![[Basket]](images/basket.png){kind=small}
Your order![[cover image]](images/issue/BK201506.jpg)
Contractual rights
[ch 4: pages 44-46]Since the start of the economic downturn, unions have been fighting attempts to cut contract terms and conditions (for example, at the Department for Transport, see page 15) and sick pay is no exception. Changes to contract terms should always be agreed. Where unions are recognised this should be through collective bargaining.
Sometimes employers try to force through change by relying on so-called “flexibility” clauses. These are contract terms, written into the contract, that allow the employer to make future changes without the agreement of the other party.
Current absence policy at GKN Aerospace “does not give contractual rights to individual employees” and the company reserves the right to alter any of its terms at any time although it will notify employees in writing of any changes.
This kind of term must always be express (that is, written), clear and unambiguous. It can never be implied (for example, based on parties’ past behaviour).
If there is any doubt about the meaning of this kind of term, the words should be interpreted narrowly, and against the interests of the party that insisted on including them. This is nearly always the employer. For a recent good example, see Hart v St Mary’s School (Colchester) Limited [2015] UKEAT/0305/14/DM.
In 2012, UNISON defeated a move by Central Manchester University Foundation Trust to cut the pay of staff who took too much sick leave. In 2015, the PCS union won a key victory when the Employment Appeal Tribunal ruled that the National Audit Office did not have the right to change the contract terms of its staff (including sick pay) without their agreement.
Sometimes, where employers fail to secure agreement to the change they want, they may attempt to force it through by terminating the original contract and offering new terms — for example, with reduced sick pay.
An employer who terminates an existing employment contract and offers new terms is not in breach of contract, as long as full legal notice of termination was given (Kerry Foods v Lynch [2005] IRLR 680). This is because by giving notice to end the contract, the employer is complying with the contract rather than breaking it.
However, forcing through change in this way is still a dismissal, and employees with at least two years’ service will be able to claim unfair dismissal.
In some circumstances it may be possible to attack proposed changes to sick pay on the basis that they are discriminatory — for example, against older workers. Unfortunately, these arguments failed in the following case:
Insurance company HCL Insurance had 10 different sets of terms and conditions because of TUPE transfers. It was unprofitable and making annual losses, and began consulting with staff on a proposal to impose new uniform contract terms on all staff, removing the enhanced benefits of some employees.
A group of older workers were dismissed for refusing to agree the new terms and they issued various tribunal claims, including a claim for indirect age discrimination. The changes put older employees at a particular disadvantage as employees within the 38 to 64 year age range were more likely to lose their existing contractual rights.
Under Section 19 of the Equality Act 2010, a person discriminates against another if they apply a provision, criterion or practice (PCP) which is discriminatory in relation to a relevant protected characteristic (see page 29) of the other person, if it puts the other person at a disadvantage and cannot be shown to be a proportionate means of achieving a legitimate aim.
The HCL workers’ claims failed as the tribunal ruled that it was not unfair or unreasonable to try to implement a fairer and more competitive set of terms and conditions across the workforce. It was “impressed” by HCL’s decision not to cut base salaries. Moreover, some of the changes (it highlighted sick pay) were only “contingent”, in the sense that employees would only be affected if they were dismissed or became sick. In other words, this might never happen.
The EAT agreed and went on to rule that there was nothing wrong with the tribunal’s approach to justification, or with its conclusions that HCL had a legitimate aim. Dismissing the employees who refused to agree the changes following consultation was a reasonable and proportionate means of achieving that aim.
Braithwaite v HCL Insurance BPO Services Limited [2015] UKEAT/0152/14/DM
Where an employer dismisses 20 or more employees within a 90-day period and re-engages them on new contract terms, this will trigger the duty to consult collectively with the union (section 188, Trade Union and Labour Relations Consolidation Act 1992).
In the public sector, it is also worth remembering the need for an employer considering cuts to sick pay to comply with the Public Sector Equality Duty.