General Vending Services Ltd (t/a GVS Assist) v Schofield

Under section 98(4) of the Employment Rights Act 1996, the question is whether the employer acted reasonably in treating the established reason as sufficient for dismissal. An Employment Tribunal must not decide instead whether the employee was reasonable to reject altered terms.

The assessment must address the employer’s decision as a whole, with equity and the substantial merits of the case. It may take account of the employees’ views and of the terms accepted by comparable employees, but must give adequate reasons showing that it has not substituted its own assessment of the contractual changes for the employer’s.

The employee had transferred to the employer under the Transfer of Undertakings (Protection of Employment) Regulations 2006. About two years later, the employer proposed a reorganisation and revised terms. The proposed changes included a reduction in basic pay, altered overtime arrangements and changes concerning holiday and sick pay.

He refused the new terms and was dismissed. The Employment Tribunal held that the dismissal was for a transfer-connected reason, that it was potentially fair, but that it was unfair under section 98(4) of the Employment Rights Act 1996. The employer appealed. The central issue was whether the Tribunal had applied the statutory test, rather than substituted its own view of the importance of particular contractual changes.

1. Appeal allowed. The Employment Tribunal had erred in its application of section 98(4) of the Employment Rights Act 1996.

2. The statutory inquiry concerns whether the employer acted reasonably or unreasonably in treating the established reason as sufficient to dismiss, having regard to equity and the substantial merits. Although the Tribunal had correctly stated that it must not substitute its view, its reasons showed that it had done so.

3. The Tribunal had treated the holiday-pay information and the proposed sick-pay entitlement as decisive because it considered them especially important to this employee. Those matters had not been identified as having that significance when the employer made the dismissal decision. The Tribunal also failed to assess the employer’s actions as a whole.

4. A proper assessment required consideration of all the proposals, the views of the employees including the claimant, and evidence of what the other employees in the cohort had accepted. The fact that an employee may reasonably reject a change does not itself resolve whether the employer reasonably dismissed for that refusal.

5. The case was remitted to a freshly constituted Employment Tribunal. It was not to rehear all factual issues. It was to accept the established reason for dismissal and determine afresh whether the employer acted reasonably under section 98(4).

• Employment Appeal Tribunal: allowed the employer’s appeal and remitted the section 98(4) issue to a freshly constituted Employment Tribunal: [2014] UKEAT 0137_13_0403 .

• Employment Tribunal, London (South): reasons sent on 11 December 2012. It found the employee unfairly dismissed and awarded compensation of £43,452.