and paid it. The employee brought an unfair dismissal claim.

The employment tribunal agreed that she had been unfairly dismissed. They acknowledged that the business had sound, good business reasons for the contract change. Given the effect of the pandemic, it was reasonable to request these changes and it was not premature. Theoretically, the dismissal had met the SOSR test. However, the employer had not behaved reasonably overall. The tribunal conceded that only one employee out of 300 had refused to sign, which indicated that the business had acted reasonably. However, there had been no meaningful consultation at all, just a one-sided conversation. Although a subsequent phone call had looked more like consultation, the tribunal did not believe meaningful consultation had taken place. The employer did not explore alternatives and instead just reiterated the firm’s position. The firm said they did not have time to negotiate with 300 staff, but the facts showed that it was only this employee with whom consultation was required. The tribunal was surprised that a firm of solicitors had so little regard for a binding contract and an employee’s desire to protect her contractual terms. The employer’s own evidence was that they did not explore alternative options and the employee would be dismissed if she refused. They had offered no appeals process. The tribunal said a reasonable employer would have taken more time to engage meaningfully with the employee and explore alternatives to dismissal. The dismissal was unfair.

This case also shows the importance of following a fair procedure in any dismissal case, whatever the circumstances. The key issues in this case were the lack of consultation and any reasonable consideration of alternatives to dismissal (including her offer to stay on existing terms and consider changes in future if required). With a sound business reason for the change, and SOSR engaged, all the employer then needed to do was follow a fair process. For one employee, this would not have taken much longer than the 48 hours in which the employee was given to sign her new contract. The employer here let their panic at Covid, and ‘fury’ with the employee, override the importance of a fair process. A remedy hearing will decide just how much that mistake will cost.

Find out how we can help.  Our partner, Jon Dunkley, heads the Wollens specialist Employment Department.  Contact him today for an informal chat, without obligation on 01271 342268 or via email at jon.dunkley@wollens.co.uk.