The UK's Employment Appeals Tribunal has confirmed that employers may dismiss employees who refuse to accept detrimental changes to terms and conditions without that dismissal being deemed "unfair" - so long as they have acted reasonably. It went on to say that an employer doesn't necessarily have to show that the business would otherwise go under (although evidence suggesting as much would help to show fairness).

When an employer seeks to make changes to employees' terms and conditions, it is well-advised to enter into consultation with the relevant employees or their representatives as the unilateral imposition of changes to terms and conditions may well be a serious breach of contract, opening up claims of constructive dismissal. Following consultation, the employer may be able to avoid liability for unfair dismissal by showing that they acted reasonably in dismissing - the key point is that the Tribunal will assess the reasonableness of the employer in seeking to implement a pay reduction, not the reasonableness of the employee in refusing.

Factors relevant to reasonableness include the size of the employer and its resources, whether the management of the company had also been asked to accept a pay cut, the process the employer adopts and how many employees accept the changes. As referred to above, the employer won't necessarily need to show that the business will go under to demonstrate reasonableness.