Khatun v Winn Solicitors Ltd

An employment tribunal (ET) has held that an employer unfairly dismissed their employee who refused to agree to proposed employment contract changes due to coronavirus.

To avoid a claim for unfair dismissal an employer must have a potentially fair reason to dismiss, acted reasonably in treating this reason as sufficient to justify dismissal, and followed a fair procedure. For a dismissal to be fair, the employer must show that the employee was dismissed for one of the following five permitted reasons: capability, conduct, redundancy, statutory illegality, and some other substantial reason (SOSR).

The burden of proof is on the employer to show that one of the five permitted reasons was the true reason for the dismissal. Showing that the dismissal was fair depends on whether the employer acted reasonably or unreasonably in treating the reason as sufficient for dismissing the employee. Tribunals will take the size and administrative resources of the employer into account and, depending on the circumstances, factors that could be relevant include:

  • whether the ACAS code was followed
  • the extent to which the employee was warned and given the opportunity to improve
  • the extent to which the employee was given the opportunity to give his or her version of events before a decision to dismiss was taken

The coronavirus pandemic has meant that the Government needed to provide financial support to businesses that were affected by lockdown measures. One of the support schemes created was the Coronavirus Job Retention Scheme which meant that employers had to reach an agreement with staff to place them on furlough and, by implication, vary their contracts of employment.

FACTS

At the start of the pandemic, the respondent decided to place half of its staff on furlough after the business began to experience a downturn. The claimant was told in person that she could continue to work but on 23 March 2020, the respondent notified her that all employees need to agree to a variation to their contract terms or face dismissal. 

The variations meant that the respondent could place employees on furlough or reduce their hours and pay by up to 20 per cent on five days’ notice until 1 October 2020. The variations also allowed the respondent to extend the terms by a further three months if the business so required it.

These new terms were sent to the claimant via email on 24 March 2020 with instructions that she sign the document and return it within 24 hours. It was again explained to her that she would face dismissal otherwise. On 25 March 2020, the claimant sent her response to said email, stating that she was not willing to agree to the new variations because she was still performing the role she was contracted to do, but she would be willing to consider them if she were to be furloughed.

The respondent encouraged her to agree to the new terms, emphasising that dismissal was the alternative. The claimant remained steadfast in her refusal. On 26 March 2020, the respondent’s Chief Operating Officer (COO) instructed that the claimant’s employment be terminated without notice, without pay in lieu, and without her accrued holiday payment. This action was justified by the COO as a suitable reaction to the claimant’s inflexibility which showed that she was “clearly not someone interested in the firm or her colleagues”.

The claimant’s IT access was terminated that afternoon and she was only informed of her dismissal after she queried this action. Later, the respondent paid the claimant notice and holiday pay after accepting that they had breached her employment contract terms. The claimant nonetheless brought a claim to the ET for unfair dismissal.

ET

The ET decided that the dismissal was unfair due to the employer's failure to undertake a proper dismissal procedure. They did not enter into any consultation with the employee over the contractual change, nor give the employee the opportunity to talk through her reasons for refusal. In addition, they did not offer an appeal to the dismissal. 

The assessment of whether a dismissal was fair or not looks both at the reason for dismissal, and how it was carried out. The ET noted that failure to agree to the variations to her contract terms and conditions could have been a fair reason for dismissal, falling within the SOSR definition. However, whether it was or not was not tested in this case due to the fact that the dismissal was unfair on the grounds of the lack of procedure.

This case does not indicate that this particular reason for dismissal will always be fair even where a thorough procedure is adopted. Each instance will be assessed on its own facts, taking into consideration both the reason and the procedure used.

Note for employers

This is yet another case relating to the pandemic being heard by the ET, a trend that we may continue to see in the coming months. The particular facts of this case, however, make it difficult to determine whether this will always be a sound reason to dismiss an employee. Although the ET found it to be a sound reason, this was because of the circumstances at the time and it is yet to be seen whether an employer who does the same thing now will be given the same judgement.

Either way, this case is an important reminder that a correct procedure must always be followed, no matter what the circumstances, if a dismissal is to be fair. This case failed because the employer had failed to go through a proper procedure, highlighting the fact that the immediacy of a given situation and pressure from the pandemic were no excuse.

It is yet to be seen whether this case will go to the Employment Appeal Tribunal for a more binding judgement on cases of this nature.

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