It was 'not unfair or inequitable' not to re-hire under conditions offered in failed negotiations

Slade & Others v TNT (UK) Ltd (Unfair Dismissal : Reasonableness of dismissal) [2011] UKEAT 0113_11_1309

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• Failure to "buy out" a contractual bonus that was removed after dismissal and subsequent rehiring was not unfair despite a buy out having been agreed in failed talks for a negotiated settlement.
• The concept of “equity” did not extend to the employer's withdrawal of the offer of a “buy-out” lump sum
• The EAT rejected the employer's argument that the fairness of the dismissal was unrelated to the terms on which re-engagement were offered (lump sum) on the grounds of remoteness

In Slade v TNT the EAT has decided that it is not necessarily unfair not to include a "buy out" of an existing contractual bonus that was removed after the dismissal and subsequent rehiring.

SOSR ("some other substantial reason" ) and 'band of reasonable responses “ test were in the EAT's opinion correctly applied by the original tribunal.

Workers at TNT were contractually entitled to receive an “end of sort (EOS) bonus” from 1983 that amounted to almost a fifth of the wage. TNT decided to save money and the bonus scheme was discontinued for new starters in August 2005. In 2009 TNT decided to abolish the scheme for employees who were still entitled to it.  

When the trade union rejected an offer from the employer to buy out the scheme with a lump sum for those entitled to receive the bonus TNT dismissed the workers and rehire dthem under a new contract that excluded the EOS bonus.

The dismissed workers accepted re-engagement under protest and then made a claim for unfair dismissal although most of the workers settled by way of ACAS for more than the original “buyout” offer.

The main considerations of the original tribunal were:  
1. whether the Respondent’s reasons for the dismissals amounted to “some other substantial reason for the purposes of section 98(1) of the 1996 Act”  and if so
2. were the dismissals fair or unfair (section 98(4) of the 1996 Act). 
3. Did the Respondent follow a fair procedure.

As TNT's defence to the claims for unfair dismissal was of SOSR the Tribunal discussed whether the reason for the dismissal was substantial (the employer has the burden of proof in establishing SOSR as well as the dismissals being reasonably believed to be for a sound business reason).   SOSR is something like the joker in a pack of cards and much beloved by employers cutting the work force. The employer needs to make the case that the action taken is necessary to stave off a business disaster. But it needn't be the only course of action or even the best one as the tribunal is not allowed to interfere with an employer's decision as long as it is within the “range of reasonable responses.”

The reason must not be trivial but it's not hard for employers to think up 'substantial' reasons. Under section 98(4) a tribunal must consider whether the dismissal is fair but with the other get out of the “range of reasonable responses” the result is often a foregone conclusion and the employee is shown the door without being able to win an unfair dismissal claim. Labour governments failed to roll back this legislation that makes a mockery of the protection of workers faced with employers using pretexts to ax the work force. Unions need to explain why throughout the years of a labour government they failed to get Labour to do away with SOSR and the “range of reasonable responses.”

In the EAT the workers argued that the tribunal had not taken the issue of fairness into consideration in light of the EAT decision in  Garside & Laycock Ltd v Booth UKEAT/0003/11/CEA where Mr Justice Langstaff stressed the importance of the concept of equity when evaluating fairness under 98(4). The EAT rejected this argument stressing that the ET had taken the effects of a drastic reduction in wages on the workers into consideration.

The workers unsuccessfully argued that the concept of “equity” extended to the employer's withdrawal of the offer of a “buy-out” lump sum. They argued that the employer should have given this when in the absence of agreement with the union the dismissals went ahead.

The EAT rejected the employer's argument that the fairness of the dismissal was unrelated to the terms on which re-engagement were offered (i.e. the lump sum buy-out) on the grounds that it was too remote for the Tribunal to have considered.  The EAT said that the tribunal is obliged, under section 98(4) to take all relevant circumstances into account

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