Some other substantial reason

12 Feb 2013

Sandford and Parkin v Newcastle Upon Tyne Hospitals NHS Foundation Trust

Under the Agenda for Full Change process, the Hospital decided to re-band the posts of 22 employees, including Sandford and Parkin (the two Claimants).  The posts were reduced to one pay level in the pay structure and all 22 employees were offered two years' pay protection if they accepted the proposed change.  Twenty employees accepted the change and received that protection.  The Claimants, however, refused and their Contracts of Employment were terminated, on notice, with an offer of re-engagement on the lower band, but without pay protection.  The Claimants chose to continue in employment on those terms.

The Claimants claimed unfair dismissal.  The Tribunal had to determine whether there was a statutory reason justifying the dismissal and if dismissal for that reason was reasonable under Section 98(4) of the Employment Rights Act 1996.

The Hospital argued that the reason for dismissal was some other substantial reason. 

The Tribunal found that the Respondent had a good business reason for undertaking the reorganisation, leading to the re-banding and both the Claimants were dismissed for refusing to accept the new terms and conditions.  Applying the established authority, the Tribunal found that the potentially fair reason of some other substantial reason had been made out by the Hospital.

Despite the fact that there had not been any meaningful consultation with either the Trade Union or the individual Claimants which was, itself, a breach of the ASE procedure, the Tribunal concluded that the dismissal fell within the band of reasonable responses.  The Tribunal took into account:

– the fact that 91% of the affected employees had accepted the new terms;

– that the Hospital had reasonably explored all alternatives to dismissal before dismissing the Claimants; and

– that the procedure they followed was not criticised by the Claimants.

On appeal, the Employment Appeal Tribunal (EAT) found that the decision by the Tribunal that the dismissal fell within the bands of responses that a reasonable employer might have was a decision that Tribunal could fairly and sensibly make. 

Our view:

There is a view in some circles that employers cannot change terms and conditions of employment without employees' agreement.  Although it is a fairly radical move to give employees notice of termination and offer re-engagement on different terms, it is, of course, an option open to the employer as this case demonstrates.  It is important that there is a good business reason for the decision to change terms but once that is made out, provided the employer follows a fair and reasonable procedure, the Tribunal will not interfere with the decision.