Martland v Co-operative Insurance Society Ltd
Mr Martland was employed by Co-operative Insurance Society Ltd (CIS) as a financial adviser. In 2005, the terms and conditions of employment of all CIS financial advisers were changed. CIS sought to achieve the changes with the agreement of the recognised trade union. However, this failed, and CIS terminated the contracts and offered new contracts on different terms.
Martland refused the new terms and claimed that he had been unfairly dismissed because of lack of individual consultation. He also claimed that he was entitled to a contractual redundancy payment worth significantly more than the statutory minimum.
In support of this, he relied on the terms of a collective agreement providing enhanced redundancy terms, which, he argued, had been incorporated into his contract of employment.
CIS argued that the dismissal was a fair dismissal for “some other substantial reason” and that, as Martland had not been dismissed by reason of redundancy, he was not entitled to a redundancy payment (whether statutory or contractual).
The tribunal decided that the crucial question was whether the new terms and conditions of employment brought about a situation in which the claimants were being required to carry out “work of a particular kind” which was different to the work they had performed under their existing contracts. The tribunal concluded they did not. The financial advisers were carrying out the same work “of a particular kind” but simply performing it in a different way. Therefore, there was no redundancy situation.
This meant the dismissal could not be by reason of redundancy and that no redundancy payment was payable. The dismissal for “some other substantial reason” was, therefore, fair.
The tribunal did say, however, that if the dismissal had been for reason of redundancy, Martland would have been entitled to an enhanced contractual redundancy payment. It said that the provisions of the collective agreement were apt to be incorporated into Martland’s contract of employment and were so incorporated by a clause in his contract which stated that any terms agreed in the course of collective negotiations would be incorporated into the contract of employment.
The Employment Appeal Tribunal found that the original tribunal’s decision was one it was entirely entitled to reach. It, therefore, upheld the decision.
This case usefully illustrates that, in certain circumstances, employers can substantially change terms and conditions of employees, and dismiss those who do not accept them, without creating a redundancy situation and an obligation to pay a redundancy payment.
The key issue is whether the business has a reduced (or nil) need for employees to carry out “work of a particular kind”. Provided that the employer can show that the employee’s new terms and conditions involve the same kind of work the employee was doing before, then no redundancy situation will arise.
Employers should also remember that, subject to certain conditions, even where there is a dismissal by reason of redundancy, there will be no obligation to pay a redundancy payment if the employee unreasonably refuses an offer of suitable alternative employment.
Alan Chalmers, partner, DLA Piper