Employment Appeal Tribunal (EAT) sheds light on the steps an employer can take when seeking to vary multiple staff contracts, and the impact this has on any subsequent dismissal and re-engagement process.
In a recent case, an employer who wished to remove a bonus scheme, but had its offer of compensation to employees rejected, issued notices of dismissal to the employees (ending the employees' rights under the bonus scheme) and offered to re-engage all the staff on new contracts (without the bonus scheme).
A number of the employees made claims against the firm for unfair dismissal, and four of those were taken forward.
The employees' complaints included one that since the employer offered a one-off payment during the consultation process, failing to offer a similar one-off payment in the dismissal and re-engagement process was unfair.
The EAT decided that the employer was not required to offer a further one-off payment during the dismissal and re-engagement process and this did not render the dismissal unfair. The EAT accepted the employer's rationale that offering a one-off payment during consultation was an attempt to end the dispute. In refusing the offer, the employees forced the employer to take further legal steps and they could not reasonable expect the offer to remain on the table since the context had changed.
This case gives comfort to employers who, for good business reasons, want to make changes to contractual terms, and emphasises that the concentration is on whether the employer had good reason to do so, rather than whether employees have a good reason not to agree to any change. For the employees who pursued their rights at Tribunal, they have been left with no compensation - a reminder that risk is a two-way street.
For further information, or for advice or assistance on this topic or other employment issues, contact Simpson & Marwick on 01382 200373.
