When is the “Neutron Bomb” Option Fair?.

From time to time, employers may wish to amend the terms and conditions of their workforce.  This may be simply to ensure compliance with current legislation and recent case law, but the process may not be so easy when the changes you wish to make are to the detriment of certain existing staff.

The first step in making such changes should always be a period of consultation to explain the reason for the changes and what might happen if staff don’t agree to them.  If the consultation process does not result in all or some of the employees agreeing to the proposed changes, the employer must then consider what I’ve always called the “neutron bomb” option – dismissing staff (after further consultation) and offering re-engagement on new terms.

The obvious risk in these circumstances is that the dismissed staff bring unfair dismissal claims (even if they’ve accepted re-engagement).  So how do you minimise that risk?

In the case of Garside and Laycock Ltd v Booth a few years ago, the EAT confirmed that the business reason for the change in terms doesn’t need to be vital to the survival of the business.  Provided that the employer consulted with the staff before dismissing them (without which the dismissal will certainly be unfair), the focus for the fairness of the dismissal will be whether the employer’s decision was reasonable and the employee’s reason for refusal will just be one factor in the mix.  In this case, Mr Booth ended up being the only one out of 86 staff who refused to accept new terms and the EAT held that his dismissal was fair.  The fact that the vast majority of staff had accepted the change was extremely relevant when assessing reasonableness.

Last month, the EAT reinforced this principle in the case of General Vending Services Ltd t/a GVS Assist v Schofield.  GVS had wanted to refocus the roles of particular staff in order to increase the company’s market share.  Mr Schofield was one of six out of about 30 engineers who refused to accept changes to his contract (which would have seen his salary reduced by £5,000) and he was dismissed.  Mr Schofield and three other staff who were also dismissed brought claims for unfair dismissal.  However, whilst the Employment Tribunal dismissed three out of four claims, they upheld Mr Schofield’s claim on the basis that changes to holiday pay and sick pay were particularly important to him.

The EAT allowed GVS’s appeal on the basis that the Tribunal had placed too great an emphasis on Mr Schofield’s reasons for rejecting the changes, rather than focussing on the employer’s reasonableness in dismissing him.  The fact that the majority of other staff had accepted the changes should have been considered as part of the balancing exercise.  The fact that it may have been perfectly reasonable for Mr Schofield to object to the changes did not mean that it was not reasonable for GVS to have required them.  The case was remitted to a new Tribunal to determine this issue.

If an employer ever finds itself needing to change terms and conditions, always consult with those staff and attempt to agree changes (perhaps amending elements of the proposed changes which are less significant than others).  Once you have the agreement of a large majority of the workforce, you will be far better placed to defend any claims for unfair dismissal in the event that you do choose the “neutron bomb” option of dismissing and offering re-engagement on new terms.

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