322: Don’t fall into this trap when changing contract terms

In Khatun v Winn Solicitors Ltd, an Employment Tribunal has ruled that a solicitor who refused to agree changes to her contract at the start of the pandemic was unfairly dismissed.

Due to an expected severe downturn in work, Winn Solicitors placed half its workforce on furlough and required remaining staff to look after the work of the furloughed staff. Ms Khatun was selected to continue working. She was informed that all staff had to agree a non-negotiable variation to their contract, or face dismissal. The variation allowed the firm to place an employee on furlough or to reduce their hours and pay by up to 20% on five days’ notice. Staff were given 24 hours to sign and return the revised contract. Ms Khatun refused to agree to the variation, arguing that she was continuing to do her contracted work, and more, and that if she were to be furloughed or any other unexpected situation were to arise, she would consider variation at that point. She was dismissed immediately, with no opportunity to appeal.

The Employment Tribunal ruled that Ms Khatun’s dismissal was unfair. The firm had a sound business reason for the contractual variation, so it met the test for dismissal for ‘some other substantial reason’. However, the firm’s actions did not fall within the band of responses of a reasonable employer, particularly given its relatively significant size and resources. There had been no meaningful consultation to address Ms Khatun’s concerns, no consideration of alternatives to dismissal, and no right of appeal. The Tribunal rejected the firm’s argument that there was no time to consult with over 300 employees. Since all other employees had signed up to the revised contract, the firm would only have had to consult with Ms Khatun.

This is not a surprising decision given the serious procedural failings. Although the severe economic difficulties caused by COVID-19 are likely to be a legitimate reason for contractual variations, employers will still need to be able to demonstrate how this applies to their particular business. Regardless of the extreme circumstances of the pandemic, it is also important to follow a fair procedure when changing terms and conditions, including meaningful consultation rather than just a threat of dismissal, consideration of alternatives and a right of appeal. Tribunals will take into account an employer’s need to act quickly, but in this case dismissal within two days of asking the employee to sign a new contract was viewed as highly unreasonable.