Changing terms and conditions is often tricky for employers. Where employees do not agree to new terms, employers may decide to impose the changes regardless by dismissing the dissenting employees and offering to re-engage them on the new terms; of course this carries a risk of employment tribunal claims. The Employment Appeal Tribunal (EAT) has also considered whether a change to terms and conditions could be a provision, criterion or practice (PCP). Where a PCP puts employees with a protected characteristic at a particular disadvantage, this will be indirectly discriminatory unless the PCP is objectively justified.
In the case concerned, a group of employees had transferred to their employer, HCL, under TUPE. Due to their length of service these employees enjoyed a number of benefits (such as private health insurance and enhanced redundancy payments) that HCL’s other staff did not receive. They also had shorter working hours and more annual leave. HCL was making a loss and its staffing costs had reached 115% of its revenues. It required all employees to agree to new harmonised terms or be dismissed.
During negotiation employees proposed alternative measures which were rejected by HCL. Employees who did not sign the new terms were dismissed and some brought claims including indirect age discrimination. HCL argued that it had not applied a PCP, but that if it had then the PCP was objectively justified.
The EAT held that HCL’s requirement that all employees accept the new terms or be dismissed was a PCP which placed older employees aged 38-64 at a particular disadvantage. However, it was a proportionate means of achieving a legitimate aim. The new terms were necessary to reduce staff costs to ensure HCL’s future viability and to have in place market-competitive, non-discriminatory terms and conditions. No less discriminatory means of achieving the legitimate aim were available and the original Tribunal had properly balanced the impact of the changes on the employees against the reasonable needs of the employer.
Employers must consider carefully whether changes to terms may amount to a PCP. If so, the changes must be objectively justified if the PCP puts a particular protected group at a disadvantage. In this case the employer cited financial pressures as grounds for imposing new terms, but this argument is unlikely to succeed where such pressures are not severe. Even where proposed changes to terms pursue a legitimate aim, employers must consider first whether other, less discriminatory, alternatives are available.