“Your hours cut or you’re fired!” ultimatum resulted in an unfair dismissal finding

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Employment contract variation is a matter which should be approached with care and any opposition should not be written off without consideration.

Author: Kiril Moskovchuk
Published:
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We continue to see judicial scrutiny over business decisions in response to the COVID-19 pandemic and in relation to furlough.

In a recent case, Khatun v Winn Solicitors Ltd, a solicitor instigated unfair dismissal proceedings against her firm in an employment tribunal in relation to her opposition to changes in the terms of employment, which resulted in her dismissal.

Her firm, like many businesses, saw a significant drop in trade caused by the pandemic. The company, unsurprisingly, decided that it would need to implement some changes to respond to the challenge and stay afloat, which also involved changes affecting its employees.

The way the firm went about implementing the changes shows that even solicitors do not always get it right where due diligence for employment procedure is concerned.

The company decided some of its solicitors would be asked to agree to furlough. The solicitors who the company designated to remain working would handle all legal cases, likely working from home, and included handling the cases of their furloughed colleagues. At the same time, the solicitors in work would have to accept a 20% reduction in their hours.

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Being a firm of solicitors, the company certainly recognised the proposed changes entailed variation in the terms of the employment contracts. The staff were contacted and asked to accept the proposed changes. The company considered the contracts should be varied as soon as was possible. However, it was not envisaged that implementation of the proposed changes would be immediate, but on notice, and possibly at a later date as might be required.

The claimant was a skilled solicitor and was chosen to remain in work. She was the only solicitor in her department who refused to accept the 20% pay cut. In her response to the company, she said, “It was unfair to ask her to accept a cut when her workload would increase.” She also protested the proposed variation meant she could not be placed on furlough at later date, but she agreed to reconsider her refusal if things changed.

The firm decided early on those objecting to the change would be dismissed, and that was the fate of the claimant. She was warned if she did not accept the cut in her hours, her employment would be terminated, and so she was dismissed.

An employment tribunal agreed that in the difficult, uncertain and disruptive circumstances of the pandemic and the significant drop in the firm’s business, the company was entitled to dismiss its staff on the grounds of “some other substantial reason”, which in legal language means “a potentially fair reason for dismissal”.

Unfortunately for the employer, the employment tribunal found the firm had not sufficiently consulted with the claimant considering as dismissal was presented as the only alternative, the changes were not necessarily meant to come into effect immediately and the claimant was showing willingness to reconsider her answer at a later stage depending on the developing circumstances.

It was also noted that, although not strictly speaking legally required for this type of dismissal, an opportunity to appeal against the employment termination was not provided, which the tribunal considered as another failure of the firm to follow a reasonable process.

Employment contract variation is a matter which should be approached with care and any opposition should not be written off without consideration, even in the most extraordinary circumstances, as this case illustrates.

Kiril Moskovchuk

Legal Advisor

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