Real Employment Law Advice

Is it fair to dismiss an employee who refuses to accept employment contract changes made in response to COVID?

An Employment Tribunal in the case of Khatun v Winn Solicitors Limited has recently decided that an employee was unfairly dismissed for refusing to agree to certain changes to her contract of employment which the employer said were required because of the COVID-19 pandemic.

Factual background

As we know, in March 2020 the Government announced the Coronavirus Job Retention Scheme, (CJRS), also known as the furlough scheme, allowing employers whose businesses were affected by the pandemic to furlough staff and claim 80% of their salaries through the scheme.

In order to furlough staff, employers needed to (in most cases) obtain the agreement of employees to be furloughed as it constituted a variation of the terms of their contract of employment.

In this case, the Employer, Winn Solicitors Limited, made a decision to place nearly 50% of the staff on furlough with the remaining staff to continue to work and manage their own workload and the work of their furloughed colleagues.

The Employee, Ms Khatun was selected to continue to work and in a meeting with her Head of Department, was told of the Employer’s plans to seek the variation to the contracts of employees which were to be non-negotiable and if refused, they were likely to face dismissal.

The next day, all staff received an email from the HR Director regarding the contract variation advising them to sign and return it within 24 hours or they were likely to face dismissal. The variation gave the Employer the power to place an employee on furlough or reduce their hours and pay by up to 20% with 5 days’ notice. The discretion to reduce employees’ hours and pay by 20% was to be applicable until October 2020 with the power to extend it by a further 3 months.

Ms Khatun responded to the email setting out that she was unable to accept the variation as she was continuing to perform her role, with the additional workload of those who were furloughed, but if matters had changed she would consider an appropriate variation at the time.

Ms Khatun’s email was forwarded to the head of department who made a short 5-minute phone call to her in a bid to change her mind. However, when she reiterated her position, she was told that the firm’s position was such that the changes were non-negotiable and that if she failed to agree, she would be dismissed.

The following day, the HR Director was informed by the Chief Operating Officer (COO) to terminate Ms Khatun’s employment immediately with no notice, pay in lieu of notice or holiday pay. The COO described her as “inflexible and clearly not someone interested in the firm or her colleagues”. Ms Khatun only found out of her Employer’s decision to terminate her employment when she enquired about her inability to access work remotely.

The Employment Tribunal’s findings

The Employment Tribunal accepted that the Employer had sound and good business reasons for implementing the variation to the terms of employment thereby making the reason for dismissal fair with it meeting the test for “some other substantial reason”.

There were however questions raised as to whether the Employer had acted reasonably in treating the refusal to accept the contract variation as a sufficient reason to dismiss Ms Khatun in the circumstances.

It was held that there had been no significant consultation regarding the proposed changes. The meeting that was held between the Head of Department and Ms Khatun was a one-sided conversation and not a consultation and neither did the subsequent discussions form a consultation with her.

The Employer argued that it did not have time to negotiate and consult with over 300 employees however the Tribunal considered that as Ms Khatun was the only member of staff who declined to accept the changes, this would not have taken up too much of the Employer’s resources.

It was held that the Employer had failed to reasonably explore alternatives to dismissal and that it was clear from the facts that the Employer had already decided that if the variation was not accepted, they were to proceed straight to dismissal without applying any fair and reasonable process.

To add to the unreasonableness of the circumstances, the Employer failed to offer Ms Khatun the right to appeal against the decision and this was highlighted by the Tribunal.

The Tribunal accepted that the Employer would not have been able to engage with ongoing negotiations and consultations for a prolonged period however it did not need to make a knee-jerk decision to dismiss Ms Khatun within 24 hours of receiving her decision.

The Tribunal explained that a reasonable Employer would have taken more time to engage with their employee to address her concerns whilst exploring alternatives to dismissal and so the dismissal did not fall within the band of reasonable responses making it unfair.

Points to consider

Having read this, I am sure you will agree that the Employer acted somewhat irrationally and without consideration to the impact of their decision. It is also a reminder of how quickly things can spiral out of control and go wrong. I have set out some pointers below which you may find helpful should you need to approach staff about varying the terms of their employment contract. 

1. Plan, plan, plan!

Yes, in this situation time was limited but if the Employer had a plan in place, then they could have avoided the situation. Having a strategy in place to address the “what if” scenarios means that you do not need waste endless amount of time and resources trying to deal with issues that you would have been able to foresee occurring.

2. Follow a process

Here the Employer completely disregarded the process. Always think about what a reasonable employer would do in the circumstances. If an employee does not agree to your proposed changes, open discussions with them, try to see what they would be agreeable to and to see if you can reach a happy medium before exploring dismissal.

3. Allow the employee to appeal

If circumstances do lead to a dismissal, then ensure that your employees are given an opportunity to appeal the decision and remember to follow a fair process if an appeal is subsequently lodged.

Khatun v Winn Solicitors Limited – Read the full judgement here

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The information contained in this blog post is provided for guidance and is a snapshot of the law at the time it is written. It is provided for your information only and should not be used as a substitute for obtaining legal advice that it specific to your particular circumstances.

The guidance should not be relied upon in any decision making process. It is strongly recommended that you seek advice before taking action.


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