Unfair Dismissal - Failure to Agree Contractual Changes

3 minutes reading time

In the recent Employment Tribunal case of Khatun v Winn Solicitors Ltd, Ms Khatun was found to be unfairly dismissed following her refusal to accept contractual changes. 

The background

Ms Khatun worked for Winn Solicitors (the Firm). Following a downturn in work because of the Covid-19 Pandemic, the Firm furloughed 50% of its staff. The remaining 50%, including Ms Khatun, remained working to caretake files. 

On 23 March 2020, Ms Khatun’s Head of Department met with her and advised her that the Firm planned to vary employees’ contracts, and a failure to accept the variation would likely lead to dismissal. On 24 March, the HR Director emailed a contract variation document to all staff, asking that it be signed and returned within 24 hours. The variation provided the right for the Firm to place employees on furlough or reduce hours of work and pay by up to 20% on five days’ notice. The alternative to signing the variation was dismissal. On 25 March, Ms Khatun advised the Firm that she would not sign the variation as she had continued to carry out her contractual role, but should the situation change or she be placed on furlough; she would reconsider. Ms Khatun then engaged in discussions with her Head of Department and HR director, the outcome of which was that that variation was non-negotiable. 

On 26 March, the Firm’s Chief Operating Officer instructed the HR Director to dismiss Ms Khatun and withhold her notice pay and outstanding annual leave. Ms Khatun was advised of the Firm’s decision to dismiss after she queried the removal of her remote IT access. 

The Firm later conceded that it had acted in breach of her contract by withholding notice pay and outstanding annual leave and rectified the non-payment. Ms Khatun brought a claim of unfair dismissal in the Employment tribunal. 

The decision

The Employment Tribunal, having found that the Firm was entitled to rely upon ‘Some Other Substantial Reason’ as a fair reason to dismiss Ms Khatun, was required to consider whether the Firm’s decision to dismiss Ms Khatun was ‘within a reasonable range of responses’ in the circumstances. It found that a failure to consider alternative employment and a blatant disregard for Ms Khatun’s contractual terms were not within a reasonable range of responses for an employer. Additionally, the Employment Tribunal found that the procedure the Firm followed was unfair. In particular, it found that the Firm’s three meetings, held over consecutive days, in which the discussion was largely one-sided and non-negotiable, did not amount to meaningful consultation.

In the circumstances, the Tribunal concluded that the dismissal was unfair. 

What does this mean for employers?

Whilst this case did not actually involve the ‘and rehire’ element of what is commonly known as a ‘fire and rehire’ exercise, it has all the hallmarks. 

Fire and rehire exercises, or dismissal and re-engagement, have been used increasingly during the Covid-19 pandemic, with a lot of employers needing to make quick changes to ensure business survival. This uptake has been met with notable scrutiny; the TUC has sought to end the lawfulness of the practice, and ACAS has published a report encouraging a tightening up of unfair dismissal in relation to contractual changes, increasing employer consultation requirements and encouraging tribunals to develop more powers to scrutinise business decisions. 

Whilst the practice remains lawful and sometimes necessary, employers wishing to undertake dismissal and re-engagement processes should ensure that they conduct a thorough and even-handed dismissal procedure, including:

  • Properly and meaningfully consulting with employees before enforcing changes. 
  • Exploring alternatives to contractual variation and potential dismissal.
  • Providing an opportunity for the employees to accept the terms before termination. 

Here to help

If you need help navigating dismissal and re-engagement processes or need advice in relation to any of the issues raised in this article, you can contact a member of our Employment Team on 0161 941 4000 or email The Employment Team.