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Employment Law Case Update: Restructuring

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The coming months are likely to bring many changes to businesses including possible redundancies or restructuring to keep roles where possible.  It is important that employers follow the right procedure when doing so making the wrong decisions or taking the wrong path could lead to tribunal.  Our Employment Law team here review the case of Argos Ltd v Ms K Kuldo which highlights the importance of following proper procedure when mapping employees into new roles.

Ms Kuldo had worked for Argos from November 2007 when, in 2017, Argos was purchased by Sainsbury’s and subsequently Ms Kuldo’s department underwent a restructuring. Ms Kuldo was informed that her job was at risk of redundancy, but that she and another employee would both be considered for the new role of Central Costs Manager.

Shortly after, Ms Kuldo was informed that her colleague had resigned and that she would therefore be mapped into the new role. Argos followed a rule that an employee could be mapped to a new role and avoid redundancy if the difference between the two roles was less than 30 per cent. It was Argos’s position that the Central Costs Manager role was sufficiently similar to Ms Kuldo’s old job that she could be transferred rather than be made redundant.

Ms Kuldo did not agree that the roles were similar. She argued the new position was of lower status, had fewer senior responsibilities, and a change of content. She submitted her objections along with some counter proposals in a grievance to the company. There was a hearing, but her grievance was rejected in early September. Ms Kuldo made it clear that she did not accept the position and asked Argos to confirm she was being made redundant. Argos instead sent her a letter confirming she would take on the role of Central Costs Manager. Ms Kuldo filed an appeal but her appeal was rejected. In early November 2017, she resigned and filed a complaint with the Employment Tribunal (ET) for constructive unfair dismissal.

The ET upheld her complaint, finding that Argos did not properly consult with Ms Kuldo regarding the change in positions. It also found that there was a general lack of understanding of the 70:30 metric and that no person at the company had actually conducted a proper assessment of the job roles. The ET agreed with Ms Kuldo that the difference between the two roles was more than 30 per cent and of lower status. The ET concluded that Argos had breached the implied term of trust and confidence and that Ms Kuldo’s resignation was in response to this breach.

Argos appealed this decision to the Employment Appeal Tribunal (EAT), arguing that the ET had committed an error in law by finding a breach of the implied term of trust and confidence. Argos also argued the ET erred in finding the dismissal to be unfair. The EAT allowed the appeal in part but found no error in law on finding a breach of the implied term of trust and confidence. It therefore upheld the ET’s finding of constructive dismissal. However, the EAT agreed with Argos that the ET seemed to determine that because the dismissal was constructive, it was therefore unfair. The ET had failed to consider the actual reason for dismissal. The EAT therefore referred the case back to the ET for additional consideration on whether or not the dismissal was in fact an unfair dismissal. The ET has yet to reconsider the case.

This case shows how employers may find themselves defending a claim in the ET for failing to follow a proper process. When deciding whether or not to map an employee into a new role, employers should take care and thoroughly assess the differences in the two roles. They should also take the time to properly consult with the affected employee and agree on a way forward, rather than try to force the employee to accept the change.

If you have any questions regarding this article, you can call our Employment team today on 023 8071 7717 or email employment@warnergoodman.co.uk.

This was previously part of our weekly Employment Law Newsletter. If you would like to subscribe, please email us at events@warnergoodman.co.uk or just fill in our subscription form.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.