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Changing terms of employment: When does varying a contract amount to a dismissal?

Contract offered for signature

Varying a contract does amount to a dismissal when the variation is, in reality, a replacement of the existing contract, the Employment Appeal Tribunal (“EAT”) has confirmed in the recent case of Jackson v University Hospitals of North Midlands NHS Trust [2023] EAT 102.

Relevant facts of the case on contract variation

Jackson was employed as a research nurse by the University Hospitals of North Midlands NHS Trust (“the Trust”). Roles at the Trust were graded according to the NHS pay and grading system. Jackson’s role was in band 6, and the banding system incorporated into her contract.

As part of a restructure in 2018, the Trust made the decision to reduce the number of band 6 roles. Jackson, having been unsuccessful in her application for a newly created band 6 role, was moved to a new band 5 role and presented with terms and conditions to sign. However, she refused to sign the new terms and conditions for the role, arguing that she should be made redundant and paid enhanced redundancy pay instead since her specialist research role had diminished.

The Trust accepted that Jackson was dismissed by reason of redundancy from her band 6 role and served notice. However, Jackson resigned before the expiry of her eight-week notice period. Due to Jackson leaving employment before the end of her notice period, the Trust informed her that she was no longer eligible for enhanced redundancy pay under the relevant Trust policy.

Jackson brought an unfair dismissal claim in the employment tribunal. She claimed she had been constructively dismissed, meaning her later resignation was irrelevant. As part of her constructive dismissal claim, she asserted that she had been subject to a “Hogg dismissal” on 3 December 2018 when the new band 5 contract was imposed, referring to the principle established by the EAT in Hogg v Dover College 1988 ICR 39.

The employment tribunal upheld the claim for unfair dismissal and statutory redundancy pay. However, it rejected Jackson’s claim for contractual redundancy pay on the basis that the imposition of the band 5 contract was not a Hogg dismissal because:

  1. there was “no radical change such as to entitle [Jackson] to regard herself as constructively dismissed”;
  2. the role at band 5 with pay protection was generic and not specialist like her old band 6 role but [Jackson] had skills to do it”;
  3.  at the time that the contract was imposed, Jackson did not treat it as a dismissal; and
  4. there was no intention by the [Trust] to dismiss [her]”.

The EAT’s decision

Jackson appealed to the EAT. On examining the employment tribunal’s analysis of the Hogg dismissal argument, the EAT held that it had applied the wrong test. Rather than consider whether there was a “radical change” from the band 6 contract to the band 5 contract, the employment tribunal “had to consider whether [Jackson’s] contract of employment had been terminated and replaced by another”, which is a question of fact and degree.

The EAT also found that the observation that Jackson was capable of performing the new role was irrelevant to the test, as was the intention of the Trust and the contention that Jackson did not treat the imposition of the new contract as a dismissal – the question was whether the band 6 contract had been brought to an end. No such analysis had been applied by the employment tribunal.

The EAT therefore allowed Jackson’s appeal. It has been remitted to another employment tribunal to carry out appropriate factual analysis to determine whether there was a Hogg dismissal.

Lessons from the ruling

This case serves as a timely reminder that careful consideration needs to be had where a contractual variation is contemplated. Although facts may not regularly give rise to a Hogg dismissal situation, there are nevertheless plenty of pitfalls to keep in mind to avoid a breach of contract or constructive dismissal claim – such as whether a unilateral variation is permissible under the contract; whether fresh consideration is required; and /or whether agreement must be obtained.

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