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Dismissal for refusing a pay cut

18 July 2011 #Employment

In Garside and Laycock Ltd v Booth (2011) the company needed to cut the salaries of its workforce in order to avoid redundancies.  Mr Booth refused to accept the variation to his contract and was ultimately dismissed for that refusal.  He brought a claim for unfair dismissal.

To determine whether the dismissal was unfair, the EAT stressed that the tribunal needs to consider if the employer acted reasonably in treating Mr Booth`s refusal as a sufficient reason to dismiss.  This involves assessing all the circumstances, such as the size and resources of the employer`s undertaking.  It also includes considering whether the dismissal was "in accordance with equity".  In other words was the dismissal just.  In order to answer this question, the EAT stated that consideration of whether management had also been subjected to a pay cut may be relevant.

On this basis, the dismissal of an employee for refusing a pay cut may be unfair if management don`t plan to cut their own salaries or have failed to explore this as an option.

This case has been remitted back to the tribunal for a decision.
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