• Guidance on Changes to Terms and Conditions of Employment
  • August 2, 2011 | Author: Alex Denny
  • Law Firm: Faegre & Benson LLP - London Office
  • The Employment Appeal Tribunal (EAT) has held in Garside and Laycock Ltd v Booth (UKEAT/0003/11) that when determining whether a dismissal for "some other substantial reason" (SOSR) is fair in the context of unilateral changes to an employee's terms and conditions, the Employment Tribunal should not consider whether the employee's refusal to accept the change was reasonable, but instead whether the employer acted reasonably in treating the refusal to accept a pay cut as a sufficient reason for dismissal.

    Mr Booth was employed by Garside for 7 years. The company experienced financial difficulties and asked its employees to accept a 5% pay cut.  Mr Booth was in a minority of employees who refused to accept the new terms and conditions and his employment was terminated.  His unfair dismissal claim was successful, but this was overturned on appeal.

    The EAT found that the Tribunal had erroneously applied a test rejected in Catamaran Cruises Ltd v Williams and others [1994], namely that an employer may only offer less favourable terms and conditions if the survival of its business depended on it.  Instead, the focus in such SOSR cases should be the reasonableness of the employer's decision to dismiss, not the reasonableness of the employee's refusal of the change.  This would involve consideration of the employer's size and administrative sources, as well as other matters such as whether management have also been subjected to the same changes.