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Contract variation—the junior doctors’ High Court challenge

November 2016

This recent and highly publicised saga highlights important points for employers to consider.  In particular, the potential challenges posed by contract variation and negotiating new terms where employees feel disenfranchised. More generally, the dispute also emphasises the importance of striking a balance between competing interests of employees and service users.

 

Background

In its manifesto, the Conservatives expressed its intention to propel forward with its plan for a ‘7-day NHS’.  On 25 April 2016, the Secretary of State for Health, Jeremy Hunt, made a statement to the House of Commons, reaffirming that the introduction of a new contract for junior doctors would be an integral component to implementing this plan.

Those opposing the proposed changes, namely the junior doctors themselves, voiced concerns that the new proposals would stretch resources too thinly, over an already under-resourced NHS- a political ‘hot potato’ in its own right.

Things came to a head when negotiations broke down between the representative bodies for the junior doctors and the Government earlier this year. The junior doctors staged a planned strike on 26 and 27 April 2016, withdrawing all emergency care to protest the proposed contractual changes.  This is the first time doctors have stopped providing emergency care in the history of the NHS.

Justice for Health, a company formed by five junior doctors, was set up to oppose the new contract.  This organisation received a considerable amount of crowdfunding to pursue its legal challenge of the new contract and the executive actions of Mr Hunt in the High Court.

The proposed changes

 

Under the existing contract, junior doctors earnt a basic rate for working ‘normal hours’ (between 7am and 7pm Monday to Friday). A ‘banding system’ is in place for work outside of these hours. This means that junior doctors would received increased pay for working ‘unsocial hours’:  pay rates increase between 20-100% depending upon hours worked, when worked and what share of those hours make up the doctor’s full working week.

The main proposal facing opposition, was the Government’s proposal to categorise working hours on Saturdays between 7am to 5pm as ‘normal hours’, meaning that these hours would no longer attract an additional rate of pay. Hours worked after 5pm on Saturday would then attract a higher rate of pay by a third. This increase would also apply to shifts worked between 7am and 9pm on Sundays.

Legal challenge and decision

Justice for Health (“the Claimant”) brought proceedings in the High Court for a Judicial Review of Mr Hunt’s actions in respect of the proposed contract. The Claimant sought to avoid the introduction of the new contract on three grounds:

  1. That Mr Hunt had adopted a decision that sought to impose certain new terms and conditions on all NHS employing bodies without any legal authority to do so and therefore the imposition was unlawful.  In particular, the Claimant relied on the statement made by Mr Hunt to Parliament on the 6th July 2016, that “the only realistic way to end this impasse is to proceed with the phased introduction of the exact contract that was negotiated, agreed and supported by BMA membership”, which the junior doctors interpreted as an imposition of the new terms which, they argued, Mr Hunt did not have the power to do.
  2. In any event, even if Mr Hunt did have the power to impose the new contract, the manner in which he made the decision was so unclear that it violated the public law principles of ‘good administration’ and ‘transparency’ that he was bound by in his executive capacity.
  3. That Mr Hunt’s decision was irrational, in that it was not based on adequate evidence to demonstrate that the higher weekend mortality rate could be remedied by the new contracts.

Mr Justice Green heard the challenge. He acknowledged that the proposed new contract generated “strong feelings”. He also commented that the evidence before the Court demonstrated a level of “disenfranchisement” amongst many junior doctors. However, he reserved his judgment to the three legal issues in question.

Refusing the application, the Judge applied the following reasoning:

In relation to the first ground, he concluded that the new contract had not been imposed. Rather, he considered that Mr Hunt had adopted a decision to approve the proposed contract on the 6th July 2016, which had been approved already by the British Medical Association.  The Judge considered that the decision of approval did not compel employers to introduce the contract. He also noted that the decision did, nonetheless contemplate that the contract would be introduced without the collective agreement of the employees.

With regard to the second ground, the Judge accepted that Mr Hunt’s statement from the 6th July had caused the junior doctors to reach the conclusion that the contract was being imposed, so as to extinguish any possibility of further negotiation on the terms. However, the Judge considered this statement in the context of other evidence, to reach his conclusion. In particular, he drew on subsequent statements by Mr Hunt which established that it was not his intention to impose the contract. The Judge also considered that following the 6th July, and during the course of the proceedings, Mr Hunt had provided further clarification for his decision, and so concluded that there was no breach his obligations of transparency and good administration.

With regard to the final ground, the Judge considered that Mr Hunt had a broad margin of discretion to introduce the contract. He accepted the Government’s submissions that there were numerous objectives behind the proposed changes, including the aim of lowering mortality rates at weekends.  He rejected the Claimant’s argument that the evidence in support of Mr Hunt’s decision was inadequate in that it did not conclusively establish that contractual changes were required in order to reduce mortality rates.  Instead, the Judge accepted that it was enough that the evidence presented in support of the contractual changes demonstrated that an increase in availability of doctors at the weekend would make some material contribution to achieving the aim of lowering mortality rates.

Considerations

In this case the court had to consider whether MR Hunt could impose a new model contract, when both NHS employees and junior doctors would be required to join up to every time they change job or hospital. This means that this will not cause a breach of contract. It does, however, highlight the potential difficulties faced by employers seeking to vary existing employment arrangements, even if they believe there to be compelling reasons for doing so. The new contract has not yet been agreed, and legal challenges—particularly as to the potentially discriminatory effect of the new arrangement—are likely to continue. Employers should carefully consider why the change is needed and whether this reason can ‘stack up’ in reality.

Some contracts contain clauses that authorise specific changes to certain terms or conditions, or may provide employers with a general power to vary any of its terms. However, if unreasonable, such clauses are less likely to survive a legal challenge in court.

 Usually, in the absence of any clause permitting the variation, the safer option is usually to communicate and consult with employees in relation to the proposed changes). In some circumstances, the employer will need to collectively consult in accordance with its statutory obligation.  Employers should therefore be mindful of this.  A unilateral variation of a contract is generally much riskier and more open to the risk of challenge by employees or to claims for unfair dismissal.

However, we do appreciate that employers sometimes need to implement change, particularly where the commercial viability of the business comes into question. There are ways to mitigate associated risks of contract variation, such as dismissal and re-engagement on the new terms. However, in such instances, following correct procedure is usually integral to mitigating these risks. This will often give rise to the need to collectively consult.

More generally, this dispute sheds light on the challenges that can be posed by disenfranchised employees.  Employer should seek to engage with their employees and consult on any matters that could affect them. Disenfranchisement or dissatisfaction is not uncommon to many employers in today’s climate.  Accordingly, employers need to think carefully about ways to keep their workforce motivated which in turn, helps achieve workforce flexibility and sustainability.

 

Vanessa Bell

Senior Associate

e vbell@prettys.co.uk

t 01473 298208

 

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