Employment Law Unfair Dismissal Employer Succeeded in Changing Terms of Employment

Good News for Employers wishing to change the terms of employment of employees, however, employers must still take care.

In Scott & Co v Richardson [2005], the Dependant, Mr Richardson, who worked for a Scottish firm of debt collectors, refused to accept his new terms of employment which required him to visit defaulting debtors during the evenings. Mr Richardson agreed to work evenings but only if this would continue to attract overtime payments as had previously been the case. Scott & Co tried for seven months to persuade Mr Richardson to change his mind but he refused, finally issuing an ultimatum that his employer should either accept his position or dismiss him. They chose to dismiss him.

At first instance, Scott & Co claimed that the change in working conditions was required to bring the company into line with new market practices and to allow them to plan work more cheaply and effectively. Mr Richardson argued that Scott & Co had failed to prove that there were advantages to the new working arrangements and that the real reason for the changes was to save money in overtime payments.

Mr Richardson succeeded in his claim for unfair dismissal and the Employment Tribunal held that it did not appear that the imposition of the shift system was of such discernible advantage that the only reasonable thing to do was to terminate the employee's contract unless he would agree to the new arrangement.

On appeal the EAT overturned this decision and held that:-

A Tribunal should not 'second guess' an employer's business decision;
A Tribunal should evaluate whether dismissal was due to the employer's reasonable belief that the contract changes had advantages; and
The employer did not need to prove that those advantages objectively exist.
This is good news for employers who can rely on the principle that the tribunal must respect their commercial decisions in assessing whether a fair reason for dismissal has been shown. However this must be tempered by another EAT decision in Forshaw and others v Archcraft Limited [2005], where the EAT relied on its own assessment that the clause in question was unreasonable and found that the dismissal was unfair.

In Forshaw the EAT said that while the tribunal generally will not re-open the commercial decisions of an employer's management, however, a reason which is genuinely held but is trivial or unworthy or whimsical will mean that the dismissal is unfair.

Comment: Provided that care is taken, changes to employment terms which are supported by sound commercial reasons will be acceptable under the law.
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© RT COOPERS, 2005. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues.

Specialist legal advice should always be sought in relation to particular circumstances.

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By: Dr Rosanna Cooper

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