Varying Terms and Conditions of Employment

The EAT in Slade v TNT (UK) UKEAT 0113/11 has held that an employer's decision to dismiss employees and re-engage them on less favourable terms was not unfair.

The employees were entitled to contractual bonuses which, for business reasons (mainly financial pressures), TNT wished to remove.  TNT made an offer to employees to buy out the bonus term, which was rejected. The employees were then dismissed and re-engaged on terms which did not include the buy-out sum or the bonus.  A number of employees claimed unfair dismissal.

The EAT held that there was "some other substantial reason" for the dismissal and that the employer had acted reasonably in treating that reason as a sufficient reason for dismissal; the employer had endeavoured to negotiate with the staff and had offered the buy-out sum to try to reach agreement with them.  When negotiations failed and the employer dismissed the employees there was no obligation to re-offer the buy-out sum.

This is a helpful decision for employers.  However, it is also a reminder of how closely the employer's decisions and processes are scrutinised by the Employment Tribunal.  Employers should therefore ensure that they have sound business reasons (ideally backed up by written evidence) before taking such actions and then follow this up with a fair process with the affected employees.