Does the demotion of an employee as part of a restructure amount to unfair dismissal?

In an Employment Appeals Tribunal (EAT) decision (Jackson v University Hospitals of North Midlands NHS Trust [2023] EAT 102), the EAT considered a ‘Hogg dismissal’ – being the principle that an employee is entitled to resign and cite constructive unfair dismissal if their employer unilaterally imposes new terms of employment on them which are so radically different to their current terms that it effectively amounts to a dismissal.

In this case, as part of a restructure the Respondent proposed to reduce the number of band 6 roles within the NHS Trust. The current band 6 employees were invited to apply for the reduced number of roles and following the claimant’s unsuccessful application he was moved to a new band 5 role and issued a new contract of employment. The band 5 role came with reduced management responsibilities and a reduction in salary. The claimant refused to sign the new terms and asserted that he was instead entitled to be made redundant, as there was a reduction in the requirement for band 6 roles.

The claimant subsequently resigned and brought a claim for constructive unfair dismissal. The claims initially failed in the Tribunal however the EAT upheld the claimant’s appeal and the claim has been remitted to a new tribunal for a complete rehearing. Notably, it was stated that the Tribunal had erred in its judgment when it had held that the demotion from a band 6 to band 5 role was not a breach of the claimant’s terms of employment.

Employers should tread extremely carefully when seeking to change employees’ terms of employment. Such a process will involve consultation with the relevant employees with a view to seeking agreement to such changes. We can provide assistance with proposals to change terms of employment, for example as part of a restructure, with a view to minimising risks to the employer.