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'Sign or resign' - Sainsbury's contracts row hits 13,000 employees

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Sign or resign - Sainsburys contracts row hits 13,000 employees

Supermarket giant Sainsbury’s has hit the headlines this week over its plans to overhaul the employment contracts of a number of its employees.

The supermarket has announced its plan to increase the hourly rate of 130,000 shop floor staff from £8.00 per hour to £9.20 per hour (£9.80 in London). However it intends to scrap paid breaks, reduce additional pay for Sunday hours and overtime rates on night shifts. It is alleged that the net effect of the changes will leave an estimated 13,000 employees worse off. It is understood that the changes are to be included in new employment contracts which will be issued to those affected employees. Employees have accused the supermarket of forcing them to ‘sign or resign’ – but what options do the supermarket and its employees have?

The starting point is the contract of employment that was entered into at the outset of the relationship between the employer and employee. This is a legally binding agreement and can generally only be amended with the consent of both parties to that agreement. Therefore if Sainsbury’s employees do not consent to the new terms, the contract of employment cannot be amended by mutual agreement.

A change to the contract of employment without the consent both parties is known as a unilateral variation. By its nature, a unilateral variation is a breach of the employee’s contract of employment. An employee has several options when faced with a breach of their contract. The employee can simply accept that breach, continue to work under the contract and take no further action. An employee could continue to work ‘under protest’ and bring a claim for a breach of contract in the civil courts. Alternatively if the breach of contract is a fundamental one, this may entitle the employee to resign from employment and bring a claim of constructive unfair dismissal in the employment tribunal.

When faced with employees who refuse to accept new employment terms, the employer may choose to terminate the current contract with notice, and offer a new contract of employment to the affected employees which contains the terms it wishes to impose. However, the termination of the original contract of employment is a dismissal and as such, employees who have been employed for at least two years have the right to bring a claim of unfair dismissal. Even if an employee accepts the new contract in these circumstances, they retain the right to bring a claim of unfair dismissal.

In all of these circumstances, a court or tribunal would consider the reasons for the breach of contract. If the reason is found to be a good one, for example economic requirement, the claims may fail. A court or tribunal would also consider the steps taken by an employer to gain the employees consent to the changes.

By Michelle Tilley, trainee solicitor in the employment law team