Changes to Terms and Conditions and Discrimination

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The Problem

Following a TUPE transfer you inherit a number of employees who have significantly better terms and conditions of employment than your current employees.

You go about trying to harmonise the terms and conditions and in doing so threaten employees with dismissal and re-engagement should they not accept the new terms on offer.

The Principle

This is the premise of the case of Braithwaite and others v HCL Insurance BPO Services Limited.  In this case the employer was incurring substantial losses.  So following a period of consultation, the employer decided to introduce standardised terms and conditions for all employees which would remove a number of benefits enjoyed by the claimants.  The employees were advised of this change and noted that they would be dismissed as of 15 June 2011 should they not agree to it.  Whilst a number of employees accepted this offer others didn’t and these employees brought a claim citing a number of issues, including that the imposition of new terms was unjustified age discrimination.  The argument was that while the provision, criterion or practice (PCP) applied to all employees (i.e. the requirement to enter into a new contract) the effect was to put workers in an age band of 38-64 at a particular disadvantage because these older workers had built up greater entitlements through long service.

The Practice

The outcome of this particular case was that the Employment Tribunal and the Employment Appeal Tribunal (EAT) agreed that whilst the PCP was discriminatory, the PCP was a proportionate means of achieving a legitimate aim (namely to reduce staff costs to ensure the business’ viability and to have in place market competitiveness and non-discriminatory terms).  The PCP was found to be objectively justifiable.

This case flags the need to consider a broad range of issues when considering dismissal and reengagement of staff.  Clearly each matter is fact sensitive but there will be encouragement for employers to know that Employment Tribunals can find PCPs to be objectively justifiable on grounds such as reducing staff costs, future viability of a business and having non-discriminatory terms.

For further information, help or advice please contact Tim Davies on 0191 211 7927 or [email protected]