Principals studying the 17-page judgment against staff at Chippenham College in Wiltshire believe it strengthens the hand of employers pressing for "flexible" agreements.
In what was regarded as a test case for the sector, two lecturers who were sacked after they refused to sign new contracts committing them to longer working hours and shorter holidays lost a claim for unfair dismissal (TES, August 9).
Five colleagues, who claimed constructive dismissal alleging they agreed new terms under duress because of the threat to their livelihoods, also lost their case.
Significantly, the three-member tribunal sided unanimously with the college on every point of law.
According to Roger Ward, former chief executive of the Colleges' Employers' Forum, the lecturers' defeat paves the way for the abolition of pre-incorporation Silver Book contracts.
"It is a seminal judgment for the FE sector," he said. "It means that the 20 per cent of lecturers who have not signed a CEF contract must now face the possibility of instant dismissal."
Graham Baskerville, Chippenham's principal and interim chairman of the new Association of Colleges, is more cautious: "It was a test case. Many people were waiting for this result. It does not mean colleges can just go and change contracts and dismiss people willy-nilly, but it will give principals more confidence."
Chippenham successfully defended its actions by arguing that the dismissals were for "sound business reasons" - government policy, budgetary pressures and the need to reorganise college services.
The tribunal ruled that "although we could accept that each individual strand of the respondent's argument, taken alone, might well be insufficient to bear the whole weight of the respondent's case, nonetheless we were unanimously of the opinion that the case, taken cumulatively, became greater than the sum of its parts".
According to John Hall, of Eversheds, the law firm which advises the Colleges' Employers' Forum (now merged into the AOC), this reasoning offers some encouragement to other colleges which wish to remove Silver Book agreements.
However, he added: "Colleges need to respond carefully, and what they must not do is think it gives them carte blanche for impulsive action. It is a decision based on particular facts, which were very well handled at Chippenham."
The panel did express sympathy for the two sacked lecturers who refused to sign new contracts on a point of principle, even though they were willing to work flexibly out of hours and during the holidays.
Yet it made no criticism of Chippenham's handling of the dispute - something Mr Baskerville himself expected, given the speed of the dismissal threat.
"It was important for me to win, because if I had lost there would have been a feeling that I had taken Chippenham down this road - so there was a lot at stake," he said.
Of particular significance, according to Mr Baskerville, was the panel's finding that, in the case of the five lecturers who eventually signed new contracts, there was no dismissal in law because no precise date was ever given for the termination of their contracts.
This meant "the employer has the right to say 'I can dismiss you'. Only if he gives a date can it be construed as a real threat."
The National Association of Teachers in Further and Higher Education, which backed the Chippenham lecturers, admits the result is "very disappointing", but insists wider implications may be limited.
"I think the most significant aspect has to be the overall approach the college took in the circumstances. Therefore, we cannot generalise," said Sue Berryman, NATFHE assistant secretary. "We certainly do not regret pursuing the case. Our members deserved to have it tested at a tribunal."
NATFHE must now decide whether to appeal, particularly on the issue of technical dismissal.
Chippenham, whose costs, already in excess of Pounds 30,000, were paid by the Colleges' Employers' Forum, is likely to seek reimbursement from NATFHE.
Roger Ward is already spoiling for another fight: "NATFHE have consistently refused to accept the CEF's legal guidance on new contracts. The Chippenham industrial tribunal proves them totally in error. It is now up to the NATFHE lawyers to overturn the case. We look forward to further major and expensive litigation."