Case Shows Dangers of Contract Variations

If an employer seeks, unilaterally, to make changes to the terms and conditions of an employee’s contract of employment and the employee is not in agreement with them, it is generally a breach of contract. In serious cases, the employee can have the right to reject the employer’s proposals and to resign and claim constructive dismissal. Other options open to the employee are:

• to go along with the employer’s proposals
• to refuse to work under the new terms and put the onus on the employer to take appropriate action; or 
• to reject the proposals but to continue to work, under protest, under the new terms, whilst reserving all rights and perhaps bringing court or tribunal procedures in the event that a negotiated agreement cannot be reached.
  

In the recent case of Robinson v Tescom Corporation, Mr Robinson objected to Tescom’s restructuring proposals, which meant that his sales area was increased to cover the whole of the South of England. On 25 September 2006 he wrote to his employer, saying that he did not accept the new terms and was treating the change as a breach of contract but would work under the terms of the varied job description, under protest, whilst regarding himself as dismissed and retaining the right to claim damages in future if a satisfactory agreement were not reached. The wording of his letter was taken from the Advisory, Conciliation and Arbitration Service advice leaflet on variations in a contract of employment. This sets out the employee’s options in such circumstances. However, Mr Robinson failed to work to the new terms and was subsequently summarily dismissed for gross misconduct for failing to follow a reasonable management instruction. Mr Robinson brought claims for unfair dismissal and breach of contract.

The Employment Tribunal (ET) dismissed Mr Robinson’s claims. Whilst he could have resigned and claimed that he had been constructively dismissed, he did not do so and was thereby affirming the continued existence of the contract. He had agreed to work under the new contract terms but then refused to comply with Tescom’s instruction to do so. In the circumstances, this failure to cooperate was gross insubordination and his employer’s decision to dismiss him was within the band of reasonable responses.

The Employment Appeal Tribunal upheld the ET’s decision. The option Mr Robinson chose to take required that he work within the varied contract, albeit under protest. He did not keep to his side of the bargain but insisted on working to the terms of his original contract while the situation was under review and ignored the new job description to which he had agreed to work.