EAT Finds That Unilateral Variation of Contract Constituted Dismissal
The EAT considered whether an employee's contract of employment had been terminated by the employer's unilateral imposition of new terms of employment.
Background
In Jackson v University Hospitals of North Midlands NHS Trust [2023] EAT 102, Ms Jackson was a specialist nurse who was entitled under her contract of employment to an enhanced redundancy payout, provided she remained employed until the expiry of her notice. Following a restructure, Ms Jackson was unilaterally assigned to a more junior position by her employer. She raised a grievance and her employment subsequently terminated before the expiry of her notice period.
Ms Jackson brought claims for unfair dismissal, a statutory redundancy payment, and for breach of contract in relation to the enhanced redundancy payment. The Tribunal upheld the unfair dismissal and statutory redundancy payment claims, but did not uphold the breach of contract claim. Ms Jackson appealed to the EAT.
EAT Outcome
The EAT upheld Ms Jackson's appeal. The employer's original intention was to continue to employ Ms Jackson, albeit in a more junior role. However, this did not negate the fact that Ms Jackson had in fact been dismissed from her original position. The Tribunal should have considered whether Ms Jackson's original contract of employment had been terminated and replaced by a new contract. The question was not whether Ms Jackson's employment in the broader sense had ended when the new contract was imposed, but rather whether the old contract had been brought to an end. The EAT found that the original contract had indeed been terminated by the employer, and upheld the breach of contract claim.
Learning Points
This scenario differs from a 'fire and re-hire' exercise, where the employer knowingly terminates a contract in order to offer new terms. Instead, this case offers guidance on when a contractual variation might be so significant as to constitute a termination.
Whether a contractual variation constitutes termination is a matter of fact and degree. In Ms Jackson's case, the new role was significantly different in status and pay (after an initial period of pay protection). It was capable of constituting a new contract, and Ms Jackson's original contract had been terminated. The case demonstrates that an employer does not need to intend for the wider employment relationship to end in order for a termination to take effect in this way.
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