Varying Terms and Conditions of Employment

[Thanks to Dr John McMullen of Wrigleys Solicitors LLP for preparing this case summary]

The EAT (Wilkie J) has handed down its decision in Slade v TNT (UK), which is authority for the proposition that an employer did not necessarily act unfairly when, after failed negotiations to change terms of employment, which included an offer to "buy out" certain existing terms, the employer terminated existing contracts with an offer of re-employment on the new terms which did not include the buy-out payment.

TNT employed loading bay operatives who enjoyed an "end of sort" (EOS) bonus. For legitimate reasons TNT sought to remove that bonus. Negotiations ensued which including an offer of a buy out payment but TNT warned that if the deal was declined, existing contracts would be terminated and an offer of re-employment made.

The employment tribunal decided that there was "some other substantial reason" for the resultant dismissal and the employer had acted fairly. The EAT considered the tribunal had correctly focused on the reasonableness of the employer's decision, balancing the advantages to the business with the effect on the claimants. Applying the band of reasonable responses test, the EAT considered that it was not right to say that the only reasonable response for the employer would be to offer re-engagement on terms which included the buy-out sum. It was open to a reasonable employer to conclude that they should not offer a lump sum on re-engagement when they were not going to achieve any of the benefit of the agreement for which the lump sum had been offered.