Employers often worry about the negative publicity associated with an Employment Tribunal case – often needlessly. It is unlikely that the nation’s press will choose to highlight a failure to follow a fair disciplinary procedure, or a redundancy decision where the selection criteria are poorly defined. To really get the press going the case needs to be about something that chimes with the things they like to write about anyway.
At the moment the Zeitgeist favours anything to do with social media, sexual orientation and the idea that Christians are being persecuted. So the case of Smith v Trafford Housing Trust was always going to get some coverage.
This is the case in which a manager was demoted and had his pay cut as a result of comments he made on Facebook about gay marriage (actually about civil partnership ceremonies in church – but close enough). You can read about it all over the place and for once the story has not been exaggerated. The employer really did treat Mr Smith’s moderate expression of a commonly held religious viewpoint as gross misconduct for which he deserved to be dismissed. Merely demoting him instead was intended as an act of clemency.
What on earth was Trafford Housing Trust thinking? I hate myself for saying this, but this really is political correctness gone mad. Surely Mr Smith’s employers could not have thought that they were entitled to police his every utterance on any topic that linked in with their policies on equality and harassment? It is baffling to me that at no point in the extensive investigation and disciplinary process did anyone in Trafford Housing just step back and say ‘hang on, aren’t we getting this a bit out of proportion?’ All that was needed was a modicum of common sense. Perhaps a quiet word with Mr Smith to ask him to either delete his comments or remove the references to Trafford Housing Trust in his Facebook profile. I have absolutely no sympathy with them and would be quite happy for the full force of employment law to be visited upon them.
It seems, however, that the full force of the law in this case appears to be compensation of just under £100. That was the aspect of the case that most intrigued me. The real issue in the case is this: If your employer demotes you and cuts your pay without any just cause – what do you do?
The real issue: demotion as dismissal
The first answer that springs to mind is to say that the demotion is a breach of contract and that you can accordingly resign and claim a constructive dismissal. But constructive dismissal is a very blunt instrument. You have to be prepared to walk away from your job and gamble that you will recover your lost earnings some months later in the Employment Tribunal. That’s always a risky strategy and not many employees can afford to do it.
Another option is to protest against the demotion and cut in salary and reserve your right to seek damages. By affirming the contract in this way you lose the right to claim constructive dismissal – but you have not ‘waived the breach’ and can still take legal action.
That is what Mr Smith did. He brought his case in the county court – the Employment Tribunal has no jurisdiction to hear breach of contract cases unless the employment relationship has ended – and was it was then transferred to the High Court.
However, once the High Court had ruled that Mr Smith had not committed misconduct (a very well written analysis that is well worth reading) it went on to hold that his demotion was, in fact, a dismissal. Because it was done without notice, it was a wrongful dismissal – but compensation for breach was therefore limited to the notice period. Mr Smith’s pay cut was being phased in by the employer so that over the course of his 12 week notice period he lost less than £100.
If you are wondering how it could be held that Mr Smith was dismissed when on the face of it he quite obviously wasn’t, you need to know about the case of Hogg v Dover College (for those with law reports, that’s  ICR 39). In Hogg the EAT held that the imposition of a wholly new set of terms and conditions amounts to the termination of the old contract and the offer of a new one. In other words, unilaterally changing somebody’s job can amount to an express dismissal. This is usually of help to the employee who can claim unfair dismissal despite not resigning. However in this case it was the employer who argued (after losing the point on their right to demote him) that the demotion was in fact a dismissal meaning that there was no ongoing breach of contract.
It does seem rather cheeky of Trafford Housing to rely on Hogg. If Mr Smith had claimed unfair dismissal (it seems he missed the 3-month deadline) the employer would certainly have argued that Hogg v Dover College did not apply and that he was not dismissed. All the same, they are entitled to put forward whatever argument helps defend the case they are faced with.
I would like to see this ruling challenged however. It seems to me that Hogg v Dover College should not apply when an employer is purporting to exercise a contractual right to change an employee’s role – as they were in this case – rather than just imposing a new contract out of the Blue which is what happened in Hogg. It seems wrong that the consequence of the change being – on close examination – a breach of contract should be that the contract was therefore terminated with the result that compensation for breach is limited to the notice period. If the employer has purported to rely on the terms of the contract then doing so should be treated as a breach rather than a dismissal. Provided the employee clearly reserves his or her position then the loss of wages can be recovered as an unlawful deductions claim in the ET.
That’s the aspect of Mr Smith’s case that I find interesting. I suppose I can’t really complain that it’s not the feature that the press chose to focus on. After all, it’s not as if the title of this post is ‘Interesting Application of Hogg v Dover College’ – who would read it if it was?