Does an employee have to accept a demotion and hefty pay cut? Esther Smith and Matthew Whelan advise.

 

The question:

Three years ago a relation was offered the opportunity to move from a ‘hands on’ role to an office-based role. He was given a letter which stated that it should not be considered a "legal document" but which outlined his new role and promised that his job title, contract and pay would be reviewed in not more than six months.

It was at least a year before any review took place and he was given an increase of £0.50ph to the Supervisory rate  as an acknowledgement of his change in role even though they did not update his contract or confirm exactly what his role was.

The company got into difficulties, was bought out and he TUPE’ed to the new company, still with no contract for his new role.

He was promised his role and pay would be sorted out. Today a manager told him that his title would either "a" or "b" (both of which would report to job role "c") and that if it was decided that his title was "a" he would have to accept the pay rate for that role, which represents an £8000py cut because his current rate of pay is equivalent to that paid to job role "c". The alternative given is for him to return to his original hands on job which would lose only the £0.50ph pay rise. Understandably this has come as a nasty shock, he’s put three years into his new role however nebulous, he’s received nothing but positive if informal feedback (no formal appraisals) and though he was promised a pay review he’s come to accept that his current pay is all he’s going to get until he finishes qualifying, something that the company is paying for.

I believe that his company is on slippery ground but am concerned by his lack of new contract, it should have been pursued more vigorously but unfortunately the company had him over a barrel as they are paying for him to qualify for the role he’s in and there was a limit to how much he wanted to rock the boat. What can he do?
 

Legal advice:

Matthew Whelan, solicitor, Speechly Bircham

The terms of an employment contract do not have to be written in order to be relied upon, they can be orally agreed and are likely to be binding if they are put into practice. Furthermore, the variation of a contract can also be effected by verbal agreement between the parties or by conduct. So, in this case, the employee’s existing terms can probably be relied on despite his written contract not being updated.

If his employment transferred under TUPE, his new employer has a legal obligation to honour his existing terms and conditions of employment. If the new employer attempts to change his terms of employment (including role or pay, or even a promise to pay for training) then these changes will be void if the sole or principal reason is either the transfer itself, or a reason connected with the transfer unless there is what is known as an “economical technical or organisational” reason for the changes (which has specific legal meaning). It is possible that the role he undertakes in now redundant, but if this is the case a procedure, including selection if appropriate, should be followed.

In short, it may be difficult for the company to change the role and terms in this way and if your relative wants to pursue this further (bearing in mind what you say about paying for his training) then this is something upon which it may be worth him taking legal advice.

Matthew Whelan can be contacted at matthew.whelan@speechlys.com. For further information, please visit www.speechlys.com.

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Esther Smith, partner, Thomas Eggar