The EAT in Garside and Laycock Ltd v Booth held that when deciding whether a dismissal was fair for ‘some other substantial reason’ in the context of a pay cut being imposed by an employer, a tribunal had to ask the question whether the employer’s decision to impose the pay cut was reasonable.
In this case Mr Booth and other employees were asked to accept a 5% pay cut when Garside experienced trading difficulties. Garside held a number of meetings then issued voting papers to employees seeking their agreement to the change. Only two employees (including Mr Booth) opposed the change. Mr Booth’s employment was terminated and he was offered fresh employment with the reduced salary level. At first instance the tribunal accepted Mr Booth’s claim for unfair dismissal but the EAT allowed Garside’s appeal noting the tribunal had wrongly asserted that the pay cut had to be crucial to the survival of the business. Further the tribunal had wrongly focused on the reasonableness of Mr Booth’s refusal to accept the change rather than the reasonableness of the employer’s decision to impose the change.