Is an employment contract varied or terminated due to imposition of new terms?

Published 10 agosto 2023

The EAT has considered whether an employee's contract of employment had been terminated by the employer's unilateral imposition of a new contract.

THE FACTS

The claimant, Miss Jackson, was employed as a specialist haematology research nurse by the University Hospitals of North Midlands NHS Trust (“the Trust”). Her role was graded at band 6 under the NHS pay and grading system known as Agenda for Change (AfC) was incorporated into her contract of employment.

As part of a restructure in 2018, the Trust made the decision to reduce the number of band 6 roles. The claimant was one of the members of staff affected by the restructuring and was invited to apply for the available band 6 posts and undergo an assessment.  She was unsuccessful in her assessment and so failed to secure one of the new band 6 posts.  The respondent informed her of this outcome by letter dated 13 November 2018.  In that letter the respondent also informed the claimant that she would be slotted into one of the new band 5 roles with effect from 3 December 2018.  There were new terms and conditions for this role.  The claimant refused to sign them and raised a grievance.  She contended that she should be made redundant and be paid enhanced redundancy pay as provided for by AfC (amounting to £36,644).

AfC terms further provided that NHS employees would forfeit their redundancy pay if they left their employment "before expiry of notice", unless an earlier release had been agreed.

Following the grievance, The Trust accepted that the claimant was dismissed by reason of redundancy from her band 6 role and served notice. However, the claimant resigned before the expiry of her eight-week notice period. Due to the claimant leaving employment before the end of her notice period, the Trust informed her that she was no longer eligible for enhanced redundancy pay.

The claimant brought an employment tribunal claim, contending she was unfairly dismissed and that she was owed redundancy pay. As part of her claim, she asserted that the imposition of the band 5 contract on 3 December 2018 amounted to a dismissal under the principle established by the EAT in Hogg v Dover College.  This case set out the principle that a purported variation of a contract, done unilaterally, can be such as to amount, in reality, to a termination of one contract and its replacement by another.  Whether variation constitutes a dismissal is a matter of fact and degree.  The greater the difference between terms and conditions before and after a variation, the more likely a tribunal is to find that a dismissal has occurred.

The employment tribunal upheld the claim for unfair dismissal and statutory redundancy pay. However, it rejected the claim for contractual redundancy pay.  The success of the claim for a contractual redundancy payment depended on whether the claimant could rely on Hogg v Dover College to demonstrate the actual dismissal date was 3 December 2018. The tribunal decided the imposition of the band 5 contract was not a "Hogg dismissal" because:

• there was no radical change such as to entitle the claimant to regard herself as constructively dismissed;
• the claimant had skills to do the band 5 role;
• at the time that the contract was imposed, the claimant did not treat it as a dismissal and raised a grievance in relation to it, which was inconsistent with her employment ending; and
• there was no intention by the Trust to dismiss the claimant.

The claimant appealed to the EAT, who allowed her appeal.

The EAT decided that the tribunal had wrongly focused on the concepts of constructive dismissal. Instead it should have carried out a proper before-and-after comparison of the band 6 post and the band 5 post to ascertain whether the new terms were sufficiently different to amount to a withdrawal of one contract and its replacement by another.  Moreover, the tribunal relied on various irrelevant matters: the fact that the claimant was capable of performing the new role was irrelevant, as was the intention of the employer and the argument that the claimant had not treated the imposition of the new contract as a dismissal because she had raised a grievance. 

Due to the flawed nature of the tribunal’s reasoning, the case was remitted to a different tribunal to conduct the proper analysis to determine whether there was a Hogg dismissal. The parties agreed that, if there was a Hogg dismissal with effect from 3 December 2018, the claimant was entitled to an enhanced redundancy payment.

WHAT DOES THIS MEAN FOR EMPLOYERS?

This case highlights that employers need to tread carefully when a unilateral variation of contract is contemplated.  In certain circumstances, the variation will count as an actual dismissal, as well as potentially a wrongful and/ or constructive dismissal.  Employers should consider whether the variation is permissible under the contract; whether fresh consideration is required; and where possible, agreement should be obtained.

Miss Clare Jackson -v- The University Hospitals of North Midlands NHS Trust [2023] EAT 102