If Your Terms of Employment Change, Can You Claim Unfair Dismissal Under The New Contract?

//If Your Terms of Employment Change, Can You Claim Unfair Dismissal Under The New Contract?

Student lawyer Joanna Garvey-Smith assesses the case of S.A Hogg v Dover College [1990] ICR 39 (EAT) and asks “If an Employer drastically changes your Terms of Employment, can you claim Unfair Dismissal while still working under the new Contract?”

Joanna Garvey-Smith

Facts

Mr Hogg was Head of History at Dover College, an exclusive private school, until he became ill with meningitis which left him disabled. He returned to work part-time but received a letter from the Headmaster some months later halving his hours and announcing the Head of Department role was to be given to another teacher.

Under legal instruction, Mr Hogg replied that he was treating the letter as a dismissal but would continue to work under the new terms while taking his case to an Industrial Tribunal (now known as an Employment Tribunal).

Original Decision of the Tribunal

Mr Hogg lost his case. The Industrial Tribunal could not find any precedent in law where an employee had won a dismissal case while still working for the employer in question. They found that, by agreeing to work under the new terms, Mr Hogg had accepted the cancellation of the old contract and therefore not been dismissed.

‘Trite Law’:  A Legal Mistake?

Mr Hogg appealed the decision using Section 95 (1) (a) of the Employment Rights Act 1996 which covers an employee’s right not be unfairly dismissed:

 (1) For the purposes of this Part an employee is dismissed by his employer if (and, subject to subsection (2) […] 1, only if)—

(a) the contract under which he is employed is terminated by the employer (whether with or without notice)

This clause is so fundamental and widely-known in Employment Law that it would be ‘trite’ to bring it up and therefore few people would do so. Applied in this case, however, it would mean the Industrial Tribunal had made a legal error.

Decision of the EAT

The case went to the Employment Appeal Tribunal who unanimously sided with Mr Hogg, saying that it had been wrong to focus on the relationship between the employer and the employee. ‘Trite’ though it may be, employment results from a contract. The Headmaster’s letter clearly told Mr  Hogg that his full-time contract as Head of  History was gone, leaving him no way of continuing to fulfil it. Therefore he had either been dismissed under section 95 (1) (a) or, failing that, constructively dismissed (when the employer breaches the employment contract so severely that the employee has no option but to resign).

Similar Cases

In coming to their decision, the Employment Appeal Tribunal made reference to:

Marriott v Oxford and District Cooperative Society (No.2)

Marriott, an electrical maintenance foreman, received a letter from his employers which stated that they could not keep him on in his position, offering him an inferior job instead with lower pay. He declined but they wrote again offering the same position for slightly more pay. Marriott only continued to work for them for a short while before handing in his notice and claiming redundancy pay through an industrial tribunal.

Like Hogg vs Dover College, he lost the case, with the tribunal holding that his contract had not been terminated, simply altered by mutual consent, and there had therefore been no dismissal. He lost again on appeal, because in common law, the difference between the old contract and the new one must be so fundamental that no one could claim that the original contract was still in existence. However, it was third time lucky when the decision was reversed at the Court of  Appeal by Lord Denning who stated that, on the facts, the employer had indeed (unilaterally) terminated the employment contract according to the Redundancy Payments Act 1965 s.3(1)(a); and Marriott was, therefore, entitled to redundancy payment.

Both Hogg and Marriott offer strong protection in case law against employers who drastically change the terms of employment from what was contractually agreed. Hogg shows us that dismissal under Section 95 (1) (a) includes termination of the contract by the employer while Marriott demonstrates that unilateral demotion together with a reduction in pay can amount to a termination of the contract. Most interestingly, both employees were able to keep working under the new contract and still claim unfair dismissal.

Conclusion

An employment contract can change at any time by mutual agreement. The first step is a consultation between the employer and the employee, followed by reasonable efforts to reach a compromise. If these fail, the employer may terminate the existing contract by giving notice and following due process. A new contract may then be proposed. This still counts as a dismissal and must be reasonable and justified, or else employees can simply decline the new contract and claim unfair dismissal.

If the employee wishes to continue working but considers the changes to be so great they amount to a breach of contract, they should state their position in writing to the employer, making it clear that they do not accept the new contract. If nothing has been resolved after 28 days, they may need to take the employer to a tribunal.

By | 2019-05-08T08:51:26+01:00 May 2nd, 2019|Student Case Blogs|

About the Author:

Joanna Garvey-Smith
Joanna Garvey-Smith has a Master’s Degree from Balliol College, Oxford and is currently preparing for the Solicitors’ Qualification Examination (SQE).