Guidance on SOSR and constructive dismissals3rd June, 2012 by Brian Butler
Most clubs will be familiar with the usual ways an employee’s contract can be terminated. These include capability, misconduct, redundancy and breach of a statutory duty. However there is one other – ‘Some Other Substantial Reason’, often referred to as SOSR.
If an employer can show that the reason for dismissal of an employee was a ‘substantial reason of a kind such as to justify the dismissal of an employee holding the position which that employee held’ then the dismissal can be added to the usual reasons why an employee’s contract can be terminated fairly.
Whether the dismissal is in fact fair or unfair will then turn on whether the tribunal considers that the employer acted reasonably in treating that reason ‘as a sufficient reason for dismissing the employee’. There is no onus of proof on employer or employee to show whether it was fair or unfair, this is a matter that can only be determined by the tribunal ‘in accordance with equity and the substantial merits of the case’ with no presumptions either way.
The usual situations that give rise to SOSR dismissals include:
• dismissing a temporary employee when the permanent employee returns from maternity leave (provided the temporary employee was informed in writing at the start of the job that their employment would terminate in this way)
• dismissal for refusing to accept changes to terms and conditions of employment for a good business reason
• a breakdown in trust and confidence
• expiry of a temporary contract
• dismissal because of personality conflicts
• dismissal because of third party pressure to dismiss
• business reorganisation – where there is no actual ‘redundancy’ situation but an employer wants to introduce new terms and conditions for sound business reasons.
Guidance on what procedure to follow
As with other types of dismissal, a dismissal for SOSR will be fair only if a fair procedure is followed and the dismissal is reasonable in all the circumstances of the case, that is, it comes within the ‘band of reasonable responses’ open to the employer. The procedure that should be followed won’t be identical for each SOSR dismissal because, as can be seen from the above list, the reasons can be widely different, so it’s just not possible to adopt a ‘one size fits all’ approach. Serious thought should therefore be given to what would constitute a fair procedure and this will depend on the individual circumstances. For example, in most SOSR dismissals it will be necessary to consider alternative employment or relocation for the employee prior to taking any dismissal decision. In cases of personality clashes, breakdowns in the working relationship between staff and third party pressure, the club would be expected to demonstrate that it did everything it could to try to remedy the situation.
In most cases of SOSR dismissals, the procedure to follow should include the following elements:
• the employee’s right to be given a timely warning of the change(s) that could give rise to a more formal period of consultation
• the employee’s right to be accompanied at formal consultation meetings
• the employee’s right to raise a grievance (if a grievance is raised the consultation may need to be suspended until the grievance is resolved, but if the grievance is related to the SOSR change(s) both matters can be dealt with concurrently)
• the employee’s right to an appeal meeting if the grievance has not been resolved
• consideration should also be given to mediation as a way of resolving disputes
• if the employee is sick and unable to attend formal meetings they should be rescheduled providing the employee’s medical practitioner’s has indicated if and when the employee is able to attend (if the employee is persistently unable to attend the meetings they should take place and the employee informed of the proceedings in writing).
Relevant case law – Cummings v Siemens Communications
The ACAS code expressly states it applies to disciplinary situations which ‘includes misconduct and / or poor performance’. It is made clear in the code itself that its provisions do not apply to redundancy dismissals or to the non-renewal of fixed term contracts but it did not specifically mention dismissals for SOSR. A recent tribunal decision in Cummings v Siemens Communications has, however, ruled that the code applies to SOSR dismissals too, which would include, for example, dismissals as a consequence of a business reorganisation.
The case of Cummings v Siemens Communications came before the Nottingham Employment Tribunal. It concerned the dismissal of an employee who had refused to accept a contractual variation which would have provided for him to take 12 days’ unpaid leave, that measure being introduced to help save costs during a period of financial difficulty for the company. Mr Cummings was dismissed and offered re-engagement on the new proposed terms, which he declined to accept. The subsequent dismissal process did not fully meet the key procedural recommendations of the code though the identified failings were not so great as to lead to a finding that the dismissal was procedurally unfair. The tribunal also found that the dismissal was, in all the circumstances, substantively fair.
On the point as to whether or not the code applied to a dismissal for SOSR, the tribunal attached importance to the wording of the introduction to the code which states that its provisions ‘includes’ dismissal for misconduct and / or poor performance, which was not to limit the code to dismissal only for those reasons. The tribunal went on to find that had there been an intention to exclude SOSR dismissals from the scope of the code, the code would clearly have done so in the same way that it expressly excluded redundancy dismissals and dismissals consequent upon the expiry of a fixed term contract.
Some commentators have expressed surprise at this decision, arguing that the code was intended and understood to apply only to ‘disciplinary and grievance situations’. Even so, and while this judgment is not legally binding on other tribunals, clubs should be conscious of at least a strong possibility that the code may be held to apply in a broader range of dismissals other than purely disciplinary matters and to comply with the code save where there are very good reasons for not doing so.
Relevant case law – Garside and Laycock (Garside)
Mr Booth was employed for seven years by Garside and Laycock (Garside) when, in 2009, Garside experienced trading difficulties. As a result of a drop in its sales and profits, it asked employees to take a pay cut of five per cent. Eventually, only two members of the workforce refused to agree to the change, Mr Booth being one of them. Garside terminated his employment, offering him new terms and conditions on the reduced pay. Mr Booth brought a successful claim for unfair dismissal. An employment tribunal decided that, although the reason for his dismissal was SOSR, the employer had failed to show that it was fair in all the circumstances. Some of the key factors which led to a finding of unfairness were that, in the tribunal’s view:
• the employer had not been in a desperate financial situation and the business reasons put forward by the employer were not ‘cogent’
• the employee’s refusal to accept the change was reasonable
• the employer had made a ‘poor attempt at consultation’ and in reality had closed its mind to any other option.
Garside appealed against the finding of unfair dismissal, asking the Employment Appeal Tribunal (EAT) to substitute a finding of fair dismissal.
The EAT held that the tribunal had erred when applying the law.
When considering the factors which are relevant to the fairness of a dismissal such as this, the tribunal had focused on the reasonableness of the employee’s refusal to agree to the change, rather than the reasonableness of the employer’s decisions as required by statute.
While the employee’s refusal or otherwise was a factor to be weighed in the balance (as part of the reasonableness of the employer’s decision in all the circumstances), it should not be the main focus of the tribunal’s inquiry.
As previous authority had pointed out, it does not follow that if one party is acting reasonably the other is acting unreasonably.
This case confirms that employers do not have to show that their business reasons for making a change were special or extraordinary.
Further, while the employee’s refusal to consent to a change may be a factor to weigh in the balance when considering reasonableness, it should not eclipse the main focus, namely the reasonableness of the employer’s decision.
Circumstances in which the employee can make a counter claim for constructive dismissal
Constructive dismissal is the term used where an employee resigns in response to their employer’s breach of an important term of their contract of employment. In this situation, an employee is entitled to treat him or herself as having been dismissed. The employer’s conduct that leads to the breach of contract is often referred to as a ‘repudiatory’ or a fundamental breach of contract and the employee’s resignation is in response to the employer’s fundamental breach of the contract.
For a constructive dismissal claim to succeed, the employee needs to show that:
• the employer was in fundamental breach of the employment contract,
• he or she resigned as a result of that breach, and
• he or she had not affirmed (accepted) the contract following the breach (unreasonable delay in resigning, for example, may constitute affirmation).
The employer’s conduct can be a significant breach of an implied term, that is an ‘unwritten rule’ such as trust and confidence or a significant breach of an express term (written term) of the employment contract that goes to the root of the contract.
It does not have to be a single incident that amounts to this fundamental breach of contract but can be a series of incidents or pattern of behaviour which, taken as a whole, amounts to such conduct (the ‘last straw’ doctrine). The tribunal will in this case consider any previous breaches of contract that may have otherwise been waived by the employee.
Any breach of contract has to be significant and must impact the core conditions of the contract. Some cases will be relatively straightforward. For example, a fundamental breach of contract is likely to occur when:
• without consultation the employer reduces an employee’s pay, benefits or duties
• the employer does not deal with an employee’s grievance
• the employer discriminates against the employee.
However, there is no hard and fast rule as to whether a case may amount to constructive dismissal and some cases may not be so clear-cut. If an employer behaves in a manner which amounts to a fundamental breach of an employee’s contract, a breach of contract has taken place.
Should an employee raise a grievance?
The law does not require an employee to raise a grievance prior to resigning and claiming constructive dismissal, but a failure to raise a grievance may mean that any compensation that the employee might subsequently be awarded can be reduced by up to 25 per cent.
If the employee has already resigned, they should still write to their employer setting out the reasons why they resigned. If the employer does not respond to this letter in writing, this may increase the amount of compensation the employee is awarded in the event of a successful claim by up to 25 per cent.
In one case, the employee was not told why he was being called to a meeting and was pressed to make a decision on termination of his employment. It was held that he could not be considered to have resigned, but that he was trying to make the best out of an inevitable dismissal.
However, an employee who reaffirms his decision to resign after a cooling off period will be taken to have resigned.
This is where the employee anticipates a breach of contract. This could be where an employer tries to change the terms in an employee’s contract where those terms are detrimental to the employee (the changes must negatively affect the core terms of the contract), and threatens to dismiss them if they do not accept the proposals. This could be classed as an anticipatory breach of contract which, if the employee resigned, an employer might face a claim of constructive dismissal.
Affirming the breach
Following a breach, the employee can choose either to accept the contract (affirm) or resign. If they affirm the contract, even once, then they cannot later dispute the breach. If an employee continues in employment for a length of time without leaving, he will be regarded as accepting the breach.
Compensation for constructive dismissal
If it can be establish that the employee was constructively dismissed, the tribunal will assess the loss that the employee has suffered. The employee may receive compensation for:
• breach of contract, and
• unfair dismissal.
In summary, if a club is faced with a situation which would require the consent of employees to make necessary changes, one or more employees may refuse to give their consent. The option open to the club is to issue the employee(s) with a revised contract. If the employee(s) do not accept the new contract the termination of employment would be SOSR. Whether the dismissal was fair or unfair would be a matter for the tribunal. The employee(s) could accept the breach of their contact(s) and claim unfair constructive dismissal. Unless the law allowed for situations like this, one or more employees could prevent changes taking place that would benefit the club as a whole. The same care, however, should be taken to follow a fair procedure as would be followed in other kinds of dismissal.
Brian Butler is the employment and health and safety adviser to the Golf Club Managers’ Association (GCMA). Contact the GCMA on 01934 641166