Same role but less pay?

Replacing an employee with another employee who will do the same work for less money is not a redundancy, because the need for employees to do the work remains the same. However, it will be an unfair dismissal unless the employer can establish a fair “substantial reason” for the dismissal (section 98(1)(b) ERA 96).

During the economic downturn, thousands of workers in the public and private sector have faced dismissal for refusing to agree to pay cuts. Increasingly, a tactic is being used by employers which involves giving notice to end the contract, at the same time as offering new, less favourable contract terms. Those who reject the new terms are not re-employed. Chapter 10 of LRD’s Law at Work 2013 (www.lrdpublications.org.uk/publications.php?pub=BK&iss=1664) includes guidance about this tactic, including factors a tribunal is likely to take into account when deciding whether a dismissal for refusing to accept new contract terms is fair

Employees in this situation are generally not entitled to a statutory redundancy payment because there is no cut in the number of employees required, or the volume of work. Even so, unions are entitled to be consulted if the proposal involves the dismissal and re-engagement of 20 or more employees over a period of 90 days or less. This is because in GMB v Man Truck and Bus UK Limited [2000] IRLR 636, the EAT confirmed that the collective consultation obligations in section 188 of the Trade Union and Labour Relations Consolidation Act 1992 are triggered whenever a fundamental change to terms and conditions (including a cut in pay) affects 20 or more employees (See Chapter 2: Collective consultation).