Thu 24 Aug 2023

Was contract of employment varied or terminated?

Employers need to take care that a unilateral variation of an employment contract does not amount to a dismissal in law.

The recent case of Jackson v The University Hospitals of North Midlands NHS Trust arose from issues relating to a restructure.  When the department the claimant worked in as a band 6 research nurse restructured, the need for the work carried out by band 6 nurses diminished.  The claimant, along with her band 6 colleagues, were invited to apply for a limited number of band 6 roles, with the unsuccessful applicants to be given band 5 roles.  Pay for those who ended up in the band 5 roles would be protected for 2 years, after which it was to be lowered.   

When the claimant was unsuccessful in her application for one of the band 6 roles she was moved to a band 5 role and issued with new terms and conditions of employment. She refused to sign this new contract.  She told her employer she should be made redundant (which would result in her receiving enhanced redundancy terms) and that if they refused to do so she would consider herself to have been unfairly and constructively dismissed. She raised a grievance and subsequently resigned on 28 December 2018. The grievance was rejected but her appeal against the grievance outcome was successful and the employer offered to give 8 weeks' notice of termination if the employee withdrew her resignation. The employee agreed to do so but argued that notice of termination had already been given by the employer on 3 December 2018, being the date that she was appointed to the band 5 role. The employer disagreed with this and, as such, the employee refused to retract her resignation and her employment terminated on 25 January 2019.

The claimant made a number of alternative claims to the employment tribunal resulting from her dismissal.  This included an argument that she had been the subject of a "Hogg dismissal".  A Hogg dismissal arises where new terms and conditions are imposed on an employee that amount to a dismissal from their existing role and appointment to a new post.  This can give rise to an unfair dismissal claim even though the employment relationship between the parties has continued.

Although the Hogg dismissal argument was unsuccessful, the tribunal still found the claimant to have been unfairly dismissed when her employment terminated on 25 January 2019.  However, the issue was important to the claimant because, if she could show she had in fact been subject to a Hogg dismissal in December 2018, she would be eligible for the enhanced redundancy payment.  She therefore appealed to the employment appeal tribunal ("EAT") on that point. 

The Hogg dismissal argument had been unsuccessful before the employment tribunal because the tribunal had found that the change in contract terms was not a "radical change such as to entitle the Claimant to regard herself as constructively dismissed" in December 2018.  It also considered that although the role was different, the claimant had the skills to do it, the fact she had subsequently raised a grievance was not consistent with her employment ending on 3 December, and the employer had no intention to dismiss her when they issued the new terms and conditions.

The EAT disagreed and concluded that the tribunal's decision was flawed for a number of reasons. It held that the tribunal had wrongly applied concepts of constructive dismissal and failed to carry out a proper before-and-after comparison of the band 5 and band 6 roles to ascertain whether the new terms were sufficiently different to amount to a withdrawal of one contract and a replacement by another. The fact the claimant had the skills to do the band 5 role was not a relevant factor, nor was the fact that the employer did not intend the issuing of new terms to amount to a termination.  In the context of a Hogg dismissal, the continuing employment relationship and the raising of a grievance was also irrelevant. 

The EAT have sent the case back to a differently constituted employment tribunal to decide whether the claimant is, as she suggests, eligible for the enhanced contractual redundancy payment she is seeking. 

The broader lesson for employers is the need to consider whether issuing and imposing new terms and conditions in situations such as these (which are often instigated because of a need to make workforce changes) is likely to result in a dismissal in law. The greater the difference between the terms and conditions before and after the variation, the more likely that a tribunal will find that a Hogg dismissal has taken place.

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