Unfair contracts could bring £1m bill

Liverpool City Council could have to pay up to £1m to 120 of its employees
after a tribunal ruled that it had unfairly terminated their contracts.

The employment tribunal decided Liverpool council acted unreasonably in
terminating the contracts of its employees in order to escape a pay protection

A remedies hearing at the end of February will decide the exact settlement
figure, which is likely to be at least £800,000.

Pay protection clauses to ensure employees are not financially affected by
reorganisation in the council were originally written in to the contracts of
the grounds maintenance and city engineer staff when tendering deals were under

But the council removed the clauses in July 1996 as part of a drive to cut
£41m from the budget.

It terminated and restarted the contracts of all its 25,000 employees,
ending the pay protection. Of these 150 were in receipt of pay protection and
the cut in wages meant a saving of £800,000 in one year. The final number of
tribunal claims lodged at the tribunal was 120.

A Liverpool Council spokes-man said: "We are still looking at the
implications of the decision and will be discussing with counsel the
possibility of an appeal."

The GMB union, which brought the case, sent out a warning to other employers:
"We will not tolerate erosion of our members’ terms and conditions."

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