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THE Employment Appeal Tribunal (EAT) has confirmed that where an employer terminates the contracts of its employees and subsequently offers them new contracts on different terms, the dismissals are not redundancy dismissals.  (Martland and others v Co-operative Insurance Society Ltd.)

Under the Employment Rights Act 1996 (ERA), a redundancy essentially takes place where the dismissal is attributable wholly or mainly to the fact that the employer has ceased or intends to cease to carry on business for the purposes of which the employee is employed either generally or at the employee's workplace, or the requirements of the business for employees to do work of a particular kind have ceased or diminished (or are expected to do so) either generally or at the
employee's workplace. 

In this case, the tribunal concluded that new terms and conditions did not require the employees to carry out work of a different kind to the work they had performed under their existing contracts. The dismissals were not therefore redundancies.

This is a useful decision for employers.  It indicates that it may be possible to change employees' terms and conditions and dismiss those who do not accept them without creating a redundancy situation and being obliged to pay redundancy payments.  This will depend on the scope and impact of the changes.

This is a précis of an article by Louise Fernandes who is the Professional Support Lawyer in the Employment and Pensions Group at Field Fisher Waterhouse LLP.

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