The unfolding of the events at the Grangemouth oil refinery has been watched with interest by many in Scotland and further afield. Ineos (the plant's operator) has come under fire for threatening employees' jobs if they do not accept a new package of terms and conditions.
As dramatic as it all sounds, it is not uncommon for employers to go down this route when all other avenues have been exhausted. An employer who needs to change employees' terms and conditions but who cannot secure the agreement of the trade union or the employees individually has little option but to terminate the employees' existing contracts of employment and to offer them re-engagement on new contracts of employment, reflecting the new package of terms and conditions. That is because, generally speaking, employers cannot lawfully impose new terms and conditions on employees.
An employee whose employment is terminated in these circumstances has, of course, been dismissed and is entitled to raise an unfair dismissal claim, whether or not he accepts the employer's offer of re-engagement on the new contract of employment. In order to successfully defend an unfair dismissal claim in these circumstances, the employer will need to overcome two hurdles.
Firstly, the employer will need to establish that it has a good, sound business reason for needing to change the employees' terms and conditions. In this case, Ineos would presumably argue that the changes are required in order to secure the future viability of the plant, in which case it would need to be able to back that assertion up with evidence. That may not be difficult if it is true that the plant is losing £10million every month, as has been reported.
Secondly, the employer needs to demonstrate that a fair procedure has been followed. Because the number of employees who are affected at the Grangemouth oil refinery is in excess of 100, Ineos faces an additional procedural burden. It must "collectively consult" with the trade union for a minimum of 45 days before it serves employees with notice.
The employer must act reasonably in all the circumstances. What is reasonable involves a balancing act, taking into account the reasonableness of the employer in dismissing the employee and the reasonableness of the employee in refusing to agree to the new terms and conditions.
It is reported that Ineos is offering employees who sign up to the new package of terms and conditions voluntarily, a one off "transitional payment" of up to £15,000 and enhanced employer pension contributions. Incentives like this are common and are usually not payable to employees who accept re-engagement on the new terms and conditions only once their employment has been terminated. The union is reportedly urging employees not to sign up to the new terms and conditions. No doubt many employees will find this a very difficult decision to make.
Listen to Lorna Gemmell on BBC Scotland talking about the employment law ramifications of the on-going Grangemouth/Ineos discussions here (skip to 1hr 35mins)
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The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
