The Employment Appeal Tribunal has found that a dismissal for refusing to agree to a pay cut was fair. The employer, Garside and Laycock Ltd had to cut costs and increase their profit margins.
It asked its workforce to accept a 5% reduction in pay. Mr Booth was the only employee out of 77 who refused to agree to a pay cut and in consequence he was dismissed for some other substantial reason (SOSR).
He complained that the dismissal was unfair. Eventually the case came before the EAT. The EAT found that the dismissal was fair. It acknowledged that the employer had undertaken extensive consultation with its staff and offered Mr Booth a six-month review of his pay after the proposed salary cut. The EAT found the test adopted by the original tribunal was incorrect in its approach.
This was that an employer may only offer less favourable terms if the very survival of the business depended on it. Nor was it correct to assess the reasonableness of the employer's decision by asking what was reasonable for the employee to do.
A tribunal must ask itself whether, in the circumstances (including the size and resources of the employer’s undertaking) it was reasonable to treat the refusal to agree to a contractual variation as sufficient to dismiss the employee.
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