When does restructuring become unfair dismissal?

When times are tough, you might have to consider restructuring your business. Unless there is a redundancy situation, you may need to consider changing your employees’ terms and conditions of employment. This will require their express or implied agreement. Without it, you may leave yourself open to claims of constructive dismissal.   

Perhaps more surprising is the potential for an employee to succeed in a claim for unfair dismissal without being expressly dismissed!

The Employment Appeal Tribunal in London recently considered this scenario.


The claimant was employed by the respondent NHS Trust at Band 6. As part of a restructuring exercise, the respondent required the Band 6s to compete for roles in the new structure. The claimant was unsuccessful and was demoted to the lower Band 5. This included a £5,000 salary reduction and the permanent loss of his managerial duties.

The claimant disputed the respondent’s right to unilaterally change his contract before resigning and claiming constructive unfair dismissal.

Employment Tribunal (ET)

The ET dismissed his claim, finding that the respondent had not breached his contract by unilaterally assigning him to a Band 5 role. It found that the claimant’s role no longer existed and that the Band 5 role was similar to his previous role, falling within the respondent’s definition of suitable alternative employment set out in its policy.

Employment Appeal Tribunal (EAT)

The EAT allowed the claimant’s appeal. The ET focused on whether the respondent breached the implied trust and confidence. It made an error in concluding that the claimant’s demotion to Band 5 was not a breach of any of the express terms of his contract of employment. 

The ET did not raise the question of whether the respondent had treated the claimant in a way that amounted to an actual dismissal. As the claimant was a litigant in person, the ET should have done so, even though he had not expressly brought a claim for unfair dismissal. The EAT remitted the matter for re-hearing before a fresh ET.


This case highlights the risks to employers in what can be a tricky area of employment law.

When restructuring, you should first consider whether there is a redundancy situation and, if so, follow a redundancy procedure. If not, and you need to propose changes to your employees’ terms and conditions of employment, you should be wary of unilaterally imposing changes not authorised by the employment contract itself. 

Your best option will likely be terminating the existing contract on notice and offering continued employment on new terms. You must carry out a full consultation process, which may require formal collective consultation.

For more information about this article or any other aspect of people services reimagined, download our App for Apple or Android, and contact your integrated HR, employment law and health & safety team at AfterAthena today.