Dismissals for Refusing Pay Cut

The EAT (Langstaff J) has handed down its decision in Garside & Laycock v Booth, which dealt with the question of whether a dismissal is fair for "some other substantial reason", where the dismissal is for failure to accept wage-cutting proposals, and if it was reasonable for the employer to dismiss, rather than asking whether it was reasonable for the employee to accept lesser terms offered to him.

In this case the employer needed to cut costs and increase profit. It asked employees to accept a pay reduction of 5%. Mr Booth refused and was dismissed from a job he had held for the previous seven years. Out of 77 employees he was the only one, by the time of dismissal, who held out against the change. The employment tribunal found the dismissal unfair.

But the EAT held the tribunal had gone wrong in a number of areas. Firstly, it was incorrect to say the test was that an employer may only offer less favourable terms if the very survival of the business depended on it. Catamaran Cruisers Ltd v Williams [1994] IRLR 386, on which the tribunal sought to rely, was not authority for such a burdensome requirement. Nor was it correct to assess the reasonableness of the employer's decision by asking what was reasonable for the employee to do. The test was whether the employer, having established "some other substantial reason", acted reasonably. The case will now be remitted to a new tribunal for a full re-hearing.

 

 

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