This time the experts, Esther Smith and Adam Partington advise on whether an employee could take action against the employer for effectively down-grading them.

The question: Pay grade – has this employee got a case?

Last year (May 2010) we went into consultation where the role was split into two roles where the current employee was consulted with to take one of the new roles or take redundancy. The member of staff liked the people side of one of the roles and did not like the strategic part of the second role so took the people management role.

This role would report into the strategic manager when they were appointed. The people role attracted a smaller salary by £7000 but the person was not concerned about this as salary was not their priority.

The salary dropped to the new salary on the 1st June. We are now nearly in April 2011 and the strategic manager has still not been appointed and the people person is still carrying out the strategic role involved in setting and managing budgets etc. The only thing that they are not doing is sitting on the monthly senior manager meeting. The people manager still reports into the General Manager as before as the strategic manager has still not been appointed.

In essence the people manager has been down graded but not told so. Has the people manager have a case to claim back from the employer the £7,000 that would have normley been paid to them If the consultation had not taken place.

It does seem unfair that the people manager has been carrying all of their duties at a very high level as they were graded very highly by the general manager during their appraisal (scored 2, 1 being the highest, 5 being the lowest).

Does you think this employee has a case?

Legal advice:
 

Adam Partington, solicitor, Speechly Bircham

In the scenario you describe, it appears that the terms and conditions of the individual’s contract have been varied by agreement.

However, it appears that the company has not kept to its side of the bargain by requiring the individual to perform the original role despite the pay cut. The individual may therefore be able to argue that the company has breached the terms of the contract as varied, and that he or she should be compensated for their loss – i.e. the additional salary they would have received had it not been reduced. 

They could either sue for this in the County Court or bring a “Wages Act” claim in the Employment Tribunal. They could also decide not to carry out the strategic part of the role and only carry out the people management role although this may be difficult to do in practice. Another option would be to resign and claim constructive dismissal. However, there are potential problems with all of these options. 

In the first place, the individual appears to have continued to work in the new role without complaint for a long period of time.  The company will probably argue that he or she has accepted this (new) arrangement and the contract has effectively been varied again, essentially to do the old role but with the new reduced salary.

Secondly, there may well be a factual dispute over what the individual is actually doing and they may struggle to demonstrate that the role they are performing now is the same as the role they were performing before the variation. I would advise the individual to raise the issue with their manager in the first instance, point out what is happening and ask for the differential in salary to be paid. If that does not work, they should take specific legal advice before considering whether to work on under protest or take any of the steps outlined above.

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Esther Smith, partner, Thomas Eggar
 

In simple terms I think it unlikely that the employee would have a claim for the £7,000 missing salary as an unlawful deduction of wages, as the employee agreed to the reduction.  However, the employee may have an argument that the manner in which the employer has conducted the redundancy process has amounted to a fundamental breach of trust and confidence and give the employee the option of resigning and claiming constructive dismissal. However, this is a big step to take, meaning the employee leaves his job, and his source of income with no guarantee of success in his claim.

His starting point may be to submit a grievance to the employer to highlight his unhappiness with the situation, and see whether the threat of a claim and a dispute is enough to encourage the employer to acknowledge the situation and rectify the pay differential.

Esther Smith is a partner in Thomas Eggar’s Employment Law Unit. For further information, please visit Thomas Eggar.