A recent case heard in the Employment Appeal Tribunal (EAT) has held that dismissing an employee who refused to agree to a pay cut was fair.

Garside & Laycock Limited had highlighted that they required to cut costs to increase their margins, and as such, requested that each employee agree to a 5% pay cut.

Mr Booth was the only employee out of a total workforce of 77 who refused the pay cut, and as a result, he was dismissed.

Mr Booth consequently lodged a claim of unfair dismissal, which the Tribunal upheld. The employer subsequently appealed against the decision which the EAT allowed, resulting in the case being sent for a rehearing.

The fresh tribunal noted the EAT’s comments that the tribunal must consider whether the employer’s actions were reasonable, and not whether Mr Booth’s refusal to agree to take a pay cut was reasonable, and found the dismissal to be fair.

More interestingly, the EAT highlighted that the company had entered into considerable consultation with all employees, and agreed to review Mr Booth’s pay after his cut in salary in 6 months.

Options an Employer can consider to reduce costs:

1. Redundancy
2. Reduced Hours
3. Job Shares
4. Job Transfers
5. Outsourcing