Changing terms and conditions 3: specific changes
In the last article of our series, we look at some specific kinds of changes to employees' terms and conditions of employment which employers may want to implement
In the first and second articles of this series, we examined the ways in which changes to employees' terms and conditions of employment are implemented, and the consequences of unilateral imposition of such changes by employers. In this Guidance Note, we apply the principles described in those articles to some specific kinds of changes which employers may want to bring about.
ALTERING SHIFT PATTERNS
Shiftworking, whether by adults of either sex or by "young persons" (that is, teenagers over school-leaving age but under 18), is now almost totally unregulated by statute. Such legislation as there was regulating shiftworking by women and young persons was repealed by the Sex Discrimination Act 1986 and the Employment Act 1989. But employers must still offer suitable alternative work to, or (if none is available) suspend on full pay, expectant or new mothers who work nights and who produce a medical certificate stating that it is necessary for their health and safety that they should not work at night for a specified period (regs. 13A and 13B of the Management of Health and Safety at Work Regulations 1992 and s.46 of the Employment Protection (Consolidation) Act 1978 - the EP(C)A).
The Working Time Directive (No.93/ 104/EEC) provides for, amongst other things (see below), average night shifts of no longer than eight hours, and a minimum daily rest period of 11 consecutive hours, for most workers. But the Government has refused to take any steps to implement the Directive, the bulk of which it must implement by 23 November 1996, pending the outcome of its legal challenge to the Directive's validity. That was heard by the ECJ on 16 January 1996, and the Advocate-General's Opinion was scheduled to be given on 12 March 1996.
Sex discrimination
Despite the lack of statutory regulation of shiftworking by women, an employer's unilateral alteration of a female employee's shift pattern may involve "indirect sex discrimination" against her, within the meaning of s.1(1)(b) of the Sex Discrimination Act 1975 (the SDA), contrary to s.6(2)(b) of the SDA (which outlaws direct and indirect sex discrimination against employees by dismissing them or putting them at some other disadvantage).
For example, in London Underground Ltd v Edwards, the EAT held that the company's application of new rostering arrangements to one of its train drivers, who was a single mother, amounted to unlawful indirect sex discrimination against her if a considerably smaller proportion of women qualified to be train drivers than of men so qualified could in practice comply with those arrangements. (This was subsequently found to be the case by the industrial tribunal to which the EAT remitted the issue.)
The EAT found that the discriminatory effect of the new arrangements was not objectively justified by the company's reasonable needs: it was feasible for the company to cater for single parents or those with primary care of children, who were only able to work social hours, without significantly harming its aim of achieving savings. And applying the new arrangements to the employee concerned put her at a disadvantage because she could not in practice comply with them. She had been able to arrange her shifts so that she worked during the day and was at home in the mornings and evenings to look after her child. But, under the new arrangements, she could only continue to work during the day if she worked much longer hours, and that would have affected her ability to look after her child.
Breach of contract
An employer's unilateral alteration of any employee's shift pattern will also most likely constitute a breach of contract by the employer. Only if it was allowed by a term of the employee's existing contract of employment would it not do so.
For example, in Dal and others v AS Orr, the EAT held that a term of the contracts of employment of a group of spinners entitled their employer to require them to change over from a four-shift to a three-shift system of working - as a result of which they would have to work longer hours for less pay - in response to a fall in demand for its products. A provision of a staff handbook, which was incorporated into the spinners' contracts, reserved to their employer "the right to amend or alter the systems, together with the hours of working, to meet the production requirements".
By contrast, in Avery Label Systems Ltd v Bannister and others, the EAT held that an express term of four packers' contracts of employment did not entitle their employer to require them to work a double day-shift instead of a single one. The term provided: "All members of staff are expected to be flexible in their working arrangements and you will be expected to carry out duties reasonably requested by your supervisor or manager." But, in the EAT's view, that referred primarily to the duties which the employees were actually required to perform, as opposed to their hours of work. The proposed change also amounted to a repudiatory breach of contract by the employer (that is, a breach of contract that was sufficiently serious to entitle the employees to resign immediately and, provided that they resigned promptly because of it, to treat themselves as having been constructively dismissed).
An express term of a contract of employment purporting to allow the employer unilaterally to alter the employee's shift pattern is also subject to the implied term of the contract that the employer will not, without reasonable and proper cause, conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee.
For example, in BPCC Purnell Ltd v Webb, the EAT held that a term of a collective agreement incorporated into a platemaker's contract of employment - which provided that there would be "total flexibility" between all the company's departments - entitled the company, within reason, to transfer the employee to another department with a different shift pattern, even if that resulted in a reduction in pay because of the loss of shift premium. But transferring him to another department with no night shift, which resulted in a reduction of £80 per week in his average gross weekly earnings of £305, involved a clear breach of the implied term.
Unfair dismissal
The dismissal of an employee who refused to work a different shift pattern would be unfair unless it was for "a reason related to the conduct of the employee" (misconduct), redundancy or "some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held" (SOSR), and the employer "acted reasonably... in treating it [the employee's refusal or, in the case of a constructive dismissal, the employer's reason for insisting on the change] as a sufficient reason for dismissing the employee" (s.57 of the EP(C)A).
In Trebor Bassett Ltd v Saxby and another, for example, the company dismissed two of its night-shift workers and offered to re-engage them under new contracts of employment which would have obliged them to work five rather than four nights a week, and - as the result of a reduction in non-contractual overtime - to accept a pay-cut of the order of £20-£30 per week. They rejected those offers, and an industrial tribunal found that they were dismissed for SOSR, but that the company acted unreasonably.
The EAT agreed. The reason for the dismissals was the company's need to increase production by substituting three continuous eight-hour shifts for three shifts which did not extend over a whole day. But dismissing the employees was outside the range of responses open to a reasonable employer. The company never tried to persuade the employees to accept the new contracts or to draw the full effects of those contracts to their attention, and it had been obliged to consult them even though their entitlement to overtime was non-contractual.
By contrast, in Wilson v Faccenda Chicken Ltd, the EAT agreed with an industrial tribunal that the dismissal of a chicken catcher for refusing to work a variable daily eight-hour shift (normally starting between 2 am and 10 am) instead of a fixed one (which started at 4 am) was fair. The reason for the dismissal was the company's need for extra shifts to be worked, in order to make efficient use of available transport from its chicken farms to its processing plant and so as to minimise the stress experienced by the chickens whilst in transit. That was SOSR, and the company had acted reasonably. It had explained the situation to the employee; promised to give him reasonable notice of his new weekly shift pattern; listened to and weighed his objections; and offered him alternative employment.
Redundancy
The dismissal of an employee who refuses to work a different shift pattern will not be by reason of redundancy unless there is a reduction in the overall requirements of the employer's business for employees to do that employee's particular kind of work, either generally or just at the employee's workplace. If the employee is redundant, then he or she will be entitled to a redundancy payment (assuming he or she qualifies for, and is not excluded from, the right to one).
In Lesney Products & Co Ltd v Nolan and others, the company reorganised the work of its machine-setters by substituting a double day-shift for their single one, and dismissed nine of them who refused to work the different shift pattern. An industrial tribunal found that they were dismissed by reason of redundancy, and the EAT agreed, but the Court of Appeal reversed that finding. The work to be done on the two day shifts was the same as the employees did on the single one, there was just as much of it, and the company needed the same number of employees to do it. The reorganisation was carried out in the interests of efficiency and to save the company having to pay so much overtime, not because of less work.
Lord Denning said: "... nothing should be done to impair the ability of employers to reorganise their workforce and their times and conditions of work so as to improve efficiency. They may reorganise it so as to reduce overtime and thus to save themselves money... Overtime might be reduced, for instance, by taking on more men: but that would not give the existing staff a right to redundancy payments. Also, when overtime is reduced by a reorganisation of working hours, that does not give rise to a right to redundancy payments, so long as the work to be done is the same."
By contrast, in Kykot v Smith Hartley Ltd, the High Court held that the dismissal of a weaver employed on the night shift for refusing to work a rotating day-shift, after the night shift was abolished, was by reason of redundancy. There was a reduction in the total number of weavers employed by the company, and this was against the background of a trade recession.
Even if that had not been the case, the dismissal could still have been by reason of redundancy if the work that was done on the night shift - the need for which had ceased with that shift's abolition - was "work of a particular kind" within the meaning of s.81(2)(b) of the EP(C)A (Macfisheries Ltd v Findlay). But the reverse is also arguable, because "work of a particular kind" refers to the tasks to be performed and not, for example, the hours during which they are performed (see part 2 of this series, pp.4-5).
INCREASING HOURS OF WORK
Children's working hours are restricted by s.18(1) of the Children and Young Persons Act 1933. But there are no statutory restrictions on the hours of work of adults of either sex, or of young persons, which are of general application, only a handful of specific ones applying to, for example, HGV drivers (whose working hours are restricted by s.95 of the Transport Act 1968 and EEC Council Regulations 3820/85 and 3821/85). The Working Time Directive (see above) provides for an average working week not exceeding 48 hours (including overtime) for most workers, unless they voluntarily agree to work longer hours. But the Government is not obliged to implement that provision until 23 November 2003.
As to the common law position, in Secretary of State for Employment v ASLEF and others (No.2), Lord Justice Roskill said: "An employee is not bound to work longer hours than those which he has agreed with his employers to work merely because by so doing he will or may make his employer's business more efficient or more profitable." And, in the same case, Lord Justice Buckley said that an employer cannot require an employee to do anything that he or she is not contractually obliged to do, "such as to work excess hours of work".
Sex discrimination
On the face of it, therefore, the bulk of employees are obliged to work such hours as their contracts of employment require them to. But an employer's insistence that a female employee should work full time rather than part time (or jobshare) - or, indeed, its refusal to allow her to work part time (or jobshare) - will amount to unlawful indirect sex discrimination against her if:
Discretionary overtime
An express term of a contract of employment which gives the employer a discretion to increase the employee's hours of work is subject to the implied term of the contract that the employer will take reasonable care not to injure the employee's health (Johnstone v Bloomsbury Health Authority). In that case, an express term of a junior hospital doctor's contract of employment required him to work for 40 hours, and to be on call for, on average, a further 48 hours, in any week. This therefore gave the authority a discretion as to the number of hours of "overtime" it called on him to work, which it had to exercise in conformity with the implied term.
Because that was not incompatible with the doctor's contractual obligation to be available to work "overtime", the implied term did not contradict the express term. Accordingly, a majority of the Court of Appeal held that the authority could not lawfully require the doctor to work so much "overtime" in any week as it was reasonably foreseeable would damage his health. But, had the express term imposed an absolute obligation on the doctor to work an average of 48 hours' "overtime" per week, the authority would not have been in breach of the implied term in requiring him to do so.
Instructions to work overtime
The dismissal of an employee for refusing to carry out an instruction to work overtime may still be unfair even if the instruction is "lawful" (that is, within the scope of his or her contract of employment). For example, in George v Plant Breeding International (Cambridge) Ltd, an industrial tribunal found that the dismissal of a seed processor for refusing to work on every Sunday during the company's peak period - which lasted between nine and 12 weeks, and during which all employees were required to work 12 hours a day, seven days a week - was unfair whether he was contractually obliged to do so or not.
An express term of his contract of employment - under which he was originally obliged to work 39 hours per week, five days a week - provided that the company could require him to work more than an average of eight hours' overtime per week when the workload made this necessary. But the tribunal found that this did not oblige him to work for as many hours as the company considered "necessary" (that is, 12 hours a day, seven days a week for between nine and 12 weeks). The company had to show that the workload did in fact make that necessary, and it had failed to do so.
An instruction to do the overtime was therefore either "unlawful" (that is, outside the scope of the employee's contract) or, if it was lawful, unreasonable. The tribunal said: "Reasonableness demands that there must be some limit to the number of hours which have to be worked in any given period . . . the workload alone cannot dictate this... If the workload demands hours beyond a reasonable limit, then steps must be taken to organise the work in some other way."
Even if the instruction was both lawful and reasonable, the tribunal was also of the view that it was unreasonable to dismiss the employee for refusing to carry it out. He had worked satisfactorily for 16 years; he was reasonably well-enough qualified to work in other parts of the company's business; the company could have made an exception in his case; and his objections to working on every Sunday during the peak period (he wanted a rest, and to be with his family, on Sundays) were reasonable. The company had in effect made Sunday working a matter of principle instead of investigating any alternative so far as the employee was concerned.
It was also reasonably foreseeable both that the employee's health could have been damaged and that his family life might have been detrimentally affected. The tribunal concluded: "... if the [company] required anything like the hours of work which [it] demanded in this case, including Sunday working, this should have been spelled out clearly in the written terms and conditions of employment. It cannot be read into a provision to work such hours as the workload made necessary." (The introduction of Sunday working is further discussed below.)
Unilateral increase in hours
It follows that, in the absence of an unambiguous express term in a contract of employment entitling the employer to increase the employee's hours of work, doing so unilaterally constitutes a breach of contract by the employer. And such a breach is likely to be repudiatory. For example, in Humphreys & Glasgow Ltd v Broom and another, the EAT agreed with an industrial tribunal that an employer's requiring two employees to work 40 rather than 37 hours per week for no more pay, without consulting them beforehand, amounted to a repudiatory breach of contract by the employer.
The EAT also agreed with the tribunal that the reason for the unilateral increase in the employees' hours of work was not SOSR, and that they were unfairly constructively dismissed. The employer was not in financial difficulty or under any pressure to cut costs, and its actions were not within the range of responses open to a reasonable employer in its situation.
By contrast, in Ellis v Brighton Co-operative Society Ltd, the EAT held that the dismissal of an employee who refused to work longer hours following a reorganisation of the company's business - as a result of which he had to perform duties additional to those required of him under his contract of employment - was fair. It said: "Where [as in this case] there has been a properly consulted-upon reorganisation which, if it is not done, is going to bring the whole business to a standstill, a failure to go along with the new arrangements may well - it is not bound to, but it may well - constitute [SOSR]."
Furthermore, although the employee had been seriously ill and the company could have done a number of things instead of dismissing him, it had reasonably taken the view that no exception could be made in the case of any employee affected by the reorganisation. Even if the company had mistakenly believed that the employee was contractually obliged to go along with the new arrangements, it had negotiated them with his trade union and had made it clear to him that he would be dismissed if he refused to fall into line.
Redundancy
A final point to note is that a switch from part-time work to full-time work (but not vice versa) may well give rise to a redundancy situation, because the business will need fewer employees to do the same amount of work (and, arguably, because part-time work is "work of a particular kind", the need for which will have ceased). If there is a redundancy situation, then the dismissal of a part-time employee because of it will be by reason of redundancy.
REDUCING HOURS OF WORK
Shorter working hours may be welcomed by many employees, and not just those with young children. But reducing the hours of work of a married woman rather than those of an unmarried one, because the former has a husband to support her, amounts to "direct marital discrimination" against her, within the meaning of s.3(1)(a) of the SDA, contrary to s.6(2)(b) of the SDA (Dassanayake v Jean Neal Developments t/a Whorlton Grange Nursing Home).
Both the manner and the extent of a unilateral reduction in an employee's hours of work may also constitute a repudiatory breach of contract by his or her employer (St Budeaux Royal British Legion Club Ltd v Cropper). In that case, an express term of the contract of employment of a steward employed by the club provided: "The employee's normal hours of work will be specified by the employer and be subject to variation as the employer may decide, the employer agreeing to give the employee reasonable notice of any alteration." When the steward was told, in purported reliance on that term, that the club had decided to reduce his hours of work from 56 to 51 per week in six weeks' time, he resigned claiming constructive dismissal. An industrial tribunal found that he was unfairly constructively dismissed, and the EAT agreed.
The apparently unfettered discretion given to the club by the express term was overridden by the club's implied obligation to maintain trust and confidence between it and the steward. And it breached that obligation by giving him an ultimatum, without prior discussion or consultation, having agreed with him all previous reductions in his hours of work. Six weeks' notice was also not "reasonable", and the extent of the proposed reduction in the steward's hours of work would have meant that he could not have done his job properly.
An employer's dismissal of an employee who refuses to work shorter hours than he or she is contractually obliged to may also be unfair. In Scottish Co-operative Wholesale Society v Taylor, for example, the society converted one of its shops (which had opened from 8.30 am to 5.30 pm on six days a week) into a "convenience store" (which would open from 8 am to 8 pm). This was staffed exclusively by part-time employees, and the society dismissed a full-time employee (employed to work 39 hours per week) who refused to work shifts totalling only 24 hours in any week.
An industrial tribunal found that she was dismissed for SOSR, because the society might have had to close the shop had it not been converted. Its staffing by part-time employees also did away with lunch and tea breaks, and gave the society greater flexibility when staff were off sick or on holiday. But the tribunal went on to find that the society had acted unreasonably, and the EAT agreed. The dismissal was in breach of a collective agreement that the staffing profile of the store would be made up "taking cognisance of the personal circumstances of current staff". And the society could easily have made an exception in the employee's case by employing her on two shifts per day totalling 36 hours a week.
INTRODUCING SUNDAY WORKING
The Working Time Directive (see above) provides for a minimum weekly rest period of 35 consecutive hours, which should "in principle" include Sunday, for most employees. Unless and until that provision is implemented into UK law, however, most employers may require their employees to work on any day of the week that the employees are contractually obliged to.
Shop- and betting-workers
But Schedule 4 to the Sunday Trading Act 1994, and Schedule 5A to the Betting, Gaming and Lotteries Act 1963 (inserted by s.20 of the Deregulation and Contracting Out Act 1994) provide that the dismissal of any shopworker or of any "betting-worker" (that is, any employee working in a licensed betting office or at a track for a bookmaker) is automatically unfair - regardless of his or her length of service or age - if the sole or main reason for the dismissal was that the worker refused, or proposed to refuse, to work on any or a particular Sunday, and:
Other workers
The dismissal of any other employee who was not contractually obliged to work on Sundays for refusing to do so may also be unfair, but only if the employee had been continuously employed for at least two years (Stedman v Hogg Robinson Travel Ltd). In Dutton v Hughes Rediffusion Simulation Ltd, for example, the company dismissed all 1,708 of its employees and offered to re-engage them under new contracts of employment requiring them to work 37 hours per week on seven rather than five days a week. Out of only two of them who rejected the offer, one had five years' service and was a committed Christian who habitually went to church twice a day on Sundays. An industrial tribunal found that he was unfairly dismissed.
The reason for the dismissal was SOSR, namely the company's need to reduce overtime payments in the face of continuing adverse market conditions. But dismissing the employee was outside the range of responses open to a reasonable employer. He was prepared to work on any day other than Sunday; his objection to Sunday working was reasonable and genuine; only once had he ever been asked to work on a Sunday; the company itself had assured him that there was little likelihood of his doing so in the future; and there would have been no operational disadvantage to the company in making an exception in his case, given its size and administrative resources and the fact that his line manager and colleagues had offered to cover for him.
Religious discrimination
The dismissal of an employee in Northern Ireland for refusing to work on Sundays may, in addition to being unfair, amount to "indirect religious discrimination" against that employee, within the meaning of s.16(2)(b) of the Fair Employment (Northern Ireland) Act 1976 (the FE(NI)A), contrary to s.17 of that Act. But, in Kennedy v Gallaher Ltd, the Court of Appeal in Northern Ireland held that the company's introduction of a 144-hour shift system, which required its employees to work on six consecutive days including Sundays, did not constitute unlawful indirect religious discrimination against one of them.
A considerably smaller proportion of that employee's colleagues with the same religious objection to Sunday working as her than of those without it could in practice work on Sundays, and the requirement that she do so put her at a disadvantage because of her practical inability to comply with it (she had to be downgraded in order to avoid Sunday working). But the discriminatory effect of Sunday working was outweighed by the company's reasonable needs. Although it was immaterial commercially to the company whether its employees worked Sunday to Friday or Monday to Saturday, their working on six consecutive days was commercially necessary and a secret ballot of them had produced a majority of more than two to one in favour of Sunday working and Saturday off.
INTRODUCING WORKING ON OTHER DAYS
The FE(NI)A does not apply outside Northern Ireland. But, as we will now explain, employees working in Great Britain who practice religions other than Christianity may be unfairly dismissed or discriminated against contrary to the Race Relations Act 1976 (the RRA) for refusing to work on days or parts of days other than Sundays.
Unfair dismissal
For example, the dismissal of a devout Muslim, whose religious beliefs require attendance at prayers at a mosque on Friday afternoons, for being absent from work between the appointed times may be unfair. That will largely depend on whether the steps taken by the employer to accommodate him or her were reasonable in the circumstances (Ahmad v Inner London Education Authority).
The same goes for orthodox Jews, whose religious beliefs require them to observe the Jewish Sabbath, who are dismissed for refusing to work between sunset on Fridays and sunset on Saturdays. And there is no reason why the fairness of the dismissal of a Hindu or Sikh employee for refusing to work on one of the festivals of his or her religion should be approached any differently.
Race discrimination
But dismissing orthodox Jews (or putting them at some other disadvantage) for refusing to work during the Jewish Sabbath will not amount to "indirect race discrimination" against them, within the meaning of s.1(1)(b) of the RRA, contrary to s.4(2)(c) of the RRA (which outlaws direct and indirect race discrimination against employees by dismissing them or putting them at some other disadvantage). That is because the proportion of Jews who can in practice work during the Jewish Sabbath is not considerably smaller than the proportion of non-Jews who are able to do so (Wetstein v Misprestige Management Services Ltd and another).
By contrast, requiring devout Muslims to give up attending prayers at a mosque on Friday afternoons will constitute unlawful indirect race discrimination against them if the discriminatory effect of the requirement is not objectively justified by their employer's reasonable needs (for example, if their absence from work can easily be accommodated). That is because, since most Muslims are black, considerably fewer black than white people can in practice comply with such a requirement (Yassin v Northwest Homecare Ltd).
Similarly, in Azam and others v JH Walker Ltd, an industrial tribunal found that disciplining Asian employees for taking a day off work to celebrate Eid (arguably the most important religious festival in the Muslim calendar), despite their employer's introduction of a ban on taking non-statutory holidays during its busiest period of the year, amounted to unlawful indirect race discrimination against them. The proportion of them (almost all of whom were Muslims) who could in practice work during Eid was considerably smaller than the proportion of European employees who could do so. And the inconvenience and loss of production caused to their employer did not outweigh the discriminatory effect of its ban, especially when bearing in mind their willingness to work additional hours to compensate.
By analogy, dismissing Hindu or Sikh employees (or putting them at some other disadvantage) for refusing to work on Hindu or Sikh religious festivals will amount to unlawful indirect race discrimination against them unless the discriminatory effect of requiring them to do so is objectively justified by their employers' reasonable needs.
CHANGES IN REMUNERATION
There is currently no statutory minimum rate below which the pay of any group of workers in the UK (other than agricultural workers) may not be reduced by their employers without breaking the law. All the wages councils (apart from the Agricultural Wages Board), which were empowered to fix statutory minimum rates of pay for particular groups of workers, were abolished by s.35 of the Trade Union Reform and Employment Rights Act 1993 with effect from 30 August 1993.
But, as we explained in part 2 of this series, s.1(1) of the Wages Act 1986 needs to be borne in mind by employers who want to reduce their employees' pay, whether directly or indirectly (for example, by reducing the employees' contractual hours of work or by downgrading them). Unless such a reduction is allowed by terms of the employees' contracts of employment, its unilateral imposition will amount to an unlawful deduction from the employees' wages. Alternatively, as we also explained in part 2, the employees may claim damages for breach of contract (Rigby v Ferodo Ltd).
In Rigby, the House of Lords said that the unilateral imposition of a reduction in the "agreed remuneration" of any employee constitutes a repudiatory breach of contract by his or her employer. That calls into question the EAT's decision in Gillies v Richard Daniels & Co Ltd, that whether a unilateral reduction in an employee's additional emoluments or fringe benefits is sufficiently material or significant to amount to a repudiatory breach of contract by his or her employer is a matter of degree.
A unilateral alteration of the formula for calculating an employee's pay also amounts to a repudiatory breach of contract by his or her employer (R F Hill Ltd v Mooney). In that case, the company attempted unilaterally to substitute a commission payable on sales above a target figure for an employee's contractual entitlement to a 1% commission on all sales. The EAT said: "The obligation on an employer to pay remuneration is one of the fundamental terms of a contract... The obligation on the employer is to pay the contractual wages, and he is not entitled to alter the formula whereby those wages are calculated."
Introducing cashless pay
It does not follow that a unilateral change in the intervals at which an employee is paid (for example, from weekly to monthly), or the unilateral introduction of cashless pay, also amount to repudiatory breaches of contract by an employer (albeit they will constitute non-repudiatory ones). Indeed, they are unlikely to do so if the employer consults the employees affected and takes steps to minimise the impact of the change on them (for example, by giving reasonable notice of its implementation, and by giving them an advance if they ask for one or helping them to open a bank account if they do not already have one).
But, where the employee is given a pay supplement in return for agreeing to be paid by direct credit transfer into a bank account rather than in cash, the employer's unilateral withdrawal of the supplement - even by gradually absorbing it into an overall pay increase - will amount to a deduction from the employee's wages contrary to s.1(1) of the Wages Act 1986 unless that is allowed by a term of the employee's contract of employment (McCree v London Borough of Tower Hamlets).
Unfair dismissal
Generally speaking, if an employee refuses to agree to either a reduction in his or her remuneration or a different basis of remuneration, his or her employer is best advised to dismiss and offer to re-engage him or her under a new contract of employment at the lower rate, or on the different basis, rather than unilaterally to impose the reduction or the change as a fait accompli. For example, in Chubb Fire Security Ltd v Harper, the EAT held that a sales representative was not necessarily unfairly dismissed by the company when, following a reorganisation of its business, he refused to sign a new contract of employment under which he calculated he would earn less commission.
An industrial tribunal found that he was unfairly dismissed because he reasonably believed that the new contract would be disadvantageous to him, and the company could have expressly warned him of the consequences of his refusal or suspended him to allow a further period of discussion. But, allowing the company's appeal, the EAT remitted the case to the tribunal to consider whether the company had acted reasonably in deciding that the advantages to it of carrying out the reorganisation outweighed any disadvantage which it should have contemplated the employee might suffer. It did not follow that, if it had been reasonable for the employee to refuse to sign the new contract, it had been unreasonable for the company to dismiss him for refusing to do so.
CHANGING JOB CONTENT
Increasing an employee's existing workload would amount to a breach by his or her employer of its common law duty to take reasonable care for the employee's (physical and psychological) health and safety at work if the employer knew, or ought to have known, that the increased workload would endanger the employee's health (Walker v Northumberland County Council). So would transferring the employee to other work if there were a reasonably foreseeable risk of his or her getting an injury or stress-induced illness. Such actions may also constitute breaches of the employer's general statutory duty, under s.2(1) of the Health and Safety at Work etc Act 1974, "to ensure, so far as is reasonably practicable, the health, safety and welfare at work of all his [the employer's] employees." (See Stress at work 1: statutory and common law duties of care for a more detailed discussion of this topic.)
In other circumstances, the nature of an employee's job may be such that his or her employer may be contractually entitled unilaterally to change its content. For example, in Crooks v Berni Inns Ltd, the EAT held that the company was entitled to require a waitress employed at one of its restaurants both to persuade customers to order more food off the menu than they might otherwise have been inclined to, and to achieve sales targets which it set for her. In the EAT's view, a waitress's job was not merely to carry the food which the customers ordered from the kitchen to their tables but also to try and sell it to them.
Similarly, where an employee's job includes a variety of unskilled duties of a general nature, his or her employer is entitled unilaterally to alter those duties from time to time in order to meet the changing needs of its business; and the employee cannot insist on performing those duties he or she likes most (Peter Carnie & Son Ltd v Paton). But, where the contract of employment of a "bar steward/catering assistant" provided that he would "primarily" do bar work, the Court of Appeal held that making his primary function catering work amounted to a repudiatory breach of contract by his employer (Pedersen v The Mayor and Burgesses of the London Borough of Camden).
Removing an important part of an employee's functions and leaving him or her with residual duties of a humdrum nature, thereby unilaterally changing the whole nature of the employee's job, also constitutes such a breach (Coleman v S&W Baldwin t/a Baldwins). So does insisting that an employee should work in a different capacity from the one in which his or her contract of employment requires him or her to, albeit on a temporary basis (McNeill v Messrs Charles Crimin (Electrical Contractors) Ltd). In that case, the EAT said that a breach of contract is repudiatory merely if it involves a "substantial" alteration in the employee's terms and conditions of employment (that is, whether on a permanent basis or not).
Unfair dismissal
Where a unilateral change in an employee's job duties constitutes a repudiatory breach of contract by his or her employer, the employee will be treated as having been constructively dismissed if he or she promptly resigns because of it. But the dismissal will not necessarily be unfair. For example, in Genower v Ealing, Hammersmith & Hounslow Area Health Authority, the EAT held that an employee of the authority who resigned because of its proposal to transfer him, following a reorganisation of the department in which he worked, was fairly constructively dismissed.
The reason for the employee's proposed transfer was the reorganisation of that department. Problems in relation to its supplies, before the employee's time, had led to a prosecution for fraud and an inquiry which recommended that one person should not be left for too long a period in control of the department. That was SOSR, and the authority had also adopted a fair procedure. It gave the employee a full explanation of what was to happen, behaved in a kindly way towards him, and fully considered his position.
An employer's dismissal of an employee who refuses to perform additional duties which he or she is not contractually obliged to perform may also be fair. In Bowater Containers Ltd v McCormack, for example, a supervisor was dismissed for refusing to supervise additional employees following a reorganisation of the company's business. An industrial tribunal found that his dismissal was unfair because, when he became a supervisor, he had been given an assurance that he would not have to take on any supervisory duties other than those which he was given at that time.
But the EAT held that the dismissal was for SOSR, namely the employee's refusal to participate in the reorganisation, which - as the tribunal had found - was "beneficial to the efficient running of the company", and that the company had acted reasonably. The company had discussed the reorganisation with the employee's union, which had tried to persuade him to agree to it. The company had also tried to reach compromises with him, and two colleagues of his who had been prepared to assume the additional supervisory duties had been dissuaded from doing so by him. There was a vacancy on the shopfloor which he could have filled, but his union and the company had expressly agreed that supervisors would not be allowed to step down from their jobs.
MOVING THE WORKPLACE
In part 1 of this series, we showed how the scope of a mobility clause in a contract of employment may be restricted or overridden by implied terms of the contract, and how the mere inclusion of such a clause in a woman's contract of employment may amount to unlawful indirect sex discrimination against her. In part 2, we pointed out that requiring an employee to work where he or she cannot, under his or her contract of employment, be required to work constitutes a repudiatory breach of contract by his or her employer. We also explained the circumstances in which the dismissal of an employee who refuses to move from one place of work to another is by reason of redundancy.
Invoking a mobility clause
Alternatively, such a dismissal will be for misconduct if the employee was contractually obliged to move (but it will not necessarily be fair). For example, in Richardson and another v Applied Imaging International Ltd, the EAT held that two employees of the company who refused to move from Warrington to Sunderland were fairly dismissed for misconduct. There was no mobility clause in their contracts of employment when the company told them that it intended to relocate to the North East. But, before the company's premises in Warrington closed, the employees had accepted its offer of new contracts of employment containing a mobility clause entitling it to require them to move to Sunderland, and terms entitling them to removal expenses and the like if the company invoked the clause.
By making that offer, Mr Justice Morison said, "the company was best able to ensure that there would be no disruption to the services they were engaged in because they would know well in advance the numbers of their employees who were willing to move and the numbers of new recruits that would be called for." He added: "What the [new] contract purported to do was to provide for arrangements for those who had agreed to follow their work to Sunderland and, as a quid pro quo, it committed them to accept such a move, whereas under their previous contractual arrangements they had no right to receive removal expenses but, equally, no obligation to move."
If an employer wants to rely on a mobility clause, then it should make it clear that that is what it is doing. In Curling and others v Securicor Ltd, Mr Justice Knox said: "There are two quite different attitudes which an employer can take in a situation... of the closing down of a part of his business. The employer can invoke the mobility clause in the contract [of an employee] and require the employee to go to a new location or job, if the clause entitles him to do so, whereupon no question of redundancy will arise. Alternatively, the employer can decide not to invoke the mobility clause and rely instead on alternative suitable offers of employment as a defence to claims to a redundancy payment (see Changing terms and conditions 2: consequences of unilateral changes ).
In the former example, the original employment continues, in the latter it ceases but is replaced in circumstances which, unless the employee unreasonably refuses the offer of suitable alternative employment, provide the employee with continuity of employment but relieve the employer of liability to make a redundancy payment. What the employer cannot do is dodge between the two attitudes and hope to be able to adopt the most profitable at the end of the day."
HARMONISING TERMS AFTER BUSINESS TRANSFER
The Transfer of Undertakings (Protection of Employment) Regulations 1981 ("the Regulations") apply not only to the acquisition of a business but also to the contracting-out of or tendering for any part of it. The effect of any such transfer is that the contracts of employment of employees employed immediately before the transfer in the undertaking transferred have effect after the transfer as if they were originally made between the employees and the "transferee" (that is, the entity to which the undertaking is transferred) - reg. 5(1). But the terms of those contracts will usually differ from those of the transferee's existing employees, and it may well wish to bring them into line with the latter's.
To do so other than with the transferred employees' express agreement or consent may, however, entitle them to complain of unfair dismissal. If the transferee makes a substantial change in their working conditions which is to their detriment, then they may resign and claim constructive dismissal (reg. 5(5)). And such a dismissal, or a dismissal by the transferee of a transferred employee who refuses to agree to any change to his or her pre-transfer terms and conditions of employment, will be automatically unfair if:
In Delabole Slate Ltd v Berriman, for example, following the transfer of an undertaking to the company, it told an employee who was employed in the undertaking immediately before the transfer that it was going to reduce his wages to the level of those of its existing employees. He resigned and complained of unfair dismissal to an industrial tribunal, which found that he was constructively dismissed but that the dismissal was for an ETO reason and that the company had acted reasonably. The EAT reversed the tribunal's decision, and the Court of Appeal dismissed the company's appeal to it. The Court held that the reason for the employee's constructive dismissal, being the company's reason for its conduct not the employee's reaction to it, was to standardise rates of pay. That was not an ETO reason, because it did not involve any change in the overall number or functions of the company's workforce.
Nor was the Court satisfied that there was a clear statutory intention to ensure that, following a transfer of an undertaking, the transferee can insist on equating the terms and conditions of employment of the transferred employees to those of its existing employees. The Court pointed out that the purpose of the "Business Transfers" Directive (No.77/187/EEC) was "the safeguarding of employees' rights in the event of transfers of undertakings", and that the Regulations themselves include in their name the phrase "protection of employment". And, according to the Court, amongst the most crucial rights of employees are their existing terms and conditions of employment.
It follows that employees enjoy greater protection against dismissal because of their employers' insistence on changing their terms and conditions of employment following a transfer of an undertaking to which the Regulations apply than they do if there were no such transfer (that is, if they are dismissed for SOSR under s.57(1)(b) of the EP(C)A).
DRESS AND APPEARANCE RULES
As we saw in part 1 of this series, an employer is entitled to make and change rules for the conduct of its employees at work within the scope of their contracts of employment. (We will be looking at the introduction of no-smoking policies in a forthcoming Guidance Note.) So far as new rules on dress and appearance are concerned, the main point to note is that these may unlawfully discriminate against certain employees on one of the prohibited grounds.
Such rules will directly discriminate against men or women contrary to the SDA if, but for their sex, the rules would not have been applied to them. Therefore, the dismissal of a man for refusing to cut his ponytail when women were allowed to wear their hair longer constituted unlawful direct sex discrimination against him (Smith v Safeway plc). Similarly, dismissing a woman for wearing trousers when men could wear what they liked amounted to unlawful direct sex discrimination against her (Cresswell v Follett and others).
Furthermore, applying new rules requiring women to wear skirts may constitute unlawful indirect race discrimination against those women who are Sikhs or black Muslims (Malik v Bertram Personnel Group Ltd). And applying new rules requiring men to be clean-shaven, or to wear safety helmets other than on a construction site (as to which, see ss.11 and 12 of the Employment Act 1989), will amount to unlawful indirect race discrimination against those men who are Sikhs unless the discriminatory effect of the rules is outweighed by considerations of food hygiene (Panesar v The Nestlé Co Ltd) or safety (Singh v British Rail Engineering Ltd).
As with any other new rules, an employer's failure to bring to its employees' attention new rules on dress and appearance, and to make it clear that the penalty for breaking them will be dismissal, is likely to make any dismissal for breaking them without a prior warning unfair. Even if both the rules and the penalty are known to an employee, his or her dismissal for breaking them is also likely to be unfair if he or she was not given an opportunity to explain why he or she failed to comply with them, if they had not been applied consistently, and/or if dismissal was too severe a penalty in the particular circumstances.
STOP PRESS: The Court of Appeal has overturned the EAT's decision in Smith v Safeway plc (above). A casenote will appear in a future issue.
Specific changes to terms and conditions of employment: main points to note
CASE LIST
Ahmad v Inner London Education Authority [1977] ICR 490
Avery Label Systems Ltd v Bannister and others 10.11.92 EAT 396/92
Azam and others v JH Walker Ltd 29.11.93 Case Nos. 41161/92 and others
Bowater Containers Ltd v McCormack [1980] IRLR 50
BPCC Purnell Ltd v Webb 8.1.93 EAT 129/90
Chubb Fire Security Ltd v Harper [1983] IRLR 311
Coleman v S&W Baldwin t/a Baldwins [1977] IRLR 342
Cresswell v Follett and others 8.2.93 Case No.23968/92
Crooks v Berni Inns Ltd 3.12.85 EAT 627/84
Curling and others v Securicor Ltd [1992] IRLR 549
Dal and others v A S Orr [1980] IRLR 413
Dassanayake v Jean Neal Developments t/a Whorlton Grange Nursing Home 16.3.92 Case No.13122/91
Delabole Slate Ltd v Berriman [1985] IRLR 305
Dutton v Hughes Rediffusion Simulation Ltd 17.3.94 Case No.31931/93
Ellis v Brighton Co-operative Society Ltd [1976] IRLR 419
Genower v Ealing, Hammersmith and Hounslow Area Health Authority [1980] IRLR 297
George v Plant Breeding International (Cambridge) Ltd 3.10.91 Case No.29560/90
Gillies v Richard Daniels & Co Ltd [1979] IRLR 457
R F Hill Ltd v Mooney [1981] IRLR 258
Humphreys & Glasgow Ltd v Broom and another 9.9.88 EAT 181/88
Johnstone v Bloomsbury Health Authority [1991] IRLR 118
Kennedy v Gallaher Ltd 27.9.93 Northern Ireland Court of Appeal
Kykot v Smith Hartley Ltd [1975] IRLR 372
Lesney Products & Co Ltd v Nolan and others [1977] IRLR 77
London Underground Ltd v Edwards [1995] IRLR 355
McCree v London Borough of Tower Hamlets [1992] IRLR 56
Macfisheries Ltd v Findlay [1985] ICR 160
McNeill v Messrs Charles Crimin (Electrical Contractors) Ltd [1984] IRLR 179
Malik v Bertram Personnel Group Ltd 26.7.90 Case No.4343/90
Panesar v The Nestlé Co Ltd [1980] IRLR 60 and 64
Pedersen v The Mayor and Burgesses of the London Borough of Camden [1981] IRLR 173
Peter Carnie & Son Ltd v Paton [1979] IRLR 260
Richardson and another v Applied Imaging International Ltd 12.10.94 EAT 311/93
Rigby v Ferodo Ltd [1987] IRLR 516
St Budeaux Royal British Legion Club Ltd v Cropper 29.6.95 EAT 39/94
Scottish Co-operative Wholesale Society v Taylor 23.3.93 (S)EAT 793/92
Secretary of State for Employment v ASLEF and others (No.2) [1972] ICR 19
Singh v British Rail Engineering Ltd [1986] ICR 22
Smith v Safeway plc [1995] IRLR 132
Stedman v Hogg Robinson Travel Ltd 2.6.94 EAT 794/93
Trebor Bassett Ltd v Saxby and another 11.1.94 EAT 658/91
Walker v Northumberland County Council [1995] IRLR 35
Wetstein v Misprestige Management Services Ltd and another 19.3.93 EAT 523/91
Wilson v Faccenda Chickens Ltd 5.12.86 EAT 98/86
Yassin v Northwest Homecare Ltd 25.1.93 Case No.19088/92
