Unfair dismissal case involving variation of contract

Can unilaterally varying an employment contract amount to a dismissal if the new terms replacing the existing contract are not ‘radically’ different from the previous terms?

Yes, says the EAT in Jackson -v- The University Hospitals of North Midlands NHS Trust (available here). The requirement for the change to be ‘radical’ is too high a threshold. It is a question of fact and degree as to whether the change is sufficiently substantial to amount to a dismissal.

Background: The EAT decision of Hogg v Dover College is authority that an employee can claim unfair dismissal where their employer has unilaterally imposed ‘wholly different terms’ which amount to an entirely different contract. In this case the employer is, in effect, ending the old contract and imposing another.

Facts: The employee, Ms Jackson, was employed as a Band 6 specialist research nurse for the University Hospitals of North Midlands NHS Trust (‘the Trust’). The Trust restructured and reduced the number of band 6 posts. The remaining band 6 posts became ‘senior research practitioner’ posts and existing band 6 nurses were invited to apply for these.

Ms Jackson was unsuccessful in her application for the new band 6 role. Instead she was moved to a newly created band 5 role (a ‘research practitioner’ role) and presented with new terms and conditions to sign. This meant a reduction in pay (after being protected for two years).

Ms Jackson refused to sign up to the new terms and brought a grievance. She said she should be made redundant and paid enhanced redundancy pay (since the requirement for her specialist research role had diminished). The Trust accepted this argument and instead gave her notice that she was being dismissed for redundancy from her band 6 role. Ms Jackson then resigned before her 8-week notice period had expired. Her terms and conditions of employment said that employees would forfeit their redundancy pay if they left their employment ‘before expiry of notice’ (unless an earlier release had been agreed). Therefore the Trust said that she was no longer eligible for (any) redundancy pay.

Ms Jackson brought Tribunal claims for unfair dismissal and for enhanced redundancy pay. She claimed she had been constructively dismissed, meaning her later resignation was irrelevant. As part of her constructive dismissal claim, she asserted that she had been subject to a ‘Hogg dismissal’ (see Background) when the new band 5 contract was imposed.

Tribunal decision

The Tribunal upheld the claim for unfair dismissal and statutory redundancy pay. However, it rejected Ms Jackson’s claim for contractual redundancy pay on the basis that the imposition of the band 5 contract was not a Hogg dismissal because:

There was no ‘radical change’ such as to entitle Ms Jackson to regard herself as constructively dismissed;
Ms Jackson had the required skills to do the Band 5 role;
At the time that the new terms and conditions were imposed, Ms Jackson did not treat it as a dismissal and instead raised a grievance in relation to it, which was inconsistent with her employment ending; and
There was no intention by the Trust to dismiss her.

Ms Jackson appealed.

EAT decision

The EAT upheld her appeal. The EAT said that the Tribunal had wrongly focused on the concepts of constructive dismissal. This has led to the incorrect application of the Hogg test. Rather than consider whether there was a ‘radical change’ from the terms of the band 6 contract to the band 5 contract, it should have considered whether Ms Jackson’s contract of employment had been terminated and replaced by another – which is a question of fact and degree.

To make its decision, the Tribunal should have carried out a before and after comparison of the role to establish whether the difference in terms created a sufficiently substantial difference to withdraw the previous contract and implement a replacement.

Further, the Tribunal’s comment that Ms Jackson had the skills to perform the band 5 role was irrelevant, as was the Trust’s intention (and Ms Jackson’s actions) at the time the new terms were imposed. It is the consequence of the unilateral variation/imposition of different terms that matters, not the intention.

Given the Tribunal’s incorrect analysis, the case was returned to a different Tribunal to apply the test correctly.

Implications:

This is a useful reminder of the pitfalls of unilaterally varying a contract. It is not only wrongful and/or constructive dismissal that employers need to be wary of. It can also count as an actual dismissal if the variation of terms is sufficiently substantial.

Unlike a ‘fire and rehire’ exercise (where the employer intentionally terminates the contract to offer new terms) an employer doesn’t need to intend for the employment relationship to end to amount to an actual (‘Hogg’) dismissal. In this situation the focus is instead on the outcome of the imposition of new terms and the greater the substantive difference between terms and conditions before and after a variation, the more likely a Tribunal is to find that an (actual) dismissal has occurred

Unfair dismissal case involving variation of contract

Can unilaterally varying an employment contract amount to a dismissal if the new terms replacing the existing contract are not ‘radically’ different from the previous terms?

Yes, says the EAT in Jackson -v- The University Hospitals of North Midlands NHS Trust (available here). The requirement for the change to be ‘radical’ is too high a threshold. It is a question of fact and degree as to whether the change is sufficiently substantial to amount to a dismissal.

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