Instructions Page 3 to 7
Case study Page 8
Reading Material Page 9 to 100
Please read this entire word document before answering the case study and follow the exact instructions given in this document. You have to use I.L.A.Cformat(Issue, Law/Principle, Application or Arguments, Conclusion.)in order to answer the case study which is not mentioned in this document.
BUSINESS & EMPLOYMENT LAW
BUSINESS AND EMPLOYMENT LAW (U21764)
Week Week beginning Lecture Seminar
1 January 5th Introduction to Employment Law: Dispute Resolution and the Tribunal System Introduction to Employment Law
2 January 12th Status Employment Law: Dispute Resolution and the Tribunal System
3 January 19th The Contract of Employment Status
4 January 26th Express & Implied Terms of the Employment Contract The Contract of Employment
5 February 2nd General Principles of Anti-Discrimination Law Express & Implied Terms of the Employment Contract
6 February 9th Termination of Employment General Principles of Anti-Discrimination
7 February 16th Fair Reasons for Dismissal Termination of Employment
8 February 23rd
Grievances and Termination Procedure Fair Reasons for Dismissal
9 March 2nd Redundancy Grievance and Termination Procedure
10 March 9th Transfer of Undertakings Redundancy
11 March 16th Current Issues in Employment Law Transfer of Undertakings
12 March 23rd Work on Moodle Current Legal Issues Work on Moodle
Assessment 2 to be submitted by 25th April 2015
Recommended Reading
The Recommended Text for this unit isthe same book as you used in the first teaching block:
Jones, L Introduction to Business Law 2nd Edition OUP 2013.
Although Jones is an excellent book for the business element of the unit, it is less detailed for the second teaching block which considers employment law. Therefore in addition it is essential that you borrow from the library one of any of the following:-
Smith, I & Baker, A (2013) Employment Law, 11th ed. OUP
Hepple,B (2014). Equality, The Legal Framework. 2nd Edition Hart Publishing
Kidner, Blackstone’s Employment Law Statutes 2013–2014 OUP (or regular and keen use of Westlaw).
Cabrelli. D Employment Law in Context – Texts and Materials 2014 OUP
Or any up to date Employment Law book. There is a very large number to choose from at the Library. DO NOT rely on Jones
NB. You will be expected to consult and read primary sources, journals and digests. The two main series of law reports are the Industrial Case Reports (ICR) and the Industrial Relations Law Reports (IRLR). The leading academic journal is the Industrial Law Journal (ILJ). You will probably access these through online databases such as Westlaw and LexisNexis which also provide digests of cases.
Whatever you decide to look at please ensure you note the dates of books – only use post 2010 editions
Business and Employment Law
U21764
Assessment Two Case Study 2014 – 2015
Tasks:This second piece of coursework consists of questions based on a case study and requires you to:-
• Recognise, understand and apply appropriate case law and legislation to realistic business problem scenarios
• Critically evaluate the law relating to employment law
• Understand principles of law governing employment relationships
• Analyse complex factual situations and identify and apply relevant legal concepts in order to reach balanced conclusions and provide advice and recommendations.
Due Date: The coursework must be submitted to the Undergraduate Centre by or on25th April 2015(the windows of the Undergraduate Centre are usually open between the hours of 0830 and 1600 daily but do check for any notices to the contrary). Remember to attach the appropriate cover sheet.
Word Limit: 2000 words excluding footnotes and bibliography. The word count should be stated on the university front sheet. Failure to state a word count will result in a 5% penalty. A falsely stated word-count may result in a mark of 0%. Note that footnotes, if used, should be used to reference sources only. Examiners are free to disregard footnotes that contain inappropriate information or information that should belong in the main text. Coursework that is more than 10% over the word limit will result in a 10% penalty (as, inter alia, concision is an important skill).
Referencing:Students must reference sources using the Oxford Standard for the Citation of Legal Authorities (OSCOLA). This can be found at http://www.competition-aw.ox.ac.uk/published/oscola_2006.pdf. Reference should be made to the primary source, except when the primary source can no longer be obtained. Poor citation of sources will result in a loss of marks. Students who are having difficulty citing sources should visit http://referencing.port.ac.uk
Plagiarism: Students are reminded of the need to avoid plagiarism. The University Regulations describe plagiarism as:
‘the incorporation by a student in work for assessment of material which is not their own, in the sense that all or a substantial part of the work has been copied without any adequate attempt at attribution, or has been incorporated as if it were the student’s own when in fact it is wholly or substantially the work of another person or persons’.
Any student suspected of plagiarising will be referred to the Head of Department and an Academic Misconduct Hearing will be arranged. Students should ensure that all sources are fully cited and that indentation or quotation marks (as appropriate) are used when quoting. Failure to include a bibliography will result in a 5% penalty, unless the lecturer/tutor has advised you that a bibliography is not required.
Electronic Copy of Work: Students should retain an electronic copy of their coursework, so that it may be checked by a member of staff should a member of staff feel the need to do so. Failure to send an electronic copy of the coursework to a member of staff who has asked for a copy may result in a penalty.
If any student has a query about any of the above matters and wishes to obtain clarification or further information please contact your seminar tutor.
Some Further Guidance:
Research: Whilst lecture notes and textbooks are of assistance, you should also read
and apply appropriate primary source materials or case notes / head notes (e.g. you are
not expected to read through numerous 40+ page case reports). Citation of textbooks in lieu of primary sources is not good form but secondary sources may contain useful analysis. In your answer, relevant legal authorities, i.e. relevant decided cases and statutory provisions, should be cited in support of your arguments. When using textbooks, ensure that you use up-to-date books and be careful as to the currency of primary materials. Any secondary sources you consult and/or quote from should be suitably identified in the bibliography. You do not need to – and should not – reference lecture notes.
Presentation: Your answer should be word-processed and properly structured. You will see below (and on the Moodle site) that the assessment criteria refers to among things accuracy, research and presentation. Please note that as this is coursework, there is less leniency with regard to these as you are not writing under exam conditions. So, please check that your sources are suitably cited, undertake and demonstrate your research and further reading, try to structure your answer so that it reads well, and do read over your answer to help ensure that use and flow of language, grammar and spelling are more than satisfactory.
Style: Be objective and analytical. Phrases such as ‘I believe’ or ‘I feel’ should be
avoided as they suggest a lack of objectivity and critical approach. You are expected
to consider all aspects of each problem; use of the word ‘assuming’ may indicate that
you are not doing this (unless you then go on to present alternative assumptions which may show fuller analysis). In the blue Handbook you were given in September there is plenty of information on how to tackle this assignment including how to structure an answer using the ILAC formula, referencing and what your bibliography should look like.
Assistance:If you have queries regarding the case study or general revision, these should be posted on the Moodle discussion forum for this unit so that everyone can benefit from them. As with some previous law units, assessment-related questions will only be answered through this means (i.e. not by email or one-to-one conversation). We shall not directly answer questions which are based on the scenario, but should welcome questions regarding clarification of legal principle or, indeed, other topics related to the Unit. Please remember that this is an individual assessment and note the definition of plagiarism above.
Some guidance on Assessment Criteria
To achieve a pass on each of the questions there must be some evident knowledge and understanding of the relevant law and, as they are problem questions, some attempt to apply it. The better the explanation of the law and the better the ability to apply and discuss it (including the citation of relevant primary sources), the higher the mark to be awarded. Detailed facts of cases are not expected unless this is inherently required by the question, because of its similarity to/distinguishability from a previously decided case, or doing so assists the explanation of the law.
For an answer to be awarded a mark in the upper second/first class range it must, among other criteria, explain and apply/evaluate the law correctly and coherently and generally cite relevant legal sources and authorities (some deduction should be made for inappropriate use of old Acts/Regs but an otherwise good answer could still get a reasonably good mark). Conclusions, which are consistent with the discussion, should be provided along with an explanation of any remedies that may be awarded (if applicable). Evidence of wider research, a fuller understanding and a strong analytical ability should be evident for a first class mark.
Assessment Criteria
<39%
Answers in this range are substantially incomplete and deficient. Serious problems with the language use are often found in work in this range and the work may be severely under/over length and/or fails to grasp the nature of the subject matter. Content, analysis, expression and structure will be
very weak or missing.
40-49%
An adequate answer which attempts to address the task and demonstrates some understanding of the basic aspects of the subject matter. The work may include some but not all of the essential elements of a problem solution. There will be limited attempt at dealing with all the issues. There may be significant omissions or errors. A satisfactory use and flow of language, grammar, spelling and format has been made.
50- 59%
The answer will include most if not all of the essential elements of a good problem solution. Some attempt at sound legal analysis will have been made. The presentation of the work will be satisfactory in respect to structure, use and flow of language, grammar, spelling and format. There may be some limited misunderstanding or misstatement of the law.
60- 69%
A well-presented answer covering all of the essential elements of a problem solution, which is clearly and lucidly written.A good attempt to consider and evaluate the different elements, with a good attempt to include practical advice and evaluate likely success or failure of the parties’ cases. The work is well organised and well-structured and demonstrates a good understanding of case law technique and analytical reasoning. It is succinctly and cogently presented, displaying evidence of analytical ability and is reasonably comprehensive of the relevant legal issues.
70+%
The essay contains a comprehensive, accurate, concise and precisely written problem solution which is cogently reasoned and well-articulated. There should be a high level of accurate legal analysis showing a sound knowledge of all of the legal principles and accurate practical assessment of the parties’ respective cases. The answer should be comprehensive and accurate in its treatment of the relevant issues.
Case Study – Problems at Softy Furnishings Ltd
Softy Furnishing Ltd (SF) is a small local firm which produces a number of decorative items for the home including cushions, curtains and bed linen. Hoping to bring its brand image up to date, the firm has just employed Roz who, straight from University, has some great ideas about how the firm’s products can be recreated to bring a modern feel to the home and how working practices can be brought up to date. Abbie has been a machinist at the firm for three years and has always enjoyed being allowed to plod along with her work, machining seams on cushions. Roz has brought in some new (very fast equipment) to speed up production but Abbie is refusing to use the machines as she says that as she was trained on more manual machines she should be allowed to continue to use them. Roz has promised training but Abbie says that she is happy to continue with what she is doing. Roz also wants to make changes in the warehouse however she often feels intimidated by the lads working in there. Dennis, Roz’s line manager has now told her that any changes she wants to make in the warehouse must go through him and that he will deal with the men in that part of the firm. Roz is not happy with this and tells him so but Dennis says that his decision is final and for her own good.
Roz is also having problems with Shabana who, in Roz’s eyes is lazy. Shabana has been employed with the firm since September 2013. Dennis has agreed with Roz that they cannot afford to keep people on if they are not pulling their weight and therefore tells Roz that she can dismiss Shabana but to make sure she gets her full notice entitlement.
Two Questions – note each question is equally weighted.
Question 1 Advise Abbie as to whether she is obliged to use the new equipment.
50 marks
Question 2 Advise Roz as to any action she can take in relation to the comments made by Dennis
50 marks
For this assessment please ignore any reference to Shabana.
Lecture 1: Week Beginning 5th January 2015
Introduction: Dispute Resolution and Employment Tribunals
Read Chapter 2 – The English Legal system – with a particular focus on The Court System and Alternative Dispute Resolution.
Pages 2- 42
Employment law in Britain is governed now by a combination of common law of contract and considerable bulk of statute law largely designed to protect the employee.
Traditionally trade unions had a large role in the negotiation of contracts in workplaces, but this has declined with the proportion of manufacturing and the reduction in heavy industries such as shipbuilding and mining. Unions are still a big factor in contract negotiation within some parts of the state system, such as in the police and some parts of education.
Since the Coalition government took office in 2010 there have been many recent changes to the Tribunal system, some of which are just coming into effect. The strategy is to cut employment costs such as those related to claims brought by workers or former workers. Although for example, only 8% of unfair dismissal cases brought against employers succeed, the Government’s view is that this is irrelevant because the cost increases once the claim commences. The reforms are designed to streamline the claims process so that the overall number of claims are reduced thereby presenting a cost saving on employment regulation. The Government’s belief is that employers will be more willing to take on new workers if there is less cost-risk.
EU law has considerable input in UK employment law, in particular in areas such as working time and in the transfer of a business. There is also an impact from the European Convention on Human Rights, particularly in the area of discrimination.
The Dispute Resolution System
The Reforms highlighted above mark a policy shift away from dispute resolution to conflict management balanced in favour of employers to promote a flexible labour market. (Employer can hire knowing they can fire without fear of costly repercussions)
ACAS and pre-claim conciliation:
ACAS offers an independent and trusted service for dealing with disputes (collective conciliation) between groups of workers and their employers (collective disputes). ACAS has a legal duty to offer free conciliation where a complaint about employment rights has been made to an employment tribunal.
Mandatory Conciliation
Government policy has been to reduce the number of cases going to Tribunal, not only to save employers from the cost of defending claims but also to relieve a burden on the taxpayer. The recession forced many employers to end or amend employment relationships, which caused a rapid increase in the number of disputes reaching the ETs. Unlike other civil litigation, where parties contribute to the costs of their case, all costs in employment cases have hitherto been born by the taxpayer. This is regarded as unsustainable when the Ministry of Justice budget has been cut by 23%.
Under s.18A of the Employment Tribunals Act 1996 the normal requirement will be that a claimant must send certain prescribed information about their claim to ACAS before presenting a claim to an ET. An ACAS Conciliation Officer is then appointed who will, during the “prescribed period”, (likely to be one month) endeavour to promote a settlement in the case. Time limits for presenting claims to ETs will be modified to accommodate the time spent in pursuing possible conciliation. In other words, time spent complying with the pre-claim conciliation obligations will be disregarded when calculating the time periods for bringing a claim.
If settlement is not possible either because the parties cannot agree or because the prescribed period has expired the Conciliation Officer will issue the parties with a certificate. The Claimant cannot present a claim to an ET without the Certificate.In trials this model of ADR reduced the number of claims that went to the ET by around 80%. The scheme is likely to place further burden on an already overstretched ACAS. Some commentators also question whether it will be effective in increasing the claims being settled. Parties may be unwilling to settle until they have seen the strength of the claim and defence (which will only be disclosed after the proposed conciliation period).
The Scheme covers:
• unfair dismissal
• all forms of workplace discrimination
• redundancy payments or selection procedures
• deductions from wages or unpaid notice/holiday pay
• rights to time off or flexible working
• equal pay.
If both parties agreed to settle and enter a compromise agreement, to be called a settlement agreement, [which requires the employee to be independently legally advised] the applicant is subsequently barred from going to an ET (Employment Tribunal).
Employment Tribunals (formerly Industrial Tribunals)
Introduction
Susan Corby and Paul L. Latreille in ‘Employment tribunals and the civil courts: isomorphism exemplified’ (2012) 41 ILJ 387 state as follows:
“This article …argues that when Industrial Tribunals (as ETs were originally called) were first created, they had characteristics distinguishing them from ‘ordinary’ civil courts, for instance in respect of their composition, accessibility, speed and the informality of their procedures. Over time many of these distinctive characteristics have been eroded. Step by step, ETs have become more and more court-like, on account of the growth of both legislation and case law, increases in procedural formality, barriers to accessibility andsuccessive limitations on tripartite adjudication (two lay members and a judge), with adjudication instead by a judge alone as in the County Court/Sheriff Court.”
Jurisdiction, composition, procedure
Jurisdiction, composition, procedure etc. are regulated by the Employment Tribunals Act 1996 and The Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013.
Lay members sit with a qualified lawyer to hear cases, BUT the legally qualified person will normally sit alone in a wide range of specified categories of cases, or in any case where the parties so agree. These include claims for breach of contract, unauthorised deductions from wages, redundancy payments, interim relief applications, written statements of employment particulars, itemised pay statements, certain complaints under the National Minimum Wage Act, stage 1 hearings under the equal value provisions and holiday pay and unfair dismissal cases. Thus there has been a significant drop in the number of cases in which lay members are involved. In February 2014 the senior president of tribunals, David Latham, suggested that there should now be a review of the role of lay members.
The jurisdiction was only to hear statutory claims (such as unfair dismissal, sex discrimination, redundancy etc.) but tribunals now have a jurisdiction over certain claims in contract which arise from the termination of the employee’s contract of employment. Matters outside the 1994 Order (see below) must still be resolved in the ordinary courts BUT the Secretary of State has a power to extend the jurisdiction of the ETs to cover even these matters under s.3 of the 1996 Act.Article 3 of the Industrial Tribunals (Extension of Jurisdiction (England & Wales) Order 1994 SI 1994/1623: Subject to certain financial limit proceedings may be brought before an employment tribunal in respect of a claim of an employee for the recovery of damages (but not for personal injuries) if the claim arises or is outstanding on the termination of the employees employment.
Exceptions
Art 5 claims for breach of certain contractual terms are excluded-(of which the most important are)
(i) a term relating to intellectual property
(ii) a term imposing an obligation of confidence
(iii) covenants in restraint of trade.
NB injunction proceedings must still be brought before County Court. Claims for non-payment of wages may also be resolved before an Employment Tribunal under Part II of the Employment Rights Act 1996 (see below).
Where parties settle an unfair dismissal claim by reaching a compromise agreement which the employer fails to honour it cannot be enforced via the ET system, for the latter has no jurisdiction under the 1994 Order to hear the claim. Only claims outstanding at the date of termination are within the ET jurisdiction.
Procedural rules have been introduced to prevent the bringing of weak cases before employment tribunals by employees:
(i) s13 of the Employment Tribunals Act 1996 is amended to allow an ET to make an award of costs against either a litigant or their representative where time is wasted because of the way they conduct their case.
(ii)s13 is amended to allow an award of costs, where the losing side had behaved unreasonably, to reflect the time spent by the winning side in preparing their case. This may reduce the number of so called “nuisance value” settlements.
As we shall see below there have been concerns about a lack of consistency in ET decisions across the country. A partial solution to this is enacted in the Employment Act 2002, s.27 which will give Tribunal Presidents the power to issue practice directions so as to ensure a consistent approach to procedural issues and to the interpretation of their powers under the Employment Tribunal Rules of Procedure. It is believed that such consistency will lead to an increase in confidence among users of the tribunal system that cases are being dealt with in a uniform way regardless of where they are heard.
Preliminary hearings- all case management decisions are made here.
Deposit Orders: if any element of a claim or the entire claim has ‘little reasonable prospect of success’ a deposit order of up to £1000 may be required from either claimant or respondent. The purpose is to deter fruitless claims or arguments or parts of claims.
Costs: Since 6th April 2012 costs of up to £20,000 may be awarded against a party who has behaved unreasonably in pursuing their claim. Again the purpose is to weed out weaker claims and vexatious litigants.
Witness expenses: Since 6th April 2012, unless the evidence is medical and the evidence is given by a professional, the cost of witnesses is born by the parties not by the State except where the ET makes an order relating to witness costs.
Decisions by Legal Officers
s. 10 Enterprise and Regulatory Reform Act 2013 introduces a ‘rapid resolution’ scheme to deal with some simple or low value tribunal claims determined by a ‘legal officer’ without the need for a hearing. The parties will need to consent to this scheme before it applies.
The purpose is to reduce cost and expedite a resolution to the dispute. From the employee’s point of view it avoids the need to provide advocacy, or pay for professional legal representation. Regulations are awaited but Regulations made under the Growth and Enterprise Act 2013 are likely to include notice disputes, redundancy and holiday pay.
Fees
In July 2013 a fee regime was introduced comprising a fee to commence a claim and a further fee, the hearing fee, likely to be payable four weeks prior to the hearing. For those on law incomes the fees will be remitted or subsidised. The fee will depend on the complexity of the case; each case will be assigned toa “level”. See: Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013 (SI 2013/1893)
• level one includes more ‘straightforward’ claims such as breach of contract, unauthorised deductions, claims for holiday pay, claims for a redundancy payment, guarantee payments, time off for trade union duties and ante-natal care;
• level two includes claims such as unfair dismissal, discrimination, suffering a detriment, equal pay, claims for rest breaks or working time, less favourable treatment for fixed-term or part-time status, and failure to consult under TUPE 2006.
For these levels, currently the final fee figures will be:
single claims
• Level one – issue fee £160, hearing fee £230
• Level two – issue fee £250; hearing fee £950.
Multiple Claims
Higher fees are payable for multiple claims, including equal pay claims. Issue fees of £1,500 and hearing fees of £5,700 are payable for the most complex claims involving over 200 Claimants.
An ET will have the discretion to order the losing party to reimburse the relevant fee. There will be a fee of £60 for the claim to be dismissed following a settlement.
In the EAT, explained below, fees will be £400 for the issue fee and £1,200 for the hearing fee.
Rationale of fees
The government aims to recoup 33% of the cost to taxpayers of employment tribunal proceedings by fees in the belief that those who use government services should pay for them.
Impact of fees
There has been a significant reduction in applications to an ET. This rapid decline is probably attributable to the introduction of fees.
Ministry of Justice of employment tribunal statistics for the period October to December 2013 compared with the same period in 2012 demonstrate that overall there has been a 79% reduction in cases. Unfair dismissal claims are down by 65% and sex discrimination claims down by 77%.
The enhanced powers to sift out weak claims have been exercised by the Employment Tribunal in fewer than 1% of cases over the period, which suggests that the reduction on tribunal cases is not due to this mechanism.
Judicial Review Challenge to Fees
In 2013 there was an unsuccessful judicial review brought by UNISON (R. (on the application of Unison) v Lord Chancellor[2013] EWHC 2858 (Admin) hearing date 29 July 2013). UNISON challenged the legality of the fees regimeon the grounds that it breaches the European Unionprinciple ofeffectiveness as it would make it virtually impossible or excessively difficult toexercise rightsconferred by Community law, it would breach the principle that EU rights should not be subject to less favourable procedural rules than comparable domestic actions, the equality impact assessment carried out did not fully assess the potential impact of the fees and the introduction of fees put certain groups at a disadvantage. UNISON’s High Court challenge failed largely because the Court considered it premature. The prospects for the planned appeal may be bolstered by these statistics.
Some Statistics on ETs
According to research for the Department of Business Innovation and Skills released in December 2013 (IFF Research, Payment of Tribunal Awards (London: BIS, 2013) the median financial award was only £2900.
Most claimants earned less than £40,000 per annum; only 5% of claimants earned over this amount.
Almost a third of employers refused to pay when tribunals made awards. Businesses were more likely to refuse to pay awards below £5,000 than above.
59% of employers in the private sector are small to medium-sized businesses, BUT 68% of claims were made against this SME’s.
33% of claimants made claims against employers with 1-9 employees;
35% against employers employing between 10 and 49 workers;
11% against undertakings with 50–249 workers.
This suggests that compliance with Employment law by smaller employers is problematic.
Employment tribunals are bound by decisions of the Employment Appeal Tribunal, the Court of Appeal and the Supreme Court.
Employment Appeal Tribunal
This is the tribunal to which either applicant or respondent may appeal as of right. The tribunal will only interfere with the decision of the tribunal if it considers it is perverse ie no reasonable tribunal could have come to that decision, or if the Employment Tribunal has made a mistake in its interpretation or application of the law.
Composition
The Enterprise and Regulatory Reform Act 2013 provides that almost all appeals to be heard before a judge sitting alone (i.e. without lay members) unless the judge directs otherwise.
Jurisdiction -s.21 Employment Tribunals Act 1996 (NB s.291 TULR (Consolidation) Act 1992
Appeals to Court of Appeal: -s37 Employment Rights Act 1996 permits appeal with leave of the EAT or CA.
Function of EAT
Please read the cases of:-
British Telecommunications v. Sheridan [1990] IRLR 27, 30 and Piggott Bros v. Jackson [1991] IRLR 309
Other Institutions (in outline)
Central Arbitration Committee – its role is to promote fair and efficient arrangements in the workplace, by resolving collective disputes (in England, Scotland and Wales) either by voluntary agreement or, if necessary, through adjudication. The areas of dispute with which the CAC currently deals are:
i. applications for the statutory recognition and de-recognition of trade unions;
ii. applications for the disclosure of information for collective bargaining;
iii. applications and complaints under the Information and Consultation Regulations;
iv. disputes over the establishment and operation of European Works Councils;
v. complaints under the employee involvement provisions of Regulations enacting legislation relating to European companies, cooperative societies and cross-border mergers
Note the functions of Parliament; Ministers; the European Union; International Labour Organisation (ILO) and the European Court of Human Rights in Strasbourg; Equality and Human Rights Commission.
Seminar 1: Week Beginning 5th January 2015
Introduction to Employment Law
1 You have studied the law relating to contract generally. What key features of employment contracts do you think make them different from a standard commercial agreement to eg buy and ship 100 tonnes of steel?
2 Why is employment law important?
3 If an employee feels threatened at work, what do you think he should do?
4 What is globalisation and what influence, if any, has it had on government policy shaping employment rights?
5 Does globalisation involve a trade-off between jobs and terms and conditions?
6 As jobs become more flexible are they also less secure?
Lecture 2: 12th Week Beginning January 2015
Status
Read Chapter 13
Pages 428 – 435
A number of things depend upon employment status, most importantly:
What minimum statutory rights are available?
What implied obligations apply to the contract?
How tax is deducted?
The liability of the employer to pay for wrongs committed in the course of employment.
Identifying the status of workers
There are four categories of legal arrangement under which persons supply their labour to the market.
(i) Employee; (ii) statutory worker; (iii) employee shareholder; (iv) self-employed
Because the majority of statutory rights are given only to employees, personnel strategies often try to limit “employed” status to “core” workers. (The structuring of the workforce between full-time and part-time and atypical workers is sometimes referred to as the “flexible firm”). The question here is: who is an employee as opposed to (say) an independent contractor or a casual worker.
Accordingly, there has been a growth in non-core workers such as part-timers, casual workers, outworkers, temporary workers and also such mechanisms as “zero hours contracts”.
It is worth noting that women seem to have been more willing than men to take on these insecure non-core contracts, which appears to be causing a higher level of unemployment amongst traditional male “head of household”. The extent to which these flexible have achieved their aims in micro economic terms is one important matter. Politically, (because of mixed macro-economic consequences), these forms of working have proved to be controversial.
Categories of Employment
Employee –
A typical statutory definition for the purposes of unfair dismissal is s.230 Employment Rights Act 1996 as follows:
(1) In this Act “employee” means an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment.
(2)In this Act “contract of employment” means a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing.
(3) In this Act “worker” ….means an individual who has entered into or works under (or, where the employment has ceased, worked under)—
(a) a contract of employment, or
(b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.
Employees as defined in the Employment Rights Act 1996 are entitled to, amongst other rights, the right not to be unfairly dismissed, the right to receive written particulars of employment, the right to receive a statutory redundancy payment, the right to receive minimum periods of notice, the right to maternity and parental leave and time off for dependents, the right to protection of wages in the event of an employer’s insolvency and the right to request to work flexibly.
The employee:
Does work personally, has mutuality of obligations, is ‘at employer’s disposal’
Often enjoys significant ‘perks’ over and above minimum rights
Enjoys all available statutory rights subject to length of service, in particular
all family friendly rights; unfair dismissal protection; redundancy payment.
Tax is paid at source
Employer is vicariously liable for all wrongs.
Statutory Workers
‘statutory workers’ who are often employed on a casual basis, qualify for a slightly wider group of rights than the self-employed. These include working time rights, paid annual leave, the national minimum wage and statutory recognition rights.
Worker –
Does work personally, has no job security
Typically casual/temporary/seasonal staff
Tax is paid at source
Employer is vicariously liable for all wrongs.
Employees and workers have the following rights:
• Equal pay for equal work
• Non discrimination
• Right not to have unauthorised deductions from pay
• statutory health and safety rights
• Minimum wage
• Working time regulations
• Data protection rights
• Time off to care for dependants
• Part-time workers are protected
Self Employed
The self-employed qualify for protection under discrimination law and health and safety regulations.
Self Employed –
‘In business on their own account’
Client or employer?
Levels of control?
Mutuality?
More than one client?
Intermittent work rather than continuous?
Provision of tools and equipment?
Possibility of substitution?
Who provides training?
Does person get paid even if there is no work to do?
Does the person negotiate for his or her fee?
Employee Shareholders
Employers have long provided share-ownership schemes for employees. This scheme is different because it allows employees to “sell” their employment rights in exchange for shares.
See generally Jeremias Prassl, ‘Employee shareholder “status”: dismantling the contract of employment’ (2013) 42 ILJ 307
According to Prassl: most employment rights were first conceived as non-derogable- and the worker acquired these rights by having employee status under contract of employment. The contract was thus a vehicle for regulation. Now the “the contract of employment loses its key public-regulatory function, as it is no longer able to redistribute risk, and employees’ rights acquire a price tag once they become subject to market forces.”(at 308)
s. 31 of the Growth and Enterprise Act 2013 (in force April 2013) which inserts a new section 205A into the Employment Rights Act 1996. This allows employees, in return for shares to contract out of unfair dismissal and redundancy provided the employer allots them shares valued at not less than £2000 on the day of issue (and no more than £50,000). Gain in value free from CGT.
In exchange for the shares the employee shareholder will give up the right to
• request to undertake study or training;
• request flexible working;
• not be unfairly dismissed*; and
• a redundancy payment.
• 16weeks’ notice of intention to return from adoption or maternity leave rather than the
present 8 weeks.
The agreement is not valid unless the employee has received prior independent legal advice.
The scheme represents the commodification of employment rights because the latter are no longer an automatic consequence of the contractual relationship of employer/employee; right are tradable-as Prasslargues . Their price will depend on negotiations in which one party will generally have the dominant hand.
*NB The right not to be automatically unfairly dismissed however remains.
Seminar 2: 12th January 2015
Employment Law: Dispute Resolution and the Tribunal System
1. What does ACAS stand for? What is their role in relation to the tribunal system?
2. Why did the collation government decide that the tribunal system was in need of reform?
3. In relation to Employment Tribunals, what are ‘time limits’ and how do they relate to bringing a claim for unfair dismissal?
4. Read the case of Palmer v Southend-on-Sea Borough Council [1984]. Why was Mr Palmer not reinstated by his employer despite being found innocent of the crime?
5. In order to take a claim to an Employment Tribunal, which documents need to be completed by the applicant and the respondent?
6. What is a pre hearing review?
7. On what basis can a case by heard by the EAT?
Lecture 3: The Contract of Employment
Week Beginning 19th January 2015
Read Chapter 13.
As this chapter does not go into a great deal of detail, look at other resources for this lecture and seminar.
Although it is not necessary for there to be a written ‘contract’, all employees are entitled to a statement of particulars (s1 ERA 1996). This provides the employee with a written statement of the main terms of the employment and must be given within two calendar months of starting work. The mandatory terms that must be covered in this statement are:
• The names of the parties
• The date that employment started
• If the employee is already employed, and the contract relates to a new position, on what date continuous employment with the employer started
• A job title, and/or brief description of the role
• Hours of work
• Scale or rate of remuneration
• Intervals of payment
• Hours
• Overtime
• Holidays
• Sick pay
• Grievance procedure*
• Disciplinary procedure*
• Pension*
• Place of work
• Notice period
*these need not be laid out in full in the statement, but can be in a separate document to which the statement refers
Where the employer gives or has given the employee a contract of employment covering all these matters, it does not also have to provide a statement. There is no need to provide such a statement for an employee who works for less than one month.
What happens if the employer does not provide a statement or a contract?
There is no freestanding right for an employee to obtain damages if the employer fails to provide either a compliant contract or statement, but if the employee takes an employment tribunal case against his employer relating to another aspect of employment and is successful, and a statement has not been provided, an additional award of two to four weeks pay may be made against the employer.
What is the difference between a contract and a statement?
There is a legal difference between a contract and a statement. Where an employee signs an employment contract to say that s/he agrees with the terms, it is binding on both parties from the date of the contract and it does not matter in practice whether the employee has read or understood the terms or not. A standard statement is given to the employee as the employer’s version of the terms and the employee does not agree to it formally, although sometimes s/he will sign it to signify that they have received it or read it. Acceptance of the terms will be implied by the fact that the employee has acted in accordance with the terms of the statement. It is therefore of evidential value, but not conclusive as to the content of the contract.
Many employers who have jobs for low status and low paid staff will try to avoid their obligations to the worker by ‘dressing up’ their contract as self-employment.
The key obligations they are seeking to avoid are minimum wage and the right to paid holiday, as well as family friendly rights such as maternity pay and leave. They also wish to ensure that the workers do not have any security of employment, and in particular any right to unfair dismissal or redundancy.
Sham Contracts
A ‘Sham’ Contract is where the ‘employer’ purposely sets out to deceive the ‘employee’. In this case, the court will intervene to decide whether the relationship is one of self-employed or whether the individual(s) concerned are actually employees, despite written evidence to the contrary,
Autoclenz v Belcher [2011] UKSC 41
B and 19 others were engaged as valets by A ltd, which had a contract with British Car Auctions to clean vehicles at various sites. They were recruited through advertisements asking for self-employed people and were required to sign a contract that described them as ‘subcontractors’. An amended agreement, signed in 2007, provided that a valet could supply a suitably qualified substitute to carry out valeting on his or her behalf and stressed that no valet was under any obligation to provide his or her services on any particular occasion. No such express clause had existed in the original agreement, but A took the view that the right of substitution always existed, indeed they said it was implicit in the valet’s subcontractor status. The 2007 agreement also expressly stated that A Ltd offered no guarantee that it would engage any valet’s services at any time.
A Ltd supplied all cleaning equipment and materials, for which, since 2007 it charged each valet at 5% of his or her weekly pay. Payment was on a piecework basis for each car cleaned and valets were required to have public liability insurance. A Ltd had a group policy in place for which it deducted £9 pw from the valet’s pay packet. The valets paid NI and tax on a self-employed basis and following a review in 2004, the Inland Revenue stated that it was satisfied it was properly regarded as a self-employment situation. Nevertheless the valets launched a claim seeking a declaration that they were either employees or workers and claiming holiday pay and unpaid wages.
The tribunal found as a fact that no-one seriously expected the valets to decline the work offered, or to provide a substitute. The claimants were fully integrated into the company’s business, were expected to turn up and do the work offered and were subject to considerable degree of control. They were therefore employees. The EAT overturned the ruling and the claimants appealed.
The Court of Appeal held that the proper test for tribunals is to examine all the relevant evidence to decide how the parties conducted themselves and what their expectations of each other were. It was clear here that the substitution clause was never seriously expected to be invoked, and that the valets were expected to turn up every day and do the work provided. The tribunal had been entitled to conclude that the claimants were subject to the necessary mutuality and degree of control and were employees, and their finding was restored. The employers appealed.
Held
The Supreme Court has upheld this finding, reiterating that it is the working practices that matter just as much as the terms of the contract. The decision emphasises that if the written terms do not represent the true intentions and expectations of the parties, then they will be disregarded. What is important is the practical reality of the relationship. The court said that there was no actual expectation of substitution, despite the clause that said that his was acceptable. The valets were closely supervised by line management. In addition the requirement for staff to warn the company when they could not attend work and to attend work every day was inconsistent with the contract terms which imposed no obligation on them to turn up.
This case emphasises the importance of the evidence about what actually happens, rather than the carefully worded contract!‘Intention of the Parties’.
Self-Employment and IR35
The tax authorities have long been suspicious of the ‘self-employed contractor’ who sets up a limited company (usually known as a ‘service company’) which consists of one director and one employee iehim/herself, and who then provides his services to a single client exclusively. This device has often been used by both employer and employee to avoid the higher taxes payable in respect of employees as opposed to self-employed people. Where the authorities consider this is ‘disguised employment’, they will assess the service company to PAYE and NI. This effectively means that the contractor will be paying full PAYE and NI just as though they were employed. You may have read something about the BBC, who pay many of their stars through service companies. Where these people work for many different broadcasters on many short term assignments, this is entirely appropriate as they are probably genuinely self-employed people, however where regular staff such as newsreaders are doing this, then HMRC could challenge this and establish that the newsreader’s service company is paying full tax. The main benefit for the BBC is that they will not be liable to refund any PAYE/NI, and their action in ensuring that a service company has been created is actually arguably responsible behaviour.
Disguised Employment? The Long Term Contractor.
MBF Design Services Ltd v HMRC [2011]
Mark Fitzpatrick was contracting through his own limited company, MBF Design Services Limited, through recruitment agencies to Airbus. Engaged to provide design services to Airbus between 2001-2003 and between 2005-2007, MBF Ltd was engaged for a fixed period of hours with Airbus and was paid hourly for services provided.
Although the contract provided that MBF could provide a substitute for Mr Fitzpatrick, this had never happened in practice. However, one of his line managers at Airbus gave written evidence that there was no reason why the company would not accept substitution if the need arose. As a specialist contractor, he agreed the broad objectives of what he was going to do for Airbus, but was left largely to his own devices in terms of the way in which it was to be achieved.
The contract between Airbus and MBF Ltd could be terminated upon giving little or no notice. Mark Fitzgerald was sent home without pay during computer downtime or when work was delayed whereas employees had to stay on site and engage in other activities – these were two key issues.
Another important aspect was the fact that the gap between the two contracts came about because Airbus could not negotiate a fee for Mark Fitzgerald’s services going forward – they thought he was too expensive and he would not lower his rates. This kind of negotiation is typical of contractors and never happens with employees. In addition to this, Airbus had paid for on-site health and safety training and training on their own computer systems, but had not paid for some general computer training the he had gone on during the year- MBF had paid for that. MBF had other clients and Fitzgerald worked for other people in the gaps between the contracts and before and afterwards.
The tribunal also considered that submitting VAT invoices for work undertaken; being excluded from the client’s holiday and sick pay arrangements, car, pension and healthcare schemes; as well as being excluded from social functions (including the Christmas parties) and being physically identifiable as a contractor by wearing a different security pass all pointed towards MBF being treated as an independent consultant with Airbus.
When the overall picture was painted for the tribunal in this case, it is clear that an arm’s length, commercial relationship existed between MBF and Airbus which meant that HMRC’s claims under IR35 were unable to succeed. Mark Fitzgerald was not in disguised employment.
Agency Workers
Agency workers are people supplied by temporary employment agencies. They are often known as ‘temps’ and tend to be used to fill in gaps where there is a spike in demand or where the employer is short of staff due to sickness or holidays etc.
They have traditionally had a raw deal in terms of employment rights. They are workers, so are entitled to some basic rights such as minimum wage and paid holidays, but they have few other rights and no job security. The Agency Workers Directive was introduced by the EU and has resulted in a change to the law laid out below.
Reform of agency workers’ rights
The Agency Workers Regulations 2010 took effect in October 2011. The basic principle is that of equal treatment between agency workers as compared to employees and workers of the hirer. The worker is entitled to the same basic working and employment conditions s/he would be entitled to for doing the same job had s/he been recruited on a permanent basis by the hirer. It also gives some rights from day one.
Rights from day one
These are the responsibility of the end user to provide.
Access to collective facilities and amenities.
An agency worker will have the right to be treated no less favourably than a comparable employee or worker in relation to access to end user client site facilities and amenities, such as the staff canteen, childcare facilities and transport services, from day one of an assignment.
Right to be informed of vacancies
From day one of an assignment an agency worker has the right to be informed by the end user client of any relevant job vacancies with the end user client that would be available to a comparable employee or worker. This would apply if the employer publicises vacancies via the internet, an intranet or on a notice board in a communal area. The key point is that agency workers know where and how to access this information.
Rights from 12 weeks…
On completion of 12 weeks continuous assignment, the agency worker is entitled to the same’ basic working and employment conditions’ as the agency worker would be entitled to for doing the same job had s/he been recruited directly by the end user. There is no need to look for a comparator as it is ‘as if’.
The agency worker is entitled to:
The same basic pay as though they were permanent
The same holiday rights as they would have if permanent
The same bonuses and commission, but only if paid on the basis of personal performance eg sale commission, not profit related bonuses
Paid time off for ante natal care.
What is pay?
Basic pay only, and any bonuses or incentives directly attributable to the amount or quality of the work done by a worker personallyeg personal bonus for the number of units sold for a telesales operative.
Who qualifies?
The right to equal treatment does not apply until the worker has satisfied a 12 week qualifying period. This needs to be continuous with the worker in the same role with the same hirer. Continuity is only broken by a period of 6 weeks or more, and it is also broken where the worker, while assigned to the same hirer, is given a new role comprising substantially different duties.
Establishing a Contract of Employment under s230 Employment Rights Act
The question is who is an employee and who is an independent contractor or a casual worker and how do we decide who is who? The courts have developed tests to decide who is and who is not an employee.
The control test
A contract of service describes one who serves and that implies submission to the “will” or control of another person. An important test, historically, and still of some relevance is the control test ie an employer tells an employee both what to do and how to do it. Why is this not appropriate in many modern employment relationships?
Integration or Organisation Test
Subordination no longer asks merely whether workers are “controlled” in the traditional sense but also whether they are integrated into an organisational scheme of work designed for them by others. Integration is however a useful test for professional person exercising own skill and labour otherwise too ambiguous to resolve borderline cases.
Davis v New England College of Arundel [1977] ICR 6
The problem with this test is that it seems to identify as “integrated” only employees who are permanent or core
More recent tests include the integration test and the multipletest.
See: Ready Mixed Concrete Ltd v. Minister of Pensions [1968] 2 QB 497
andMarket Investigations Ltd v Minister for Social Services [1969] 2 QB 173
As essential factor in distinguishing between a contract of employment and a contract for services is whether individuals engaged to do work are inbusiness on their own account. Contrastemployees with professional and/or managerial expertise with consultants and company directors.
Also of relevance is the concept of mutuality of obligations.
See: O’Kelly v. Trusthouse Forte Ltd. [1983] ICR 728
Cf.Nethermere (St Neots) Ltd v. Taverna and Gardner [1984] ICR 612
Cheng v Royal Hong Kong Golf Club [1998] ICR 131
Carmichael &Leese v National Power plc [2000] IRLR 43
Bunce v Potsworth Ltd t/a Skyblue[2005] IRLR 557
Melhuish v Redbridge Citizens Advice Bureau[2005] IRLR 419
The tax status of the worker is by no means decisive.
See: Ferguson v. Dawson Ltd [1976] IRLR 346
Young and Woods Ltd v. West [1980] IRLR 201
Cf. Massey v. Crown Life Assurance [1978] ICR 590; IRLR 31
Personal service is also part of the irreducible minimum for the existence of an employment contract. This will usually mean that if there is an unqualified right to delegate there will not be an employer/employee relationship. However a limited right to delegate will not prevent an employment contract existing. These cases will often depend upon the interpretation of a “substitution” clause. Unless the unqualified substitution clause is a “sham” the worker will not be an employee (or a s230 ERA limb (b) worker).
See: Express & Echo Publications Ltd vTanton[1999] IRLR 367
Cf. Macfarlane v Glasgow CC [2001] IRLR 7
However, those in business on their own account will be neither employees nor workers.
Ready Mixed Concrete SE Ltd v Ministry of Pensions[1968] 2QB 497
Economic Reality Test
The economic reality test asks whether the worker is independent of the business and therefore self-employed. It investigates such questions as profit and loss – Ready Mix Concrete above.
The Privy Council in Lee v Chung and Shun Shing Construction and Engineering Co Ltd[1990] IRLR 236, [1990] ICR 409, PC
“The fundamental test to be applied is this: ‘Is the person who has engaged himself to perform these services performing them as a person in business on his own account?” ……The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task’.
A strength of this test is that it exposes sham devices by concentrating on reality.
Variation of Contract
The contract may become outdated, the job itself may change, the employee may be promoted or have his/her job title changed. Where the employee agrees to any change, this is binding.
The employer may have allowed scope for variation e.g. ‘and any other duties reasonably incidental to the post’ or clause requiring the employee to be ‘reasonably flexible’ in relation to his place of work. Where this is the case, the employee will usually have to agree to changes, unless the request is inherently unreasonable.
Where the change involves a mutually agreed term of the contract, if there is no scope for variation in the contract, the employer will have to get the employee’s consent to any change. If the employer imposes the change on an individual, it may well amount to an effective dismissal (so called ‘constructive dismissal’ dealt with later in course) if the employee leaves in disgust. Alternatively the employee may stay employed and make a claim for breach of contract eg for back pay.
Where the change requested is just to the ‘works rules’ or conditions of employment e.g. a no-smoking rule, dress code etc, the employer can enforce this unilaterally with reasonable notice.
Even where the change required is a fundamental one, it is sometimes possible for the employer to enforce it where it is part of a ‘genuine economic reorganisation’ – is shown to be necessary and applicable to the whole workforce or the whole of a department and for good business reasons. This happens a great deal in the current economic climate – for example JCB negotiated with their workforce to reduce their basic hours and pay to 36 hours per week from 40 hours, which the workforce chose to accept rather than sustain redundancies. In 2009, BA negotiated for all of their staff to work in August for free – a reduction of 1/12 in their pay that year, again in order to try to stave off redundancies. Generally, where a large majority of the staff are prepared to agree to this, employers have been legally permitted to enforce the change on all staff, terminating those who do notagree with notice and offering new employment on the new terms. Generally employees who have not agreed have been found to have been fairly dismissed Catamaran Cruisers v Williams 1994.
Contract as a strategic device – common clauses
Probation – a management tool.
This is an example of a common express term of an employment contract. Employers will provide a period of time during which the new employee is ‘on probation’. During this time s/he will normally be on one week’s notice of termination on either side and is likely not to be entitled to any ‘perks’ such as sick pay or pension. Often, but not always, the employer will increase the notice period once the probationary period has been successfully completed.
The legal position
Probationary periods have little legal significance in terms of statutory rights – each of the rights we will discuss later such as unfair dismissal, etc depends on a particular length of service for each right
At the end of the probation the employer will have the option of:-
‘passing’ the employee as satisfactory
extending probation to deal with outstanding issues on performance ie setting objectives and a new time frame
dismissing the employee – this should never be one in a perfunctory manner, the employer will need to be aware of matters such as discrimination law which still protects the employee.
The case of Przybylska v Modus Telecom Ltd 2007 made it clear that if the employer fails to hold a probation meeting, the employee can assume that s/he has ‘passed’ their probation. In this case, this meant that Ms P was entitled to one month’s notice not one week, since that is what the contract provided.
Seminar 3: Status
Week Beginning 19th January 2015
1. Why is it important to distinguish between a worker, an employee, an employee-shareholder and an independent contractor?
2. What rights does each category of worker mentioned in (1) above possess?
3. Is an employer free to structure their workforce as they require? Is the law on this subject problematic?
4. What are sham contracts? How if at all does the courts approach to sham contracts align with the doctrine of laissez-faire?
5. You are setting up a new “start-up” bio-tech business which will market and sell applied research from the local University. What employment status would you give (i) the office cleaners; (ii) the design team who convert the blue-sky science into commercial products; (iii) the sales team; (iv) the maintenance staff who might be called on occasionally to fix broken equipment?
Lecture 4: Express & Implied Terms of the Employment Contract
Week Beginning 26th January 2015
Read Chapter 13 – As this chapter does not go into a great deal of detail, it is essential look at other resources for this lecture and seminar.
As discussed, a contract of employment (s230 ERA 1996) is a legally binding agreement between an employee and an employer, which is formed when the employee agrees to work for pay. The contract, which need not be in writing (although it ought to be) is normally made up of both oral and written agreements and may include:
Express terms -these are terms explicitly (or expressly) agreed, which may include those negotiated during the recruitment process as well as those in a formal written contract.
Implied terms –
(i) terms that are too obvious too mention (eg that the employee will not steal from the employer);
(ii) those necessary to make the contract workable (eg that an employee whose
contractual duties require driving must have a current driving licence)
(iii) those that are the custom and practice of the industry;
(iv) terms imposed by law (eg the right not to be discriminated against because of, for example sex/race).
In addition, there may be terms incorporated into individual contracts by reference to promises made (eg at the interview) or “non-contractual” documents, such as the letter of appointment, company handbooks, or collective agreements with trade unions. Students should be aware of that not all the contents of handbooks or collective agreements will be contractual, but some may be.
See:
Petrie v. Macfisheries [1940] KB 93
Deadman v Bristol City Council [2007] IRLR 888
Kaur v M G Rover Group Ltd [2004] EWCA 1507 [2005] ICR 625
Keeley v Fosroc Ltd [2006] EWCA Civ 1277
Wandsworth LBC v D’Silva [1998] IRLR 193
Implied terms have become an increasingly important and controversial means of regulating employment standards. There is, however, no judicial consensus about the extent to which (if at all) this is appropriate.
The traditional view, however, is that the parties are free to make their own agreement without interference from the law. This expresses laissez-faire, but such a philosophy is not neutral and tends to allow the stronger party to dominate. Under what circumstances is a term implied?
The classic tests have been the “business efficacy test” and the “officious bystander test”. The first of these was proposed by LJ Bowen in The Moorcock (1889) 14 PD 64. A term can only be implied if it is necessary to give business efficacy to the contract to avoid a result that the parties cannot as reasonable businessmen have intended. However, it means that only the most limited term should then be implied – the bare minimum to achieve this goal.
The officious bystander test originates in the judgment of Mackinnon LJ in Shirlaw v. Southern Foundries (1926) Ltd [1939] 2 KB 206. This test is that a term can only be implied in fact if it is such a term that had an “officious bystander” listening to the contract negotiations suggested that they should include this term the parties would “dismiss him with a common ‘Oh of course!'”.
Implied Duties of the Employer
To pay wages according to the contract
The Work/ Wage Bargain
To pay him/her as agreed. Failure to pay an employee’s full salary will amount to a breach of contract, which will entitle the employee to leave and claim constructive dismissal, or to stay and claim breach of contract. This is only the case where it is a deliberate refusal, rather than an administrative error.
Although the courts have sometimes insisted that the employee must actually do work in order to be entitled to their pay it seems now to be settled that the employee is entitled to be paid wages if ready and willing‘ to work; it does not matter that no work is actually done: Beverage v. KLM (UK) Ltd [2000] IRLR 765. Thus, as in this case, if the employer closes the business over Christmas the employees are entitled to be paid unless the contract states otherwise.
This is consistent with well-established authorities, such as Asquith J in Collier v. Sunday Referee Publishing Co. [1940] 2 KB 647 at 650:
“Provided I pay my cook her wages she cannot complain if I choose to take any or all of my meals out.” (see further below)
Employees taking industrial action are not ready and willing to work‘: Miles v. Wakefield [1987] AC 539
To Notify Employee of Contractual Benefits
Scally v. Southern Health and Social Services Board [1992] 1 AC 294
The duty applies where employees have not negotiated their own contracts and the courts seem unwilling to extend it- see University of Nottingham v. Eyett [1999] IRLR 87
To provide a grievance procedure and deal promptly and effectively with grievances
Goold (Pearmark) Ltd v. McConnell [1995] IRLR 516
It is an implied term in a contract of employment that they employer will reasonably and promptly afford a reasonable opportunity to their employees to obtain redress of any grievances they may have. Reference to the procedure by which this is to be done should be included in the s.1 statement.
To provide work?
But exceptions:
Piece work or commission
Turner v. Goldsmith [1891] 1 QB 544
Devonald v. Rosser [1906] 2 KB 728
Giving no work but offering pay is now known as “Garden leave”.
Although generally there is no right to work an employee cannot be placed on garden leave (unless there is an express teem in the contract) if they are able to earn mire by being at work (bonus/commission) or if their reputation may be damaged as a result of not being given any work or if, because of their skills, they need to be in a situation where they can keep their skills up to date.
William-Hill Organisation Ltd. v. Tucker [1998] IRLR 313 CA
Symbian Ltd v Christensen [2001] IRLR 77 CA
Senior executives who give in their notice can cause all kinds of problems if they choose to go to work for another company or business within the sector.
Most employers will keep their options open in the employment contract with a view to deciding what is the best course of action in this situation? The employee will have a certain period of notice to serve and most employers will include what is known as a PILON clause in all their employment contracts.
‘…we reserve the right to make a payment in lieu of any period of notice or part of it whether given by either party. Such a payment shall be limited to your basic salary at the rate payable at the date the notice is given and shall not include…any other benefits or any kind whatsoever’.
This means that the employer reserves the option to pay the employee their full notice, with or without benefits (depends on contract), and terminate the contract immediately. The employee will not then remain on site where they may be able to pick up confidential information or cause problems.
For senior executives or those engaged in sales it is normal to have a garden leave clause which enables the employer to keep the contract in place during the whole period of the notice, while not requiring the employee come to work (hence the name). The advantage of this is that the employee remains employed by the business and cannot work for anyone else – an injunction can be obtained against the employee if they try to do this. The downside is the expense – the employee will remain on full benefits throughout including eg company car, mobile, health insurance.
Job Flexibility
There is a general expectation nowadays that an employee can be expected to perform whatever duties are necessary to achieve the tasks that are his or her responsibility. However, most employers make that clear as a matter of contract
Eg ‘…you are required to perform such additional duties as your line manager shall specify from time to time’.
A term may also be implied by custom – although this is increasingly rare.
Sagar v. Ridehalgh [1931] 1 Ch 310. The problem for the employer in Sagar was that they had failed to gain authority to make the deductions by way of an express term. The issue is now regulated by Part II of the Employment Act 1996.
Repeated ‘custom and practice’ by the employer can lead to a term being implied into an employee’s contract of employment. This only works where employees are well aware of the policy or practice is clear and where it is followed most if not all of the time over a lengthy period.
Garratt v Mirror Group 2011
Since at least 1993 MGN had offered redundant employees enhanced redundancy pay on condition that they signed a compromise agreement. In 2002, the group negotiated a collective agreement with British Association of Journalists, a trade union, which set out how enhanced redundancy pay would be calculated but did not mention compromise agreements.
In Feb 2006, G was made redundant. His enhanced payment would be £80,000, but he refused to sign the compromise agreement. His statutory entitlement was around £48,000. The County court rejected G’s claim to the enhanced sum, on the basis that there was an implied term that receipt of the enhanced sum was dependant on the signature of the compromise agreement since in the 13 year period leading up to the claim, everyone seeking enhanced payment agreed to sign, and even those represented by the union in two redundancy exercises which had taken place previously had agreed to sign compromises.
Held
The Court of Appeal held that the employee had freedom of choice as to whether to sign the agreement or retain their legal rights. Everyone offered the enhanced redundancy package had legal advice and yet had accepted it. The compromise agreement was very well established and generally talked about, although the employer had not actually publicised it formally. It was an implied term that the enhanced redundancy package and the signature to the compromise agreement were linked and one depended on the other.
To cover the employee for reasonable work related expenses.
To take reasonable care for the safety of his/her employee, providing:
Competent fellow employees.
Adequate plant and equipment.
Safe place of work and system of work.
There is no obligation to give a job reference, except in limited circumstances covered by the Financial Services Act, but where one is provided, it must be prepared with reasonable skill and care to ensure that the information contained within it is accurate AND with reasonable skill and care to ensure that the information does not give an unfair impression of the former employee.
Mutual Trust and Confidence
The most important implied term is the implied term of Mutual Trust and Confidence. Although this is expressed as ‘mutual’ it is really an employer term meaning that the employer must not conduct himself in such a way as to undermine the relationship of trust and confidence between the employer and the employee. This is a question of showing the employee respect.Most significantly this duty requires employers to treat employees with
respect.
Examples: Palmanor Ltd v Cedron [1978] IRLR 303
Lewis v Motorworld Garages Ltd [1986] ICR 157
Cf. Woods v WM Car Services Ltd [1982] ICR 693; IRLR 413 where the CA held that the employer was not in breach of this duty through persistently pressurising an employee to accept new terms and conditions of employment.
Stress
These are cases where the employee claims that the employer has broken its duty to take reasonable care of his/her health and safety. The allegation will be that psychiatric injury has been caused by work. There has been a great range of cases on stress, and the general guidelines seem to be:
As far as home related stress is concerned e.g. bereavement, most responsible employers will give the employee some latitude and will try to provide help and support e.g. time off, light duties etc, for a reasonable period. Many employers provide access to a confidential counselling service.
In relation to work related stress:
The employer is usually entitled to assume that the employee can stand the normal pressures of work, unless he knew of some particular problem or vulnerability.
The test is always the same, there are no occupations considered intrinsically harmful to mental health.
The employer is generally entitled to take what he is told by his employee at face value, unless he had good reason to think to the contrary – if the employee says s/he is ‘OK’ then that can be taken at face value.
The employer will only be liable for stress related illness where he could or should have been able to foresee the illness i.e. he knew or ought to have been aware of the ‘warning signs’ or his employee expressly brought them to his attention, warning signs may include employee actually complaining, absences accompanied by medical notes or self-certs stating ‘depression’ or ‘stress’ or behavioural change.
A breach of the duty is only made out if it is proved that the employer failed to take reasonable steps to alleviate the stress, bearing in mind the magnitude of the risk, the gravity of any harm, the costs and practicability of preventing it and the justifications for running the risk – the size and scope of the employer’s operations are relevant here.
Abusive or bullying conduct from the employer.
Generalised unfair treatment of an employee, including depriving them of some benefit for no good reason, or leaving them out of a generalised pay rise arbitrarily.
Applying inappropriate and disproportionate disciplinary measures.
Refusing, or simply failing to deal with grievances or problems promptly when asked to do so by the employee.
Breaking promises made to the employee, upon which the employee has relied.
All the cases in this area tend to involve the employee leaving employment in response to such behaviour by the employer and seeking to claim constructive dismissal.
The Employee’s Implied Terms
To obey lawful and reasonable orders – This includes adaption to new techniques and skills, as long as proper training is given, and there is a basic understanding that the employee should be reasonably flexible, especially in small businesses.
To exercise reasonable care and skill in the performance of his/her employment – This is not an obligation to be ‘perfect’ but to be reasonably competent in the context of the skills and experience the employee has. The employee is also responsible for carrying out the training they receive.
Not to delegate his/her duties – the essence of a contract of employment is that it is performed personally, and the employee cannot substitute someone else even if that person is able to perform the role.
To co-operate – the employee must not stand in the way of progress – eg he must take on new equipment/new ways of working – Creswell v Inland Revenue
To give faithful service – this includes things like not leaking confidential information, taking bribes, working for a competitor or setting up in competition.
NB: This usually only operates during the currency of the employment. If an employer wants to restrain an ex-employee from competing etc., a restraint of trade clause may be necessary, and that will have to be reasonable in order to be enforced by the courts.
Not to undermine the employer’s trust and confidence in him/her – This is rarely invoked in practice as a standalone allegation. However it may become more prevalent since the rise of social media. There have been a number of recent cases where the employee has posted matters online which have had an adverse impact on the employer’s reputation and this implied term might well be relevant in cases such as that.
To take reasonable care for his own safety and that of colleagues.
Relationship with Express Terms
Implied terms which “limit” the application of unfair express terms
In Johnstone v. Bloomsbury Health Authority [1991] ICR 269 CA Leggatt LJ (dissenting, although with the support of Stuart-Smith LJ on this point) appeared to reject the idea of overriding implied terms: “In my judgment as a matter of law reliance on an express term cannot involve breach of an implied term.”
Also: Scally v. Southern Health and Services Board [1991] 4 All ER 563
United Bank Ltd v. Akhtar [1989] IRLR 507
Was the clause permitting the bank to relocate Akhtar in its discretion and to pay re-location expenses in its discretion actually “limited” or overridden?
Mobility Clauses -United Bank v Akhtar (above) – gives the employer flexibility
It is common for employers to provide that employees may be required to move, where the employer moves the location of its business or where the business itself operates at multiple locations.
Where an issue as to mobility arises, the first port of call will be the contract. If the contract provides clearly that the employee is employed in a particular location, then the employer will have to get the employee’s consent to the move. If s/he does not want to go, then they may be entitled to a redundancy payment.
If the contract is silent, much will depend on the nature of the employment as to what would be implied. In industries where mobility is taken for granted, such as construction, employees will be expected to move to sites as and when work arises. Higher level staff will usually be expected to have a higher level of mobility whereas those at a lower level wouldnot normally be required to move locations beyond reasonable travelling distance from their home.
However most contracts provide mobility clauses eg ‘……the Company may, on giving you reasonable advance notice, require you to accept a new normal place of work within a reasonable daily travelling distance of your home’.
Seminar 4: The Contract of Employment
Week Beginning 26th January 2015
1. Why is having employee status important?
2. What is a ‘zero hours’ contract?
3. Why are women more likely than men to take on part time work?
4. Which Act of Parliament provides employment protection?
5. What is a statement of particulars and where can its requirements be found?
6. Identify 5 things which must be included in the statement of particulars.
7. What happens if the employer does not provide a statement of particulars?
8. What is meant by ‘Personal Service’ and why is this so important to the contract of employment?
9. Is the employer able to change the contract of employment if he finds that it is not working to his advantage?
10. Sally is employed as the head chef at the Gourmet Fish Restaurant between 19.00 and midnight. Sally secures employment as a chef, between the hours of 11.30 and 15.00, in a newly opened restaurant in the next street from the Gourmet Fish Restaurant. The owner of the new restaurant advertises the opening in the local newspaper. The advertisement stresses that Sally is also the chef at the Gourmet Fish Restaurant.
Is Sally in breach of her contract with Gourmet Fish?
Reading Ready Mixed Concrete Ltd v. Minister of Pensions [1968] 2 QB 497 will help you to answer this next question.
11. Imran is engaged under a contract with Clarks Co Ltd to provide what the contract describes as the service of sales agent. Imran is required to drive his own car to a variety of locations in the south of England to secure custom for the products of Clarks. Imran is paid on a commission basis, receives travel expenses, and is treated as self employed for tax purposes. Imran contacts the office daily to ascertain whether Dennis, the Head of the Sales Department has work for him to carry out. Imran is required to notify Dennis in advance of taking leave for any reason. His contract permits him to engage in any business activities, when he is not undertaking work on behalf of Clarks, provided he does not solicit existing customers of the company.
Advise Imran as to whether he is protected, as an employee, by the Employment Rights Act 1996.
13. Harriet is an office manager for Yellow Hat Productions, a film company. She is paid £35,000 pa and her hours are stated in her contract to be 35 hours per week, being required to work 9am to 5pm Monday to Friday with a lunch break. Her contract states that she may be required to work ‘such hours unpaid as are necessary to complete the tasks allocated to her by her line manager’. Yesterday her manager, Sheila, asked Harriet to stay behind after 5pm to help her clear out some old files that were ‘cluttering up the office’ but she refused stating ‘I am not required to do overtime’.
Is she right to refuse this request?
Would it make any difference if there was no such clause in the contract?
Or, Harriet was an office junior on £7,000 pa?
Or Facts as (a) above, but the task to be completed was a vital report for the company’s bank?
Lecture 5: General principles of Anti-Discrimination Law
Week Beginning 2nd February 2015
Read Chapter 14
Pages 457 – 476
The law recognises the right of an individual worker to be treated equally with others regardless of factors which should be irrelevant in decision making.
The Equality Act 2010 provides protected related to protected characteristics as discussed below.
The word ‘discrimination’ simply means to decide between one thing and another. As a matter of course, employers will often have to ‘discriminate’ or make choices at work. The fact that an employer decides to employ one candidate rather than another, or decides to promote one member of staff rather than another is itself a form of discrimination. The important thing is that the employer does not make the decision, or appear to do so on an unlawful basis; so the issue to be determined is the reason for the decision that was made.
Why do we have a law about equality of opportunity?
It has an important role in protecting the dignity of the individual worker
It tries to correct the disadvantages which are suffered by certain groups (perhaps in introducing some element of ‘affirmative action or positive discrimination’)
It tries to overcome the failure of the market by bringing down barriers against certain excluded groups.
General Principles
Anti-discrimination legislation has a number of features which make it different from standard employment protection, which we discuss later:
There is no qualifying period of employment required before the worker can take advantage of the protection (unlike, eg unfair dismissal)
All forms of discrimination allow for unlimited damages, and the legal costs involved in defending claims is high because they tend to be complicated
There is a reversed burden of proof once the applicant shows that there is a genuine question mark over the decision and prima facie evidence of discrimination is found i.e. the employer has to show that in taking the decision or action in question there was not unlawful discrimination – (EqAct 2010 s136)
A discrimination action is often interesting enough to generate unwelcome publicity
The law applies to all persons who work for the organisation, whether employees, workers or contractors and also to ex-employees, for example, where a failure to give a reference is claimed to be victimisation, and also to job applicants.
The Equality Act 2010 (EqAct 2010) was passed to place all anti-discrimination provisions under a single consolidated statute. The Act also reformed the law in the number of areas, and reference is made to this in the relevant sections.
‘Protected Characteristics’ (s4)
Just because a decision seems unfair, does not necessarily mean that it is unlawful. In order to be so, the less favourable treatment needs to because of certain protected characteristics.
Less favourable treatment will be unlawful if it is because a person has the following characteristics
Age (s5)
Disability (s6)
Gender reassignment (s7)
Marriage and Civil Partnership (s8)
Pregnancy and Maternity (s18)
Race (which includes colour, nationality or ethnic or national origin) (s9)
Religion or Belief (s10)
Sex (s11)
Sexual Orientation (s12)
There is also separate provision which prevents discrimination against part-time workers, and those on fixed term contracts. Part Time workers are protected by thePart Time Workers (Prevention of Less Favourable Treatment) Regulations 2000 and Fixed term workers are protected by the Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002. Part-timers’ treatment and terms and conditions should be equalised with full timers and the same applies to fixed term employees (other than the fact that their contract is set to run for a specific period, rather than being permanent).
Discrimination Generally
What kind of acts are discriminatory?
In all cases, the legislation provides for four main kinds of discrimination, and a fifth more restricted type.
1. Direct Discrimination (s13) – less favourable treatment specifically because of one of the protected characteristics, for example, the person’s sex, race, colour, nationality or ethnic or national origin, disability, gender reassignment or sexual orientation. This might be, for example, a refusal to employ, a denial of promotion or training, a dismissal or redundancy or undermining someone because of a protected characteristic.
2. Indirect Discrimination (s19) – where the employer uses a provision, criterion or practice which disadvantages one or more of these protected groups and which cannot be objectively justified. For example, a required level of English to qualify for a job might discriminate against persons who have not been born in the UK, may have had to learn the language late and may not have such a good command of English. A minimum height requirement will discriminate against women, as will a strength requirement; a dexterity requirement may discriminate indirectly against men. The question in all cases will be; can that requirement or criterion be justified in the context of the genuine requirements of the job?
3. Harassment (s26) – isunwanted conduct violating the dignity of men and women in the workplace and causing a hostile and intimidating atmosphere for them, and which takes place because of a protected characteristic The key is that the actions or comments are viewed as demeaning and unacceptable to the recipient, and it is reasonable for them to have that effect.
4. Victimisation (s27)- less favourable treatment meted out to any person related to the use of this legislation, e.g. because a person has brought unlawful discrimination proceedings, or assisted another person to do so.
5. Discrimination based on association or perception or because someone is deterred from doing something (the definition in s13 is wide enough to cover this type of discrimination)
Where less favourable treatment of the worker is not based on his or her own particular protected characteristic eg disability or age or race, but is because of his or her association with another person who does have those particular characteristics, that treatment will be unlawful. An example might be that a worker is treated less favourably by the employer because of the time s/he is spending away from work caring for an elderly relative, or a disabled child. This will be a form of direct discrimination (s13) because of the worker’s association with someone who is disabled or someone who is aged. The perception discrimination provisions make it unlawful to treat someone less favourably because it is perceived that they are eg gay, or a Muslim, even though, in fact, they are not, but the less favourable treatment takes place ‘as if’ they were gay. An example might be that a worker is subjected to homophobic abuse on the basis that he is gay, when in fact he is heterosexual or an application from a prospective employee which is rejected because her name makes her ‘sound’ like she is from an Africa.
How does this apply in employment? (s39)
An employer must not unlawfully discriminate against someone:
in the arrangements he or she makes for the purpose of determining who should be offered that employment, or
in the terms on which he or she offers the person that employment, or
by refusing or deliberately omitting to offer that employment.
in the way it affords access to that person to opportunities for promotion, transfer or training, or to any other benefits, facilities or services, or by refusing or deliberately omitting to afford access to them, or
by dismissing him/ her, or subjecting him/her to any other detriment.
In relation to direct discrimination, the motive of the person discriminating is irrelevant – even if he means well, it will still be discriminatory.
Positive action (s158)
Employers have been able to take ‘positive action’ for many years to reduce the effect of discrimination on the make-up of the workforce. Where an employer has a particularly low proportion of a particular group, in practice this is most likely to be in relation to one sex or a racial group:
in one department or part of the business compared with the rest of the organisation, or
in the business compared with the proportion of that group in the wider community.
The employer is entitled to attempt to redress that balance by:
placing job advertisements in particular parts of the press
by using employment agencies where such groups are concentrated
by aiming recruitment or training schemes at school leavers from particular groups
by encouraging these employees to apply for promotion or training opportunities
by providing special training for promotion or skills to this group.
These provisions are aimed at encouraging participation and up-skilling members of unrepresented groups. Ultimately, however, the actual decision making around recruitment, promotion or training must be fair and not unlawful discrimination.
Positive Discrimination
From April 2011, the Equality Act introduced a very limited ability for employers to discriminate positively. This is specifically in the area of recruitment and promotion. The employer is entitled to take a protected characteristic into account when deciding who to recruit or promote where people having one of the protected characteristics are at a disadvantage or are underrepresented in its workforce. This is quite limited, as it only applies where the candidates are otherwise equally qualified, and it is not lawful to have some kind of blanket rule of treating candidates with a particular characteristic more favourably than others.
Harassment (s26)
It is unlawful to harass a worker at work on the basis of any of the protected characteristics. This means that the employer has an obligation to take all reasonable steps to ensure that such harassment does not take place and to support the worker if it does. If this is not done, the liability for the harassment may shift to the employer.
The potential damages can be extremely high – even in an isolated example of severe harassment, the employer will have to demonstrate that it has a well enforced and well understood harassment policy and that it takes such matters very seriously.
The vicarious liability of an employer for acts of harassment by an employee towards a fellow employee usually extends to work related social activities, but not purely private social engagements (s109).
Recent changes to law on harassment
There is a new approach to the definition of sexual harassment, which has the effect of simplifying it and widening it. The general harassment provisions apply to age, disability, gender reassignment, race, religion or belief, sex and sexual orientation. They make it unlawful for A to harass B by engaging in conduct ‘related to’ one of these protected characteristics where the conduct has the purpose or effect of violating B’s dignity, or creating an intimidating, hostile, degrading, humiliating or offensive environment for B. Thus it would obviously cover a situation where B was being harassed because he was gay, but it also covers any situation where the conduct is ‘related’ to that characteristic and so it would cover a situation where offensive remarks were made to C about eg his son’s disability, or D about his daughter’s sexual orientation, or indeed remarks made about one worker in the hearing of another, who is upset about the treatment of his colleague. This means that someone has a perfect right to sue based on upset they are suffering because of conduct which relates to another person’s sexuality or race.
An employer will only be able to protect himself from a liability if he can demonstrate that he has taken ‘all reasonable steps’ to prevent the harassment (s109).
Occupational requirements
Under the previous law, exceptions where discrimination was allowed applied in different ways to different strands of discrimination. The Equality Act applies a general occupational requirement defence to all protected characteristics. What this means that if a person is able to show that, having regard to the nature or context of the work, it is an occupational requirement to have a particular characteristic and that applying that requirement is a proportionate means of achieving a legitimate aim, then it will be lawful. For example, female staff may be required where the job involves close personal contact with women, or the authenticity of a dramatic performance may require a black actor. In both cases the recruiter will argue an occupational requirement, and will reject candidates who do not have that characteristic. There is also provision to deal with organised religions and organisations which have a religious ethos. This is a strict provision and does not allow generalised discrimination by those bodies. They will have to show that the post in question is either for a minister of religion or is one of the small number of lay posts which exist to promote and represent religion. It certainly would not apply to support posts, administrators etc, but only to those positions where the religious ethos was fundamental to the work.
Gender reassignment
Discrimination on the grounds that someone has been, or will be, in the process of gender reassignment/undergoing a sex change is unlawful. Most of these cases tend to be either about harassment or washroom facilities, and the employer must be careful to ensure that a hostile working environment does not grow up around a transsexual and that it permits use of the assigned sex facilities once any operative procedures are complete. On sick leave, treatment of a GA case will be compared with those who are absent because of sickness or injury in order to determine whether there has been less favourable treatment.
The Gender Recognition Act 2004 was passed to give transsexual people legal recognition in their acquired gender. Legal recognition follows the issue of a full gender recognition certificate by a Gender Recognition panel. The panel has to be satisfied that the applicant:
Has, or has had, gender dysphoria,
Has lived in the acquired gender throughout the preceding two years, and
Intends to continue to live in the acquired gender until death.
On the issue of one of these certificates, the person will be entitled to a new birth certificate reflecting the acquired gender, and will be able to legally marry someone of the opposite sex. For all purposes they will be legally regarded as being of their acquired gender.
Sexual orientation
Discrimination on the grounds of sexual orientation is unlawful ie less favourable treatment on the grounds of homosexuality, lesbianism and bi-sexuality.
The cases have largely been on the subject of homophobic abuse and the extent to which the employers have been responsible for encouraging it or permitting it, or failing to have a policy dealing with it. The main issue for employers to be aware of here is ‘banter’ of a homophobic nature. It is critical that employers take action to tackle any such issue within their workforce, or there that they may be liable to the affected worker.
Religion or Belief
It is unlawful to discriminate against workers because of religion or similar belief. The law applies, as do all the discrimination rules, to recruitment, terms and conditions, promotions, transfers, dismissals and training, and therefore both to current, prospective and former workers.
The employer must not discriminate directly by, for example, refusing to recruit or dismissing anyone on the grounds of their religion or belief, apply some rule or procedure to them which is indirectly discriminatory unless it can be justified. Workers must not be harassed or victimised because of their religion. Any recognised religion, religious belief or philosophical beliefs are protected. Atheists, spiritualism, environmentalism and beliefs about animal rights are also potentially covered.
What about special requests which are related to religion?
Where a worker makes a request based on some religious observance e.g. prayer room, time off to go to mosque, Friday afternoons off, particular holidays or extended holidays the employer should listen carefully, consider the consequences for the business and grant them if practicable. If it is not possible, then s/he should explain carefully to the employee why, on good business grounds, his/her request cannot be granted, and this should always be documented. An employer is not under a specific obligation to make changes to accommodate an employee’s religion.
Disability Discrimination
It is unlawful to discriminate against a person who qualifies as disabled. Every employer has an additional obligation to make reasonable adjustments to ‘level the playing field’ for disabled workers or job applicants.
This area of law applies to employees and to workers. However, in practice the major issues in relation to absence tend to concern employees as they are required to provide continuous service. Most employees on long term sick leave, and some who are frequently absent for short periods, may qualify as ‘disabled’. This imposes extra duties on the employer.
It is unlawful for an employer to discriminate against a disabled employee or job applicant by treating that person less favourably than s/he treats, or would treat, others for a reason relating to his or her disability – that treatment is defined below.
The duty placed on an employer is twofold:
not to discriminate against a disabled person, and
to make reasonable adjustments to accommodate the disabled person.
Who qualifies as disabled?
This definition goes far beyond the traditional perception of disability.
A disabled person is someone who has: (s6)
‘A physical or mental impairment which has a substantial and long-term adverse effect on his/her ability to carry out normal day-to-day activities’.
It covers any normal physically related illness which has a substantial effect on the person, e.g. heart conditions, angina, epilepsy, diabetes type 1, and medical evidence of the condition will need to be produced
It also covers mental conditions ranging from schizophrenia or manic depression to anxiety disorders; reactive and clinical depression can also be regarded as a disability. The law used to require that the mental illness was clinically recognised, this is no longer necessary but it is particularly important here that the employee produces clear medical evidence of his/her condition.
It can cover disorders which recur, although the person may not suffer any symptoms in between attacks, such as serious asthma and epilepsy.
Learning disorders such as dyslexia are now recognised as a disability.
There are some conditions which are automatically regarded as disabilities, even though the employee may not currently be suffering any or many symptoms; these are HIV AIDS, multiple sclerosis and cancer.
Some conditions are expressly excluded, including alcoholism and drug addiction unless they cause other problems – eg liver disease.
In order for the disability to be seen to be substantial, it must have lasted or be predicted to last at least one year, or for the rest of the person’s life.
What activities must be affected?
It is not necessarily activities at work that must be affected. It is essential in order to satisfy the definition that the employee should have substantial difficulties in his or her everyday life, but it is not necessary that the disability has to affect any particular function.
The first duty – do not discriminate. (s39)
In an employment context, it is unlawful to discriminate against a disabled person i.e. treat them unfavourably, in
Making the arrangements for deciding who to employ.
The terms on which you offer that person employment.
Refusing to offer that person employment.
The terms which you give the employee, compared with employees already working for you.
The employment opportunities afforded to the disabled person, namely promotion, transfer, training or the receipt of any other benefit e.g. facilities and services, which plainly includes fringe benefits – this also applies where the employer refuses to afford these opportunities.
Dismissing him/her or by subjecting him/her to some other detriment.
The second duty – to make reasonable adjustments (s20)
The Act places a specific duty upon the employer to make reasonable adjustments to work arrangements and the working environment so as to accommodate disabled persons. Where any employer is faced with a disabled employee then there will be a fundamental duty to make a full and proper assessment to enable it to decide what steps it would be reasonable to take to prevent a disabled person from being at a disadvantage. This will apply with a disabled job applicant, but also where an existing employee is, or becomes, disabled. This may involve an employee who has been absent long term coming back on reduced hours or duties until s/he is able to fully perform the role.
The duty arises where the arrangements made for the work or the way the work is done, or the physical features of the premises or the equipment place the disabled employee at a significant disadvantage compared to persons without that disability.
Examples of reasonable adjustments include altering premises, allocating some of the disabled person’s duties to another member of staff, altering the disabled person’s working hours, transferring the disabled person to fill an existing vacancy etc However, the employer is only required to make reasonable adjustments, bearing in mind its size and its resources.
The third duty – An employer has an additional duty in relation to disabled people and that is not to discriminate because of something arising from the disability (s15). For example and employer cannot discriminate by refusing to allow a guide dog on to the premises. They are not discriminating against the blind person but against the dog, therefore this is ‘arising from the disability’.
The defence
It is never lawful to directly discriminate on grounds of disabilty e.g. to have a rule not to employ epileptics. However, less favourable treatment for disability related reasons can be justified where the employer can justify it. The net effect is that if the employer can explain his/her treatment of the employee eg a decision to dismiss the person, by reference to economic imperatives, health and safety of the employee or fellow employees, or general impracticality, it may be possible to defend the action. If the employer can show that either there are no possible adjustments or, despite any adjustments that it might reasonably be expected to make, the disabled employee cannot be taken on or retained without significant difficulties, it may be justified in refusing to employ or in dismissing the employee.
Sickness and Disability Discrimination
This area is governed largely by the contract and by case law on sickness, however the law about disability discrimination may impact on the way the employer deals with the employee, and provision for Statutory Sick Pay (SSP) is made for all employees and workers under the Statutory Sick Pay (General) Regulations 1982 as amended.
Staff sickness may be a considerable burden on a business, leading to additional costs in using temporary staff or paying overtime, and increasing the workload for other staff. While all employers would want to support members of staff who are unwell, if sickness absence is not managed, particularly where the employer pays sick pay, at worst the benefit may be abused, or absences may be extended unnecessarily.
In dealing with sickness, it is customary to make a distinction between long term absence and short term frequent absence and also deal with absence related to disability, which could fall into either category, as the law applicable to the employment is different in each case.
Medical records and information
It is essential in every business to carefully record and monitor absence in relation to every employee and employer. Without this, it is impossible to take any effective action to tackle absenteeism.
Additionally, good medical evidence is crucial to every decision to be made about a person on grounds of sickness. Most employers provide expressly in contracts and policies that employees must see a company doctor or nominated specialist on request where they need information about the employee’s medical condition. If the employee wilfully refuses to co-operate with the employer’s reasonable attempts to get information, it has been held by some tribunals to be gross misconduct. It is certainly the case that, if the employee refuses to undergo a medical examination, the employer is entitled to take action on the basis of the evidence it has.
There are particular rules about GP records (because they often contain much extraneous detail and are much more personal in nature) – the employee is entitled to withhold consent to disclosure of them in the first place, or to review them before disclosure and to require amendment.
It is crucial that employers keep all medical information secure, and ensure that any personal details are only disclosed to management where this is strictly necessary. All medical records are subject to the Data Protection Act.
Documentation
Employers should require the employee to notify his/her line manager as early as possible on the first day of absence. Once the employee has been absent for one calendar week, on the eighth day of absence s/he must provide a doctor’s certificate stating the reason for the absence.
Return to work interviews
These are a valuable tool as an opportunity for communication between employer and employee and also a disincentive to casual absenteeism. Additionally, they encourage proper recording of sickness absence. The line manager speaks to the employee on his or her return, and record the reason for absence, checking that the employee is fit to return. Employers suffering absenteeism problems will often use such interviews on each occasion of absence, others may decide to talk directly to the employee in this way only when there has been a longer absence of a few days or more.
Practical Approach to dealing with Sickness
Long term sickness
An employee is usually regarded as long term sick when s/he is absent for 4-6 weeks or more, although there is no hard and fast rule. All employers should have a policy on such matters, and the policy should be followed consistently. The employee will have provided a reason for absence by way of doctor’s certificate and s/he may also provide additional medical information or can be required to do so. Where an employer provides sick pay it is not normally possible to terminate employment on the basis of incapacity during that sick pay period. However, depending on the ability of the business to cover for the absent employee, and how key the post is, the employer is often in a position to consider termination where there is no immediate prospect of the employee returning to his job.
Many long term sick employees will be covered by the rules on disability discrimination which are explained above and therefore it is essential that the employer considers all and any reasonable adjustments which may permit the employee to return to work in some capacity.
Short term frequent absence
This is where the employee is absent for one or a few days at a time and this occurs on a number of occasions. In many ways this kind of absence is more difficult for an employer to deal with than long term sickness, as it is unpredictable and difficult to cover.
It is possible, where absences are single days, that the employer suspects that the employee is not genuinely ill and is either attending interviews or taking a ‘duvet day’. Where such absences have a clear pattern eg Fridays, Mondays or the day after a bank holiday, the employer is entitled to treat the matter as a case of misconduct in the absence of a compelling explanation. Otherwise, it is dealt with under the employer’s sickness absence procedures.
‘Trigger Point’ – informal investigation
All employers should have a point at which they start to tackle short term frequent sickness. Some employers use the Bradford Factor, which is a measure of the frequency of absence, and details of this can be found at http://www.incomesdata.co.uk/studies/bradford.htm. Others will have a rule of thumb that, once an employee has been absent on eg four occasions within 12 months, then his or her line manager will arrange a meeting to discuss it. It may unwise to publicise this, as some employees may well ‘work up’ to the limit, regarding two or three days of sick absence as akin to an entitlement.
This meeting will be an informal one, designed to determine whether there are any health issues of which the employee is aware. It also has the effect of warning employees who are not genuinely ill that further absenteeism will have formal consequences.
If sporadic absence continues, the employer will arrange a formal meeting at which the employee will again be asked whether there are any medical issues of which the employer should be aware. S/he will be told that if absences continue, or if the employee now discloses a medical issue, the employer will organise a medical examination and report, designed to determine the reasons for the absence. Often, the employee’s attendance record will improve at this point, and if this does not occur, s/he will be required to see a doctor. The employer will act in accordance with any information in this report, particularly if the employee has a medical condition which means that s/he is disabled. If the report indicates that there is no medical condition, the employer will require an improvement in attendance and if this is not forthcoming, will dismiss using proper procedure or whatever procedure is laid out in its own employee handbook.
Ultimately the employee will need to reach an acceptable standard of attendance at work or a dismissal for incapacity is likely, on the basis that the level of unreliability cannot be tolerated within the organisation.
Sickness during disciplinary process
It is quite common for employees who are subject to disciplinary proceedings to go sick just before meetings are due to take place. Where the employer pays contractual sick pay in addition to SSP, it is common to insert a clause in the contract to the effect that sick pay will not be paid if formal proceedings of this nature have been commenced. If the employer is contractually obliged to pay sick pay, there is little that can be done, other than to wait for the employee to return.
Sickness during maternity leave
Where a woman is sick during her maternity leave, the employer is not able to take any action, as this would be seen as a detriment which she has suffered by reason of her pregnancy. Once she has returned from maternity leave, she is treated exactly as other employees are, in relation to any sickness which has occurred from that time onwards.
The Rehabilitation of Offenders Act 1974
This Act applies to England, Scotland and Wales, and is aimed at helping people who have been convicted of a criminal offence and who have not re-offended since.
Anyone who has been convicted of a criminal offence, and received a sentence of not more than two and a half years in prison, benefits as a result of the Act, if he or she is not convicted again during a specified period otherwise known as the ‘rehabilitation period’. The length of this period depends on the sentence given for the original offence and runs from the date of the conviction. If the person does not re-offend during this rehabilitation period, they become a ‘rehabilitated person’, and their conviction becomes ‘spent’.
For example, if a person receives a sentence of imprisonment or detention in a young offenders institute of between six months and two and a half years, the rehabilitation period is ten years, or five years if the individual was under 18 at the time of conviction. For an absolute discharge the rehabilitation period is six months.
Sentences can carry fixed or variable rehabilitation periods and these periods can be extended if the person offends again during the rehabilitation period. However, if the sentence is more than two and a half years in prison the conviction never becomes ‘spent’. It is the sentence imposed by the courts that counts, even if it is a suspended sentence, not the time actually spent in prison.
Once a conviction is ‘spent’, the convicted person does not have to reveal it or admit its existence in most circumstances. However, there are some exceptions relating to employment and these are listed in the Exceptions order to the ROA. The two main exceptions relate to working with children or working with the elderly or sick people, but admissions to certain professions are also covered, including accountancy. If a person wants to apply for such a position they are required to reveal all convictions, both spent and unspent, and they may be taken into account for the purposes of recruitment.
Sickness and Holiday Entitlement
There has been a long running legal saga about the entitlement of sick workers to continue to accrue holiday. The fact that they do so has been established for a long time, but the issue has been whether or not they can carry that holiday entitlement over if they have not taken all the holiday to which they are entitled when the holiday year ends.
The problem is UK legislation giving effect to the right; under Regulations 13 of the Working Time Regulations 1998
(9) Leave to which a worker is entitled under this regulation may be taken in instalments, but—
(a) it may only be taken in the leave year in respect of which it is due, and
(b) it may not be replaced by a payment in lieu except where the worker’s employment is terminated.
The ECJ has given its judgment in the case of Dominguez v Centre Informatique du Centre OeustAtlantique2012 – this case really affects public sector workers as it decides that the right to four weeks paid annual leave (note it is only 20 days, as this is the amount of holiday given in the Directive) is directly applicable. This right cannot be made subject to conditions about having worked any period during the year, and is inalienable. This means that workers have a right to carry those 20 days over regardless of any provision in any national statute. However it is open to national governments to make conditions relating to the remainder of the paid annual leave (ie the additional 1.6 weeks in the UK) and also presumably for employers to deny a right to any additional contractual holiday leave that they might pay in addition to that. However, current UK authority, Adams v Harwich International Port Ltd 2011 does state that workers unable to take annual leave during the year because of sickness have a right to carry the whole minimum annual leave ie 5.6 weeks (28 days), not just the 4 weeks. We await the decision of the UK government as to how to legislate in response to this case, meanwhile public sector workers can enforce this right to the 4 weeks directly.
As far as the length of carry over for employees who are absent for years is concerned, the ECJ decided in KHS AG v Schulte 2011 that it was quite acceptable for the national government (here Germany) to put a limit of 15 months carry over from the end of the leave year, but 9 months carry over was too short (Neidel v Stadt Frankfurt 2012). Hopefully changes will be made to the WTR in 2012 to deal with all these issues.
Does the employee have to give notice that s/he wishes to carry sickness over?
NHS Leeds v Larner 2012
L had been employed by NHS Leeds as a clerical officer since 2000. Her holiday year ran from 1/3 to 31/3. Her conditions of leave said that annual leave would accrue during paid and unpaid sick leave. They also provided that annual leave could be carried forward, but only for service delivery reasons and that had to be discussed before returning from sick leave, agreed by the employee’s head of service and authorized by a director. There was no mention of any need to put in a request before the end of the relevant leave year in order to carry forward untaken leave. Later communications to staff stated clearly that leave could only be carried over in exceptional circumstances and by written application.
L went on sick leave in Jan 2009 and never returned to work. She was diagnosed with depression. During 2009/10 she made no request to take her annual leave or to carry it forward into the next leave year. Her contractual sick pay ran out in Jan 2010 and on 8/4/10 she was dismissed on the grounds of ill health. NHS refused to pay for leave not taken by her in 2009/10.
L argued that she had the right, without prior request, to carry forward her paid annual leave not paid in 2009/10 to 2010/11, and have it paid on termination of her employment. Her evidence was that she had taken no holiday during her sick leave as she had been too sick to have done so. This was a case concerning a state body ie NHS, so was taken under the Working Time Directive. The Court of Appeal stated that she did not need to have given notice in the previous year to take the holiday and there was no such requirement under the law. If an employee returns to work and is no longer ill and then delays until after the end of the holiday year before asking for their leave, they may well lose it, especially if they have a provision preventing carry over in their contracts (Fraser). Mrs Larner was not covered by this as she remained sick throughout. This ruling is likely to apply equally to private employers as the CA said they could see no difference in the application of the Directive and the Regulations, but note that this right to carry over probably only applies to the basic 20 days, not the bank holidays.
What of the employee who becomes sick during paid annual leave?
Associacion Nacional de GrandesEmpresas de Distribucion v Federacion de AssociacionesSindicales 2012
This ECJ decision concerned the situation where a worker becomes sick during leave, rather than prior to a scheduled period of leave. The court held that it made no difference when the incapacity for work arises – where paid annual leave coincides with sick leave, the worker is entitled to take the annual leave at a later time and this may be scheduled outside the normal holiday year.
This decision reinforces the need for employers to have robust reporting procedures, backed up by a requirement to provide medical evidence of sickness.
Part Time Working
There is no specific number of hours which constitute part time, it is simply when someone in the organisation works less than those employed on full time contracts. An employer must be able to objectively justify any less favourable treatment of part time employees and demonstrate that the difference in treatment is because of a genuine business need.
Advantages for an employer of job share can be significant in that he is better placed to cover absences and perhaps having two people sharing a role means that additional skills are brought to the job, however there are also disadvantages in that there will be additional costs and if one person leaves it might be difficult for the employer to be able to cover those specific hours. Using part time workers can be advantageous in manufacturing for example as sufficient numbers are available to cover breaks/holidays etc. Part time workers are also able to provide additional support working evenings/weekends when traditionally vacancies are harder to fill.
Seminar5: Express & Implied Terms of the Contract of Employment
Week Beginning 2nd February 2015
1. What is an Express Term?
2. John was employed by Hargreaves Industries five months ago. The company has a three month probationary period for all staff. This has not been mentioned again since he started work. His contract of employment states that each party must give one week’s notice of termination of employment during the probationary period and afterwards, one month’s notice of termination must be given by either party. Yesterday, his boss, Neil, held a ‘probationary’ meeting and has terminated his contract of employment stating that the company is ‘cutting costs’.
How is John’s notice to be calculated?
3. What is the difference between a garden leave clause and a payment in lieu of notice clause?
4. What is an implied term?
5 Decide in the following scenarios whether an implied term has been breached. If so, which
term?
a) Steve who is usually paid weekly, has not been paid by his employer for two weeks running
b) Lisa is an administrator in the offices of Plectra International. She has worked for the company for 18 months. A very important set of specifications had to be sent to a supplier by 5.00 pm last night, in order that they could be provided for a project starting shortly. Lisa was responsible for sending them out, and her boss, Jane, completed them and gave them to her at lunchtime before going to the Middle East for a week. Lisa did not send them out and as a result the project is delayed. Not only that, but the documents have been lost.
c) Ray, the Office Manager has just shouted at the Office Junior Chan in front of his colleagues saying that Chan is incompetent and useless.
d) Abrar has just finished a training course which will help her with the new computer package the company has just installed but despite the fact that the package is more efficient therefore leading to greater profits for the firm, Abrar is refusing to use it and says that she will continue with the old system as it is easier to use.
e) Croft pharmaceuticals is refusing to give staff new face masks when dealing with new chemical compounds on the basis that the old masks (designed for trapping dust) are adequate.
f) Joe is refusing to drive the firm’s lorry as it was not sent to the garage for its scheduled MOT test.
g) Mohammed has been caught sending obscene messages to other members of staff on a social media site.
h) Samuel works for Addison international, a large oil company. An old colleague of Samuel’s who moved from Addison to another company in the sector rang him yesterday. He says he was at a trade conference and heard James, one of Samuel’s project team, ‘sounding off’ about working for Addison in the bar. He heard James tell the group that working for the company was ‘legalised slavery’ and that the company was ‘morally bankrupt’ because of the way they had treated one of his colleagues. The colleague in question was retired compulsorily a few years ago, but had not been happy to go. James went on to say to the group at the bar ‘you only get on in Addison if someone likes you – it has nothing to do with merit’. Do you think that James is in breach of his employment contract, and if so, how?
6.Pharma plc has two members of staff off work with ‘stress and depression’. May either of these be successful in an action?
a) Sally is in the middle of a very acrimonious divorce. Everyone in the office is aware that she has been struggling emotionally with the fallout from this. She has been off work now for three weeks.
b) Dave had four short periods of work off with ‘stress’ in the last four years. Two years ago, he was moved from a technical job in Taunton up to Pharma’s head office in Southampton, following the closure of a production facility there. He was given a management role which involved supervising some staff at facilities all over England and Wales. He has travelled extensively as part of his job, but has appeared to be struggling. His last appraisal indicated that he needed to ‘slow down, and to stop micromanaging his staff’. Last week Dave had a nervous breakdown.
Lecture 6: Termination of Employment
Week Beginning 9th February 2015
Read Chapter 13
Pages 438 – 451
You will remember that employment protection is provided by the Employment Rights Act 1996. Here we consider how a contract can come to an end
Employment may be terminated in a number of ways
Resignation – notice given by the employee.
Retirement
Consensual Termination – the employer and employee may reach an agreement about the employment ending, for example in relation to an early retirement scheme that the employer offers on certain terms.
Death – employment ends automatically on the death of the employee.
Dismissal- the employer ends the employment by dismissing the employee with or without notice – this includes a failure to renew a fixed term contract. The employee may also be constructively dismissed where s/he resigns in response to a breach of contract by the employer (see below).
Resignation
The employee may hand in his or her notice indicating the date s/he intends to leave. This should be done in writing, but is effective whether it is done orally or in writing. An employer cannot presume that an employee has resigned if s/he fails to turn up at work, and in this situation, an employer should contact the employee and try to get them to return for investigation and possibly a disciplinary for unauthorised absence. If s/he fails to attend for work and/or contact the employer then the employer will send a letter dismissing the employee enclosing their P45.
Zulhayir v JJ Food Services 2011
Z employed by JJ as a delivery driver. In Jan 2005 an accident at work caused injuries to his spine, and he went on long term sick leave. He initially sent in medical notes, but these stopped after 5 months. Payment of SSP ceased in July 2005 and in Jan 2006 he was evicted from his home and moved to a nearby flat, but did not inform JJ despite a clause in his contract requiring him to do so.
In late June 2006, JJ wrote to him at his old address noting the lack of correspondence in the last 12 months and asking him to confirm his resignation in writing if he no longer wished to be employed. The letter stated that if they did not hear from him by 5 July 2006 then they would conclude that he no longer wished to work for them and that he terminated his contract of employment. The letter was returned to JJ as not delivered, but JJ made no further attempts at contact. Z subsequently brought unfair dismissal, disability discrimination and breach of contract.
Held
It is clearly established that an employee’s repudiatory conduct cannot bring a contract to an end, the employer must accept an employee’s breach by dismissing the employee. Z’s failure to notify his employer of his change of address was not an implied termination. The letter – ‘respond or be taken to have resigned’ is not construed as a termination, particularly since JJ knew the letter had not been delivered. No effective steps had been taken by either party to terminate the contract , and this did not take place until Z took tribunal proceedings in May 2010
Retirement
Since October 2011 it has not been lawful for employers to terminate their employees’ contracts because of age ie for retirement. Therefore it is only employees who are entitled to make the decision that they wish to retire. If an employer wishes to terminate the employment of an older member of staff, they will have to do it on the normal grounds of competence, health or misconduct and treat this employee exactly as they would have done a younger employee. This is discussed in the lecture relating to fair reasons for dismissal.
DISMISSAL
Wrongful Dismissal (s95 ERA 1996)
This is dismissal in breach of the employee’s contract.
1. Termination by dismissal
a) Dismissal by Notice. The employer has a contractual right to dismiss for any reason (or no reason whatsoever) providing the employee receives due notice. The period of notice will normally be expressly stated otherwise there will be an implied term of reasonable notice.
Minimum periods see s.86 ERA 1996.
b) Summary Dismissal. Summary dismissal (i.e. without notice) will, prima facie, constitute a breach of contract – as will termination of a fixed-term contract prior to its expiry. Dismissal in breach of contract is termed wrongful dismissal. However, an employee who commits gross misconduct can be summarily dismissed (as the employee will have breached a condition of the contract). N.B. the misconduct must go the root of the contract and thus constitute a repudiatory act by the employee. See: Laws v London Chronicle Ltd [1959] 2 ALL ER 285.Cf. Pepper v Webb [1969] 2 ALL ER 216 and Wilson v Racher[1974] ICR 428; IRLR 114
c) Constructive Dismissal. A constructive dismissal occurs where an employee resigns in response to the conduct of the employer. For there to be a constructive dismissal, it is not enough that the employer has treated the employee unreasonably, the employer’s conduct must amount to a repudiatory breach of an express or implied term of the employment contract. See: Western Excavating Ltd v Sharp [1978] ICR 221; IRLR 27.
Note that it was subsequently made clear that the employer does not owe a general duty to act REASONABLY: White v Reflecting Roadstuds Ltd [1991] IRLR 331
Examples of breaches of express terms may include imposition of a pay cut, unilateral changes to contractual hours and demotions. However, remember the employer’s breach must go to the root of the contract (i.e. be a breach of a condition) and the employee may be deemed to have affirmed the breach if he/she does not act reasonably promptly. The implied duty on the employer not to destroy mutual trust and confidence is of primary importance with respect to constructive dismissal. Duty to maintain Mutual Trust and Confidence (or trust and respect). Most significantly this duty requires employers to treat employees with respect. See lecture notes on express and implied terms.
Other matters
Where the employee would have expected significant benefit in terms of exposure or enhancement of reputation eg in entertainment cases, damages may be recoverable for his/her loss.
Damages cannot be recovered for the loss of statutory rights if the employer has dismissed before the employee has obtained the necessary period of service.
The employee should take steps to find alternative employment and if the employer can prove that s/he has failed to try to mitigate their loss, the damages may be reduced.
Any claim of breach of contract of more than £25,000 will not be heard in the tribunal but by an ordinary civil court.
Where damages are in excess of £30,000, they are taxable. Unfair dismissal damages are not so taxable.
Injunctions
An employee may wish to enforce his contract and require the employer to allow him to remain in employment. In practice this is extremely rare, since courts are not generally prepared to enforce personal relationships. There are just a few cases where employers have been forced to retain the employee in employment, and this is usually because of the extreme prejudice that will be caused to the employee by the dismissal.
Irani v Southampton and SW Area Health Authority 1985
Unfair Dismissal – Every employee has the right not to be unfairly dismissed (s94) ERA 1996
This is where the employee is arguing that:-
The reason given for the dismissal is unjustified in the circumstances, or dismissal is disproportionate response and/or,
the procedure that the employer has followed is defective.
In order to make a claim for unfair dismissal the following must be proved.
The person is qualified to make a claim – they must be:-
An employee
Working or based in the UK
Have completed the minimum required continuous service ( 1 year if the employee started work before 6/4/12, or 2 years if s/he commenced service on or after 6/4/12)
There has been a dismissal.
Assuming that there has been a dismissal, it is for the employer to establish the reason for the dismissal and that the reason falls into one of the potentially fair categories in s98 ERA 1996:-
Capability and qualifications (covers competence and sickness, also whether the employee satisfies the qualifications required to continue in the job egpassing accountancy exams)
Conduct- must be gross misconduct to justify dismissal
Illegality
Redundancy
Some other substantial reason
These ‘fair reasons for dismissal’ are further discussed in lecture 7
The tribunal will have to be satisfied that dismissal is a proportionate response – it does this by applying the ‘range of reasonable responses test.’
The employer will have to follow the proper procedure.
Qualification to Claim
Status
The employee will only be permitted to make a claim for unfair dismissal if s/he is an employee (s94)
Continuous Employment
S/he will also need to show that they have been ‘continuously employed for a period of not less than’ one year or two years, depending upon the date upon which their contract of employment started.
For those employees whose employment commenced before 6/4/12, the qualifying period is one year, for those who started on or after that date, they will need 2 years continuous service in order to make a claim of unfair dismissal.
Following the decision in Redfearn v UK [2013] TRLR 51, the ECtHR decided that the UK was in breach of its duty under the Convention to protect the rights of association by failing to enable an individual, who is dismissed on political grounds, to challenge this dismissal. Under 13 ERRA, the government has remedied this by amending s108 ERA 1996 to remove the need for continuous employment where a dismissal is on the grounds of the claimant’s political opinions or affiliation – such dismissals are not automatically unfair and will be fair if, on the basis of normal principles, the dismissal is within the range of reasonable responses test – see below.
The period needs to be:-
Uninterrupted by any period of more than a week where there is no contract of employment in force – it does not count if the employee is
Sick or injured
On leave for under any of the family friendly rights
On annual leave
What is the termination date? (s97)
This is important for calculating how long the employment has been for continuous service purposes.
The employee must put in the claim no more than 3 months from the date of termination.
Vasella Ltd v Eyre 2012
E wished to resign from her job as an operations manager of an hotel in Glasgow and went into work on Sunday 21 November 2010 and hand delivered a sealed envelope containing her resignation for the attention of P, the hotel’s general manager. P did not work on Sundays and she knew this – she asked the duty manager to put it in his pigeon hole but M told her that P was on leave and would not be back until Wednesday. She accepted this and left the envelope for him. Later that evening she e-mailed her letter to B, an executive PA at the company, B. B did not work on Sundays but read the e-mail and circulated the information to others in the company that evening. The letter of resignation was dated Monday 22 November and stated that she wished to resign’ with immediate effect’. On Monday, B replied to her e-mail accepting her resignation and stating that her last day of work would be Monday 22nd November. When she later put in a claim for unfair dismissal, there was a question of whether she was within the 3 months time limit for unfair dismissal and this depended on when her resignation took effect.
Held
A resignation does not have to be in any particular form as long as the employee clearly communicates to the employer that s/he is treating the employment as being at an end. Even though her letter was delivered to the hotel, it stated clearly that she was resigning on the following day and their response to her made it clear that that is what they believed. E had no reason to think that her decision to resign would have been communicated before the following day. E’s resignation date was 22nd November and her claim was in time.
The effective date of termination is usually the date upon which notice expires, if it is given, or the date upon which an instant or summary dismissal takes place or the date upon which a fixed term contract that is not renewed expires.
What is a dismissal?
In order to make a claim of unfair dismissal, the employee must be able to show that s/he has been dismissed.
Futty v Brekkes
Employee has been dismissed with or without notice
The employee’s fixed term contract has not been renewed
These are known as actual dismissal
Employee has resigned in circumstances which indicate that s/he is responding to a breach of contract by the employer or the employee has been forced to ‘resign’ eg ‘resign or be dismissed’
This is known as constructive dismissal.
Automatic Unfair Dismissal
There are a set of underlying reasons for dismissal which are deemed to be automatically unfair. Under normal circumstances, the employer will have attempted to hide the real reason for dismissal by using some other excuse, such as poor performance. The employee will claim that the real reason for the dismissal is not that which is stated, but one of those set out below.
Because this protection is deemed particularly important in that it protects employees from employers who seek to take away their most basic rights, it does not require a one year’s qualifying service and several of the grounds provide for a higher level of compensation.
The reason for dismissal is;
That the employee took advantage of one of the family friendly rights, such as parental leave, or maternity leave
That the employee concerned was, or proposed to become, a member of a Trade Union or had taken part or proposed to take part in TU activities or was not a member of a Trade Union or a particular Trade Union.
That the employee was taking some action designed to prevent danger to health and safety and was designated to carry out those activities.
Alternatively, where an employee working in a place where there are no such officials, brings Health and Safety matters to the attention of his employers, refuses to work in circumstances of danger or tries to take steps to avert such danger.
That the employee refused to work hours in contravention of the Working Time Regulations or refused to give up the rights granted by that legislation.
Ajayi v Aitch Care Homes 2012
Two employees were employed as waking night support workers at a home for vulnerable adults. The employer made it clear that they were required to remain alert at all times and sleeping on duty would usually result in dismissal. A and O were both caught sleeping on their night shift and instigated disciplinary proceedings. In the course of the proceedings, O asserted that he had been exercising his right to a rest break under the Working Time Regs, but both employees were dismissed for misconduct. They claimed automatic unfair dismissal on the ground that they, by going to sleep, were refusing to comply with the employer’s requirement that they should stay awake all night without a rest break. They could not claim unfair dismissal because they did not have one year’s service.
Held
The word refusal means some positive action needs to be taken to refuse – the claimants could not implicitly refuse to comply by going to sleep. The employees had been dismissed because they went to sleep and going to sleep was not a refusal to comply.
That the employee brought proceedings against an employer to enforce a statutory right eg minimum wage.
That the employee did not disclose the existence of a spent conviction.
That the business was being transferred under TUPE (see later lecture), and the dismissal was made by the transferor by reason of the transfer, or by the transferee and it was not for an economic, technical or organisational reason leading to a change in the workforce.
That the reason or principal reason for the dismissal is that the employee made a protected disclosure under the Public Interest Disclosure Act 1998. Such disclosures will be ones which show e.g. that a criminal offence is being/has been/will be committed, that a person is or has failed to comply with a legal obligation, that a miscarriage of justice is or has occurred or that health and safety is or is likely to be endangered.The sorts of situations covered is where the employee reports a fraud or suspected fraud going on in the higher reaches of the company, or tries to alert senior managers to the fact that illegal workers are being taken on as casual workers, or that the company is polluting a river.
That the reason or principal reason for dismissal is the fact that the employee carried out jury service even though their absence would cause severe problems to the employer and they refused or failed to ask to be excused.
And..
S10 Employment Relations Act 1999 provides that a worker has the right to be accompanied by a colleague or trade union official to any disciplinary or grievance hearing. The companion can take notes, can put the worker’s case to the panel and answer questions on his or her behalf. S12(3)(b) provides that an employee will automatically be regarded as having been unfairly dismissed if the reason (or principal reason) for the dismissal was that s/he accompanied or sough to accompany a colleague under s10
Evans v Open Sight 2012 – a probationary part-time employee was moved to a full time role within her probation period and then agreed to accompany two colleagues, including her boss, at disciplinary proceedings against them. Her new boss, who had initiated those proceedings, dismissed her for poor performance at the end of her probation. The court concluded that there was no evidence that her performance was poor, in fact it was quite the opposite, and the real reason for her dismissal was her support for her old boss and colleague.
Seminar 6: General Principles of Anti-Discrimination
Week Beginning 9thFebruary 2015
1. In the context of the workplace, who is protected by the law preventing unlawful
discrimination?
2. Which section of the Act relates to direct discrimination? What does the term ‘less favourable treatment mean’? Give examples of when this might occur.
3. Find, readand be prepared to discuss the case of Amnesty International v Ahmed UKEAT/0447/08/ZT3.
4. Can you think of any other characteristics not currently covered by the legislation that you think sometimes lead to prejudice against a person? Do you think the law should protect those characteristics?
5. Penny is the manager in charge of short listing applicants for a post as editor of the in-house magazine at Lomax Cinemas Group. The post requires excellent organisational skills, the ability to write clearly as well as good communication skills. Twenty applications were given to her by the recruitment agency. Penny selected four candidates for interview, all of whom were women, all of whom were white and all of whom had experience in similar posts in a media environment. The following candidates were not selected for interview.
a. David had been an editor’s chief assistant in a large book publishing company; he states on the application form he wishes to move into ‘a more exciting environment’. He comes very highly recommended by his previous employer. He states on his CV that during 2009/10 he was not working as he was suffering from ‘depression’ following a divorce. Penny doesn’t list him on the grounds that he might be ‘unreliable’
b. Kishore is Asian who has been working in the UK for two years on temporary jobs. He was an editor for a newspaper in Mumbai and has a lot of experience there. Penny doesn’t list him as ‘language may be a problem’.
c. Neil is 54 years old. He has recently been made redundant from Nat Mags (large publishing company). He ran a magazine there for ten years and has extensive experience. Penny does not list him because he’s ‘not really worth the investment’.
d. Steve has undergone a sex change, and until three years ago was Sophie. Penny does not list him as ‘he will just get a load of banter’ in the office and ‘we don’t have time for that’.
e Giles is not shortlisted – Penny says that she considers his organisational experience in Gay Pride, listed in his hobbies and interests, means that he will be easily diverted from the job.
f. Penny does not shortlist Shaz, since her ‘Essex accent isn’t classy enough bearing in mind the type of people she deals with’
Is Penny potentially acting unlawfully and if so, how?
6. Darren is unhappy about the fact that he has not been promoted to head of his department since his boss, Errol, left. He has been the effective deputy head for four years and was acting head while Errol’s replacement was found, and he had applied for the job. He was told he had not been successful and the new head is a woman. He says that he believes that the company may be ‘determined to put more women in the top management posts’. What evidence would he need to collect to show that this might be the reason for him being passed over for promotion?
7. Lucille joined Betabyte Ltd a month ago to replace Dawn, who is pregnant. Lucille was on a one year fixed term contract. She has just announced that she is, in fact, four months pregnant. Betabyte have dismissed her, as shedidn’t tell us she was pregnant when we took her on’. Are they entitled to do so?
8. Samantha is a junior member of staff at the head office at Kelly Communications. Laura, one of the more senior managers, goes to the HR Department and tells them Samantha has told her she (Samantha) is having ‘a bit of trouble with Nick’, as he is a ‘bit of a groper’. Nick is a senior administrator who is on the same team as Samantha. Laura says that Samantha doesn’t seem too bothered by this, but Laura is worried and that is why she has come to HR.
If the company fails to deal with this matter, what legal action might Samantha have against the company? Is Laura able to take any action against the company?
Lecture 7: Fair Reasons for Dismissal
Week Beginning 16th February 2015
Read Chapter 13
Pages 440 – 450
As previously discussed, assuming that the employer has not been guilty of dismissing for an automatically unfair reason, there are potentially 5 reasons for which a dismissal may be fair.
Capability and Qualification – this embraces competenceie a lack of skills/and or aptitude
Capability – where illness means that the employee may not be fit to perform the work
Qualifications – a job offer is reliant on the employee passing a driving test within 3 years/an accountancy trainee is dismissed because he cannot pass his exams after a specified number of attempts.
Competence and Capability
Competence Issues caused by Sickness
If an employee has a long term sickness problem, or is consistently absent for sickness on a short term basis, the employer will have to consider its position.
If the employee is suffering from a disability, the employer will need full medical information before considering dismissal and will only be able to do this if all reasonable adjustments have been tried to endeavour to get the employee back to work.
With intermittent absences, the employee will have to examine the medical position but, if any adjustments that are tried do not work, and there is no improvement in the employee’s attendance, it may well be reasonable to dismiss.
Managing Performance – Competence
Why do we manage performance?
Managing performance is about recognising good performers and motivating them to stay and grow the business.
Managing performance is also about addressing poor performance and helping people to improve, but if managers do not then they are liable to spend longer on managing poor staff, and lose good performers who become disillusioned, also there are likely to be morale issues within a team
Performance in the probationary period
The principles behind probationary periods have already been covered. In managing performance, or at least in anticipating later problems, probation is a useful management tool. Probationary employees may be dismissed if they are not performing to the required standard. It is normally provided that their probation may be extended if they are satisfactory in some but not all areas. A fair basic procedure should be followed with a meeting clearly setting out why the employment is being extended or the employee is being dismissed and the full reasons for any termination should be properly backed up and documented. Where there are concerns about performance, but grounds for optimism, the extension to the probation will set out objectives for improvement in some areas, with a time frame.
Where the allegation is of general poor performance, critical aspects are:
The setting of standards – the expectations of the employer should be clearly documented as far as possible in terms of performance and objectives – see process below
Communication with the employee – the employee should not be in any doubt as to where s/he is failing to meet these objectives and this should be clearly explained. Although any initial meeting is informal in tone and is not part of any formal disciplinary, the whole conversation should be documented and actions to be taken should be recorded. The employee should always have an opportunity to state his case – this might include issues around sickness, home related or work related difficulties which are affecting performance.
Outcome of the meeting – this might include:-
Training to be planned – whether formal or ‘on the job’ – if the latter, then who is to do it and when?
Addressing particular issues which have been raised e.g. relationships at work, sickness of the employee etc.
Mentoring or coaching – where this is appropriate, what arrangements have been/will be made?
Where are the goalposts? What is the employee expected to have achieved realistically by the time of the next meeting, or what other action should have been taken by each side?
Feedback – when is the next meeting, and where should the employee go if s/he has problems or issues to raise before this?
Once this process has been commenced, a continuing failure to meet objectives and to perform can result in the employee being dismissed (s98 ERA 1996).
Other reasons for poor performance
It may be that during this informal preliminary meeting, or later in the process, the employee discloses that s/he has another problem which is leading, or contributing, to the problems of poor performance.
Illness or disability – the employee may indicate that he has a medical condition or health concerns. It will be inadvisable for the employer to take any further action until the extent and effect of this has been determined. Once it has, if the condition is a disability, the employer will have to consider what reasonable adjustments can be made to accommodate this disability
Stress – the employee may state that s/he is under stress for personal reasons or because of work-related issues. Again the employer will need information about the nature and extent of the stressor. If it is a home related issue, such as a divorce, debt or serious illness in the family, most employers would give the employee some latitude. A tribunal would almost certainly take a dim view of a dismissal for poor performance in the teeth of serious personal problems. If a work related issue is cited, such as excessive workload or bullying, then the employer should carefully investigate the allegations in order to decide whether they are justified, taking appropriate action eg reduction of workload, disciplinary action against bully, where appropriate.
Formal performance management procedure
Bearing all this in mind, once the employee is past the probationary period, and then concerns about performance arise, it will be necessary to carry out a formal procedure.
Once the informal stage has taken place, if there has been no improvement, or insufficient progress towards the objectives, the employer should move into a more formal process. Many employers have a performance management procedure, but if there is no such written procedure, it is acceptable to follow the pattern of the standard disciplinary procedure. The employee is effectively taken through three stages similar to the three warnings, but the meetings are different in that there is no issue of conduct or wilful behaviour; it is a question of competence. The employer will set objectives, discuss with the employee how they may be achieved and what training and support might be required. If, despite this, the employee does not reach a satisfactory standard, then the employer moves to the next stage.
Ultimately, the employee may be dismissed at the final meeting, with notice. It is critical, as always, that these meetings are carefully documented and backed up by letter to the employee confirming the outcome of the discussions. The dismissal procedure should conform with the ACAS Code of Practice, otherwise there is a danger that the dismissal could be seen to be unfair.
Misconduct
The allegation here is that the employee has been guilty of wilful misbehaviour.
Investigation
Before taking any disciplinary action for misconduct, the employer will need to be sure of its grounds. Other than in exceptional cases, the employer will normally launch an investigation into the misconduct. In cases where the allegation is of gross misconduct, it would normally be appropriate to suspend the employee, normally on full pay, pending the outcome of the investigation.
Any investigation will normally be conducted by the employee’s line manager or some other suitable person. They will seek to interview witnesses, review any documents and try to establish exactly what has happened. They will then recommend whether disciplinary action should be taken.
A more senior manager will normally review the investigation, and then decide whether to accept the recommendation. If they do, a disciplinary panel or disciplinary officer will be appointed to hear the internal disciplinary. That person or person(s) must be unbiased as far as possible.
This person(s) will then hear the evidence, including that given by the investigating officer who will present his/her report, any other witnesses on either side, and very importantly, the employee him/herself. They will then make a decision.
Misconduct tends to be divided between
Gross misconduct – examples are dishonesty, violence, harassment or bullying of other employees and this kind of conduct, if found to be proved, will tend to lead to instant or summary dismissal.
Serious misconduct – this is also very serious, but tends to matters that might constitute gross misconduct where the employee is able to show that there are mitigating circumstances and persuades the employer to give him/her a last chance by issuing a formal final written warning.
Minor misconduct – this is misconduct which will not lead to dismissal, but leads to a warning, whether a written warning or a formal verbal warning – it is up the employer which to issue and is a matter of judgment.
All warnings will last for a specific period of time – tendency is for verbal warnings to last 6 months and written warnings to last 12 months. If the misconduct is repeated within this period, the employer will move to the next warning stage or to dismissal.
Particular Issues
What is the difference between misconduct and incompetence?
As stated above, incompetence is the inability to do your job to a reasonable standard. It is perfectly legitimate for an employer to dismiss an employee for incompetence, but this is normally dealt with by a performance management process as laid out above. On the other hand, misconduct tends to be wilful poor behaviour and is dealt with through a disciplinary process. Depending on the seriousness of the misconduct the employer may seek to apply an appropriate disciplinary measure. There is sometimes confusion when the employee is guilty of a major error with serious consequences for the employer – it may feel more like gross negligence than gross misconduct but does that justify instant dismissal? It is always a good idea for employers to list in their list of examples of gross misconduct ‘serious/gross negligence in the performance of your duties’ or something similar.
Here is a case with that confusion…
Screene v Seatwave Ltd[2012]
S Ltd operates a business for buying and selling tickets of tickets for sporting and other entertainment events. S was its financial controller. In June and July 2008, S Ltd was the victim of a series of fraudulent transactions which led to them losing around £1.7m from its German bank account. It had been S’s responsibility to monitor the account, but he did not detect or report the fraud until August 2008.
Following a disciplinary hearing, he was summarily dismissed and in the letter of dismissal, the company stated that S had been negligent in his duties by failing to complete non-UK bank reconciliations, and that this was ‘serious negligence’ on his part and justified summary dismissal.
S was given a right of appeal against the decision, but chose not to complete it although he did activate it. He then put in a claim to the employment tribunal, claiming that his dismissal for gross misconduct was disproportionate and unreasonable. In its response to the claim, the company repeated the charge of negligence and said that it had been so fundamental that it warranted instant dismissal, but it also stated that the reason for the dismissal was incapability, not misconduct.
The tribunal upheld the dismissal, stating that he had been dismissed for incapability and for misconduct, with misconduct being the primary reason ie failure to monitor the account, and that gross negligence was capable of amounting to gross misconduct under their disciplinary procedure. The employee appealed arguing that the tribunal should not have concluded that he had been dismissed fairly for misconduct when this was not mentioned in the defence, and if he was guilty of incapability, this is the procedure that the company should have followed.
Held
The fact that the employer had changed the stated reason for dismissal from conduct to capability made no difference – the facts upon which the dismissal was based remained the same throughout the period and the employee had not suffered any prejudice from the change of label. The dismissal was fair.
Misconduct outside work
Where the employee has been guilty of misconduct at work, the employer will need to carry out the procedure above and a decision will be taken as to whether to take disciplinary action. It is more complicated if the misconduct has taken place outside work.
It has generally been held that where the employee has committed some offence of dishonesty, the employer will generally be justified in dismissing him or her. It will generally be necessary to show that there is a real impact on the employee performing his or her role, or some reputational issue.
Leach v Office of Communications 2012
L was employed as an International Policy Adviser by Ofcom, and Ofcom’s role includes a duty to have regard to the vulnerability of children and it has involvement in a number of social policy initiatives in that area. Before starting the job, L had travelled to Cambodia and had been arrested on suspicion of having sexually abused children on a previous visit to the country. He was not charged. SOCA became aware of the allegations and so did the press. In early 2007, this resulted in him sending off a variety of highly emotional e-mails from his ofcom e-mail account, and his employers investigated these and gave him a written warning for sending the e-mails but was convinced that he was innocent of the allegations.
In late 2007 specialist officers from the Met contacted Ofcom and made them aware of much more serious allegations relating to child sex abuse in Cambodia and were specific about four serious allegations and they told Ofcom that these allegations were ‘the tip of the iceberg’. Ofcom asked for more information, but the police were unwilling to provide more. They asked Leach to respond to this.
Ofcom’s press adviser was of the view that the allegations carried a ‘significant risk of reputational damage’ to the organization if they were true and were carried in the press. In Jan 2008, he was called to a disciplinary at which he denied all the charges, but Ofcom dismissed him summarily anyway. They accepted the police’s advice that he was still a risk to children, and also considered that L had not been open and frank with them and referred to a dismissal for ‘breach of trust and confidence’. His internal appeal was conducted by a senior HR Director who questioned the disciplinary panel and held a further meeting with the police and following this, he rejected L’s appeal.
A tribunal found that the dismissal was fair for Some Other Substantial Reason, and was satisfied with Ofcom’s procedure, appeal to the EAT was unsuccessful. The Court of Appeal heard H’s appeal.
The CA remarked that it could not fault the ET’s judgment in principle. It had said that there was a growing tendency for employers to use the formulation ‘breach of trust and confidence’ as a sort of ‘automatic solvent of obligations’ – it was not. It was necessary to identify precisely why the disclosure made it impossible for Ofcom to continue to employ L. It was clear that it was at risk of serious reputational damage. Where an employer receives official information that an employee poses a risk to children, it must in principle be entitled to treat that information as reliable. An employer in that situation cannot be expected to carry out its own independent investigation as it has neither the expertise nor the resources to do so. The employer should not take an uncritical view, but Ofcom had done its best to find out more.
Gosden v Lifeline Project Ltd 2012
A tribunal held that an employer had fairly dismissed an employee who had sent an offensive chain e-mail, outside working hours and from his home computer, to the home computer of a friend who worked for the employer’s client. The e-mail eventually entered the client’s computer system and caused the employer’s reputation with that client to be damaged. The decision to dismiss the employee was reasonable. The e-mail had been a ‘chain’ type mail which had at the bottom ‘it is your duty to pass this on’, and it was clearly intended for the friend to pass on.
Illegality
This is a legitimate reason for dismissal and is confined to situations where it is no longer legal for the employee to be employed in that role eg s/he is a professional who has lost their licence to practice, a company director who has been disqualified by the court or a driver who has lost their licence.
Redundancy
See later lecture
Some other substantial reason
This is confined to reasons which do not fit neatly into one of the other categories but which the tribunal still considers mean that the employer can legitimately claim that there is a sufficient reason for a lawful dismissal.
Examples include
A refusal to accept a reduction in pay or benefits which has been imposed by the employer on the workforce for good economic reasons and which the overwhelming majority of his or her colleagues have accepted.
Reputational issues where the employee is involved in lawful conduct which may impact eg in Pay v Lancaster Probation Authority , Pay was dismissed because his employer discovered that he was a leading person in the UK branch of a French sado-masochistic society and was involved in a local club which promoted these activities. The employer felt that his employment as a senior probation officer assisting young offenders who had been guilty of sex offences was prejudiced by his activities as would the authority’s reputation if his activities became general knowledge.
Procedural Fairness
Whether or not the reason for the dismissal has been established and whether dismissal is a proportionate response to what has happened is one thing; the other is whether or not the employer has carried out a fair procedure. If this has not been done, then the dismissal will be unfair.
The issue is s98(4)(a) ‘whether in the circumstances (including the size and administrative resources of the employer’s undertaking), the employer acted reasonably or unreasonably in treating the reason as a sufficient reason for dismissing the employee’
It is quite clear that the tribunal should hold the dismissal unfair, even if in its opinion the employer was being harsh, provided the dismissal fell within the ‘range of reasonable responses’ within which one employer might decide to dismiss, whereas another might not.
Remedies
Reinstatement and Re-engagement
If the tribunal finds a dismissal unfair, it must explain to the complainant that these orders are available, and ask if the employee wants the tribunal to make such an order.
Reinstatement is taking the employee back to his/her job, treating him/her as if s/he were never dismissed, inclusive of benefits such as increments/promotion etc. S/he will get their old job back on the same terms and conditions.
This will not be ordered if the claimant does not want it, or where it is not practicable.
Re-engagement is where the employee is taken back by the employer or by a successor or associated employer, in an employment comparable to that from which s/he was dismissed or other suitable employment. Here the tribunal specifies the identity of the engaging employer, the nature of the employment and the rate of remuneration. In either case, continuity is preserved.
These orders are extremely rare, as it is unusual for the claimant to want anything other than compensation – they are awarded in less than 1% of cases.
Compensation
Compensation is the main remedy and is divided up into various ‘heads’. The employee is eligible for a ‘basic award’ calculated in the same way as redundancy payment (lecture 11), and a ‘compensatory’ award, which seeks to put a figure on the employee’s actual loss. Both heads are subject to a maximum and tribunals are now permitted to award interest on their awards.
A minimum award of £5,300 is applicable where the dismissal is for trade union or health and safety activity, and it can be reduced in certain circumstances.
Unfair Dismissal Basic award: £13,920
Unfair Dismissal Compensatory award: 12 months’ gross pay or £76,574 whichever is the lesser amount
A week’s pay is max £464 (gross)
Additional Award 26 to 52 weeks’ pay (capped at £464 per week)
Dismissal for health and safety reasons – No limit
Dismissal for making a protected disclosure (whistleblowing) – No limit
Discrimination – race, sex, disability, sexual orientation, religion or belief, age – No limit
Breach of contract £25,000
Basic Award
Dependent upon the employee’s length of service and his/her pay, the award can be reduced by the amount of any redundancy pay received, and may also be reduced for contributory fault, where the employee has refused an offer of reinstatement, or where the employer has made some ex gratia payment meant to offset legal rights.
The Compensatory Award
The objective of this award is to compensate the employee to some extent for the loss of his job, subject to a maximum. The onus is on the employee to produce evidence of his/her loss.
It should be the amount the tribunal considers to be just and equitable having regard to the loss sustained by the complainant.
There may easily be a nil compensatory award where there has been no loss, or where there has been a procedural defect, which would have made no difference to the decision to dismiss.
Also this may be the case where the original dismissal was on weak grounds, but later a cast iron case against the employee emerged.
The major headings are: –
(i) Loss up to the date of the hearing i.e. actual loss of income including loss of other benefits e.g. car.
(ii) Future loss – actual likely loss times a multiplier, taking into account matters such as local conditions, likely future occurrences in the complainant’s life e.g. redundancy.
(iii) Loss of accrued rights – loss of statutory rights which depend on continuous service
(iv) Loss due to manner of dismissal – loss of dignity, ‘name’ in the industry etc.
(v) Loss of pension rights.
Seminar 7: Termination of Employment
Week Beginning 16th February 2015
1. Distinguish between Pepper v Webb [1969] and Wilson v Racher [1974]. What are the distinguishing features?
2. Explain the term constructive dismissal and give an example of when it might occur
3. What damages are available for wrongful dismissal?
4. What are the major differences between the actions of wrongful dismissal and unfair dismissal?
5. Are the following fair reasons for dismissal or could the employer taken any other action? Are any of these automatically unfair?
a. Alan is dismissed for wishing to join a trade union
b. Betty is dismissed because no matter how hard she tries, she cannot seem to grasp the new machinery brought in by management
c. Cynthia is dismissed when her employer finds her smoking in the Ladies toilet
d. David was employed three years ago on the basis that he passes his HGV driving test within three years. David has just failed again and is dismissed.
e. The company for which Edwin works has just announced that it is to close and staff have been told they will be dismissed.
f. Frank is concerned that some of his work colleagues are operating machinery without proper safety equipment. When he raises the issue with his manager he is dismissed.
g. Grace has a boyfriend who works in sales and Grace takes great delight in continually telling her work colleagues about what the pair get up to at the weekend. Other members of staff are fed up with listening to this and have complained to their manager on a number of occasions. The staff have now said that if Grace is not dismissed, they will all leave. Grace is dismissed.
h. Hamad is dismissed when he is caught stealing from the till.
Lecture 8: Grievance and Termination Procedures
Week Beginning 23rd February 2015
Reading:
Look at www.acas.org.uk, Disciplinary and Grievances at Work, the ACAS Guide which accompanies the Code of Practice 1 Discipline and Grievance Procedures.
Grievance Procedures
It is important that the employee is able to bring a grievance against anyone within the organisation, it fact, it is an implied term that a grievance and discipline procedure is in place. There is no set format for this, but the system must be robust and must provide the employee with an opportunity of raising issues within a confidential framework. The employee is entitled to raise any issue and his grievance must be heard in a timely manner. The employee must also be satisfied that action is taken/or that his issue with dealt with/or that he has received a full explanation as to why this situation has occurred.
For example in organisation in A it has been decided that all grievance letters should be addressed to the HR Manager and that he/she will decide who is the most appropriate person to hear the grievance. If the grievance is in relation to the HR Manager him/herself, then the grievance letter is to be sent to a Senior Manager within the firm. In this scenario:-
Jo feels aggrieved because he feels that his Manager is not allowing him to take holiday to which Jo is entitled. Jo writes a simple grievance letter, the format of which has previously been set out by the HR Department. In the letter Jo states that he feels that he is being ‘picked on’ by his Manger because others in the department are able to take heir holidays when they choose. The grievance letter is sent to theHR Department who decide that they will write back to Jo and explain to him that they will speak to his Manager on his behalf and find out why holiday time is not being given. The HR Manager then arranges a meeting with Jo’s Manager who states that the work Jo is involved in is critical for a major contract and that once the work is completed, Jo will be free to take holiday. The HR Manager points out to Jo’s Manager that this bad feeling could have been avoided and that it is his responsibility to explain his decision to Jo and not to merely refuse his request for holiday. Jo’s Manager then holds a meeting with Jo and explains the position, apologising for not explaining the situation more clearly in the first place. Asa gesture of good will, the HR Department decides to award Jo (and other involved in this contract) an extra day’s holiday for helping the organisation with this very important contract.
If a letter of grievance does not resolve the issue, the procedure becomes more formalised, again there is no set format for this.
In essence:-
The employer holds a meeting; formal meetings should be held without unreasonable delay.
Employers/employees and companions of the employee should make every effort to attend; employees should be allowed to explain their grievance and how they think it should be resolved, adjournment may be necessary if investigation is needed.
At all times, the employer must allow the employee to be accompanied, this also applies where the employee is complaining about the employer breaching a duty which is owed to the employee, which will be most usual cases.
The employer must decide on appropriate action and must then communicate this to the employee, and where appropriate, set out the action that the employer intends to take.
The employee should be informed that they have a right to appeal and the grounds of the appeal should be set out in writing without reasonable delay. Theappeal meeting should be set without unreasonable delay and at a time and place which should be notified to the employee in advance. The appeal meeting should be heard without unreasonable delay by someone not previously involved in the case if possible. There is a statutory right to be accompanied and the outcome should be communicated to the employee in writing without unreasonable delay.
Overlapping grievance and disciplinary cases
Where an employee raises a grievance during the disciplinary process, the disciplinary process may be temporarily suspended in order to deal with the grievance.
Where the two are related it may be appropriate to deal with them concurrently.
Collective grievances
What is said above is not appropriate for grievance raised by 2+ people to a trade union – they should be dealt with by the organisation’s process.
Dismissal Procedure
REMEMBER, unfair procedure can make what would otherwise have been a fair dismissal, unfair. It is absolutely crucial that the proper procedure is followed.
With misconduct, competence and incapability dismissals, the standard is set by the ACAS Code of Practice on Disciplinary Practices and Procedures in Employment (can be found on www.acas.org.uk.). A failure to follow the recommendations therein will often count against an employer in judging the fairness of the dismissal. The standard procedures of most large employers conform to this.
Important points are:
It is crucial that any individual employee should be aware that s/he is to attend a disciplinary hearing. Employees must have notice of the charge against them.
Under s.13(4) of the Employment Relations Act 1999, the right to be accompanied applies to only those disciplinary hearings that could result in: the administration of a formal warning; the taking of some other action (for example dismissal or other disciplinary sanctions); or the confirmation of a warning or other action already issued or taken (ie an appeal hearing). Although the statutory right does not apply to an investigatory meeting, an employee may have the right to be accompanied under the employer’s own disciplinary procedure.
Employers should try to ensure that the decision to dismiss is not taken by the person who has initiated the complaint or someone whose dealings with the employee might have already tainted his/her view of the case.
The employee should have an opportunity to put his/her side of the story – this is of vital importance.
The employer should talk to any witnesses and gather relevant documentation; there is no general principle that the employee must be shown the witness statements, as long as they are told the substance of the accusations.
The employee should be able to present evidence and/or cross-examine witnesses if s/he wishes.
It is not generally acceptable to dismiss an employee for a ‘first offence’ unless it is gross misconduct. He should normally be subject to a series of warnings before dismissal is an option. It will not be fair to take into account expired warnings in taking the decision to dismiss.
Reasons for the decision should be given and the panel should consider a full range of actions it might take, not just dismissal.
There should be a right of appeal against any disciplinary decision.
In order to justify a dismissal for misconduct, the employer will have to show that s/he honestly believed on reasonable grounds that the employee was guilty, and this belief must exist at the time that the employer took the decision to dismiss.
In order to back this up, the employer must show that s/he has carried out as much investigation into the matter as is reasonable in all the circumstances and this will depend, to some extent on the size and administrative resources of the employer.
The employer may not rely on after-acquired information to justify a previous dismissal, but where this was discovered during the appeal process, they may so rely.
With illness, the tenor of the procedure is different, but the principles are the same. Tribunals consistently stress that to warn a genuinely ill person is inappropriate – what is important is consultation and the gaining of medical evidence as to future prospects of the employee.
The ACAS Code
The general rules that employers should follow are:
The Code concentrates on disciplinary situations, which include misconduct or poor performance. It is legitimate to use a separate procedure to deal with performance issues, but the basic principles of fairness must be followed.
Principles
Disciplinary and grievance policies should be laid out in writing.
Where possible, employees should be involved in the development of policies.
Managers should be made aware of them.
Often formal action is necessary, but what is reasonable or justified will depend on size and resources of employer.
However, disciplinary matters should be dealt with fairly:
Employers and employees should deal with matters promptly eg meetings and decisions under the procedure.
Employers and employees should act consistently.
Employers should carry out any necessary investigations, to establish the facts.
Employers should inform employees of basis of the problems and given them an opportunity to put their case before decisions are made.
Employers should allow employees to be accompanied.
Appeal against any disciplinary sanction should always be allowed.
Disciplining Staff
Establish the Facts
Investigate without delay
Either
Hold an investigatory meeting without unreasonable delay, or
Collate evidence
If a disciplinary meeting results, a different person should investigate and conduct disciplinary if possible.
There is no statutory right to be accompanied at investigatory meeting, but employer procedure might allow itif employer is suspending with pay, should be as short as possible, kept under review and the suspension itself is not disciplinary action.
Inform the employee
If a disciplinary meeting is to be held, inform the employee in writing with enough information to be able to defend himself, and possible consequences, andcopies of any written evidence, including statements to be included, andnotify employee of time and date and venue, andadvise employee of right to be accompanied.
Hold the Meeting
This must be done without unreasonable delay, but give enough time for the employee to prepare his or her case. Employers and employees should make ‘every effort’ to attend meeting.
The employer
explains the complaint;listens to employee’s response; gives employee the opportunity to ask questions, present evidence and call witnesses; gives employee opportunity to challenge employer’s witnesses; where either party intends to call witnesses, they should give notice to the other side.
Right to be accompanied
There is a statutory right to be accompanied where meeting could result in:
formal warning being issued; or
taking of some other disciplinary action or
the confirmation of such (ie appeal hearings)
The companion can be a workmate, TU Rep or official employed by TU (if a TU rep, they must be certified by Union as competent to accompany worker).
The companion can
address the hearing to sum up the employee’s case; respond on behalf of the worker to any views expressed at the meeting; confer with the employee during the hearing.
The companion cannot
answer questions on the worker’s behalf; address the hearing if the worker does not want this, or
prevent the employer from explaining its case.
Decide on Appropriate Action
Inform employee in writing. The usual sanction is written warning, first or final. This should set out in writing the nature of misconduct/poor performance andwhat is required to improve.
The timescale for this
How long the warning will last and the consequences of any repetition.
If it is a dismissal, the employee should be informed
Reasons
Date of termination of contract
Period of notice
Right of appeal
If gross misconduct has taken place
Only an employee with the appropriate authority can take that decision
There must still be a fair process
Generally what constitutes gross misconduct should be set out by the employer.
Where an employee is persistently unable to attend a disciplinary hearing without reasonable cause, the employer should take a decision on the evidence available.
Opportunity to appeal
Should be heard without unreasonable time and delay
Ideally at an agreed time and place
Employees should set out grounds for appeal in writing
Where possible should be held by someone not previously involved in case
Workers have statutory right to be accompanied
Result should be conveyed to employee in writing.
Seminar 8: Fair Reasons for Dismissal
Week Beginning 23rdFebruary 2015
1. Derek is a lorry driver. He currently holds a Class 2 licence which does not enable him to drive articulated lorries. This has not been an issue, since his employer, Hambledon Freight, has operated a number of non-articulated lorries which have been for deliveries to two large customers. However, his employer has recently gone over to running only articulated lorries since the customers have required it. They offered Derek a chance to take his Class 1 licence test, and he has tried to pass it, but has just failed for the third time. Do you think the employer can dismiss him fairly, if so for what reason?
2. Ray has worked for Dawsons Plumbers for fifteen years and reports directly to Darren, his manager. Ray is very experienced. His two most recent reviews have been respectively C and now D, the lowest grade. The main issue seems to be that since many of the company’s clients have gone over to computerised heating systems, Ray has struggled to cope. To be honest, he has always had a problem with flexibility and adapting to new things. Yesterday, an important client called one of the directors of Dawsons, furious about a mistake that Ray had made on his system. The director called him in and dismissed him ‘with immediate effect’. Do you think this is likely to be seen as fair, and if not, why not?
3.
4. An e-mail has found its way onto Fortress Security’s website, sent to one of the staff who immediately alerted the senior management. It is an English Defence League recruitment e-mail and contains racist language. The IT department investigated and they have traced it to an ex-employee’s e-mail, but it was forwarded to that address from the private e-mail account of a current member of Fortress’s staff, Nick. At the bottom of the email, there is a statement ‘we are always recruiting new members! It is your duty to pass this on!’It was sent from Nick’s home laptop on a Saturday evening, when he was not at work. Nick has now been disciplined and dismissed. Fortress Security provide services to several local prisons in the South of England and the prison service, which is its biggest client, has a zero tolerance attitude to racist material. Nick argues that the e-mail is a confidential communication and that his behaviour on a Saturday night is ‘none of your business and it is not reasonable to discipline me for it.’ Do you agree?
5. George has been dismissed from his job as warehouse man as the manager finds some irregularities in the stock handling system. George has been employed by the company for ten years and has an excellent work record but he has lately become rather forgetful and admits to the manager that he thinks he may have forgotten to enter some vital information on to the sheets. Is the employer able to dismiss George in this way?
6. It has come to the management’s attention that the Saturday warehouse lad Imran is only 15 and not 16 as they thought. This is because his details were entered incorrectly on the system and Imran did not disclose this fact.
See next page
7. If an employee is suspected of gross misconduct, how should the employee proceed?
Lecture 9: Redundancy
Week Beginning 2ndMarch 2015
Read Chapter 13
Pages 450 – 453
You will remember that redundancy can be a fair reason for dismissal (s98 ERA 1996) – see previous lectures
Redundancy
A person can only qualify for redundancy where they:-
Are an employee
Are employed continuously for 2 years
What is a redundancy?
An employer can dismiss an employee for redundancy where:-
The employer’s business or the part of the business where the employee was employed has closed down or the employer no longer carries on business in the place where it was carried on before.
The requirements that the business has have ceased or diminished or are expected to do so
In terms of employees to carry out work of that particular kind, or
For employees to carry out work of a particular kind in the place where the employer employed the employee.
Closure of the business
If the employer completely ceases the business in which the employee is employed, the resulting dismissals will constitute redundancy. Where the business is taken on by a new owner, the Transfer of Undertakings Regulations (mentioned above) have the effect of transferring all the employment contracts intact to the new owner.
Cessation of the business at a particular location
Where the business moves to another location, or part of a business operated in a particular location closes down, there may well be a redundancy situation. Whether any employees at the site to be closed are redundant will depend on whether the new or remaining sites are far away and also whether the relevant employee has a mobility clause in his or her contract.
Diminution in the need for labour
A number of situations may give rise to a reduction in the need for employees. There may be a reduction in demand for the employer’s goods or services, labour may be replaced by technology or mechanisation or a restructure may reduce the need for staff eg flattening the management structure.
In all these cases, there is potentially a redundancy, since there is a reduction in the need for employees.
In Safeway Stores v Burrell 1997, the EAT suggested the adoption of a three stage test which is in use today.
Was the employee dismissed?
If so, did the requirements of the employer’s business for employees to do work of a particular kind cease or diminish, or were they expected to?
If so, was the reduction in need for staff caused wholly or mainly by that?
There is no need to prove that this particular employee’s job has disappeared; it may have been merged with someone else’s, or someone else may have been moved into the employee’s job (‘bumping).
Qualification for redundancy pay
Only employees have a right to redundancy pay, if they otherwise qualify. Workers such as agency staff and casuals cannot claim a statutory payment.
A person who has been made genuinely redundant will not be able to successfully claim unfair dismissal, providing the employer has gone through a proper selection and consultation process, and they will be restricted to redundancy only.
All employees who have worked for their employer for at least two years continuously will qualify to claim statutory redundancy pay, in addition to their contractual or statutory notice.
A redundant employee must be given a written statement showing how his or her redundancy pay has been calculated – failure to do so is a criminal offence.
The amount of redundancy pay will be calculated as –
0.5 week’s pay for each full year of service where age during year is less than 22
1 week’s pay for each full year of service where age during year is 22 or above, but less than 41
1.5 weeks’ pay for each full year of service where age during year is 41+
The weekly pay which is used to work out your redundancy payment is usually the employees normal weekly gross pay at the time they were made redundant. Gross pay means pay before tax, national insurance and any other legal deductions have been made.
There is a maximum weekly limit which is currently £464. This means that even if the employee earns more than £464 a week (£470 in N. Ireland), the redundancy pay will be based on weekly earnings of £464 (£470 in N. Ireland). Length of service is capped at 20 years and the maximum amount of statutory redundancy pay is £13,920.
If the employee changed from full-time work to part-time work and then were made redundant shortly afterwards, weekly pay will be calculated at the part-time rate. This is because the calculations are based on how much the employee is earning when they are made redundant.
If the employee is paid commission on a regular basis, this should be included in to the week’s pay.
A week’s pay does not include overtime pay unless the overtime is regular and the employee has to do it as part of the job.
If earnings vary each week, an average of the 12-week period leading up to the redundancy is used.
Some employers pay according to their own redundancy payment policy in excess of the statutory entitlement. It is advisable for such policies to mirror the statutory scheme to prevent any claim of age discrimination as most redundancy payments will increase with length of service and therefore age is a significant factor.
Offer of suitable alternative employment
If alternative work is available and the employer fails to offer it, this may convert a redundancy into an unfair dismissal. If a redundant employee is offered a suitable alternative, and refuses it, then s/he will lose their right to redundancy pay. Therefore the statutory scheme encourages redeployment.
Where the employee has been made redundant, the employer must make an offer of re-employment before the old employment ends. The new job must start, or be due to start either immediately the old job comes to an end or after an interval of not more than four weeks. If the employee accepts the offer, s/he is treated as not having been dismissed and no redundancy payment will be made. If the employee unreasonably refuses an offer of suitable employment, then the employee will lose the right to a redundancy payment, although s/he will still be dismissed for redundancy.
What is suitable employment?
The question of whether the offer is a suitable one is always a question of fact for the tribunal. This is both objective and subjective. The first issue will be the objective one, ie whether the nature of the job on offer in terms of content, status and terms and conditions, and to what extent they are equivalent to the redundant position. The next issue is subjective suitability, and the extent to which the employee perceives the position as being suitable. This will determine whether the employee was reasonable to refuse it. There are a number of cases where tribunals have found that the new position being offered is suitable objectively, but because of the employee’s perception that it involved considerable loss in status, it was not suitable for this employee and s/he was reasonable to refuse it.
Taylor v Kent. A Head Teacher was offered alternative employment as one of a pool of mobile teachers. The salary was to be the same but the drop in status meant that the role was ‘unsuitable’.
Cambridge & District Co-operative Society v Ruse. A Manager of a butcher shop was transferred to manage a butchery department in a large store when his shop closed down. Having less responsibility and (in his mind) less status, he left claiming redundancy. It was held that his perceived lack of status allowed him to refuse the new job.
Trial period
In any situation where an employee has accepted an alternative job, statute provides for a ‘trial period’ in which s/he can try out the job for its suitability. The statutory trial period is mandatory. The trial period begins when the employee’s employment under the old contract ends and it ends four weeks after the date on which the employee starts work under the new contract.
If the employee terminates the contract during the trial period, or gives notice during the trial period to terminate it, and the contract does then end, s/he is treated as having been dismissed for redundancy when the original contract came to an end. The employee is also treated as having refused the new offer of a job. If it is concluded that the alternative job was suitable, then the employee will lose his/her right to a redundancy payment. It is possible, in limited circumstances, for the trial period to be extended by mutual agreement. The only acceptable purpose for this is that a period of retraining is needed by the employee in order to perform the new job.
Fair redundancy procedure
There is a statutory consultation process which must be completed in the context of larger redundancy exercises where more than 20 employees are being made redundant.
Individual Consultation
First stage
The employer should:-
Consider ways of avoiding redundancies – it may be possible to negotiate some kind of flexible working or job share arrangements, and it may be possible to second staff to other businesses or clients, have a recruitment freeze, reduce agency working etc in order to stave off the need for a redundancy programme.
Consider a general economic reorganisation of the workforce eg reducing hours, overtime payments etc. Employees may prefer to agree to such a change in order to try to keep their jobs. This means vital staff are not lost.
Consider asking for volunteers for redundancy, but reserving the right to veto any applications where staff areto valuable to lose. Many employers do not like to do this, and it is certainly not obligatory.
Take legal advice to ensure that any redundancies are carried out in accordance with the law, if they do become inevitable.
Women on maternity leave
If there are women on maternity leave within the pool at risk of redundancy, they are a particular danger to the employer. A redundancy in this situation may not only be an unfair dismissal but also discrimination because of the protected characteristic of pregnancy and maternity.
Women on maternity leave have no right to keep their jobs in a redundancy situation, but they do need to be fully involved in the consultation process laid out below, and the employer should be flexible about this eg holding meetings at the woman’s home. Care will also have to be taken with any selection matrix to ensure that they are not being disadvantaged as against staff who are not on maternity leave – equally they should not be treated more favourably than other staff in the way in which they are marked.
The woman is entitled to be offered any suitable alternative vacancy, before it is offered to anyone else who has been made redundant. This may involve using temporary workers until she returns from her maternity leave and starts her new job where that is reasonably practicable.
Individual consultation
Where particular jobs are clearly earmarked for redundancy because eg a whole department is closing down or a particular function which a particular employee or group of employees performed is no longer required, then no selection will be necessary. In that situation, the employer must;
Carry out a proper consultation to give individual employees an opportunity to comment on the process and to provide time for the employer to decide whether alternative employment is available.
Write to the employee before holding the first consultation meeting setting out the fact that s/he is at risk of dismissal for redundancy, it is often good to have an informal chat with the employee at that time setting out the issues and explaining why the letter has had to be sent.
Inform the employee that s/he may have a companion at any meeting (this is not legally required, but is generally considered to be good practice).
At that meeting, set out formally the reasons for the redundancy and give the employee an opportunity to comment and to ask questions before setting a consultation period, normally between 2 and 4 weeks in which s/he may come forward with comments and the employer will look for alternative employment in the business, if possible. Generally the more employees that are being made redundant, the longer the consultation should be. It is critical that at this meeting the redundancy is not expressed in any way as a final decision – the employee is ‘at risk’, and not redundant at this stage.
If no options present themselves, a further meeting will be held at the end of the consultation period in which the employee will be given his notice. He may or may not be required to work that notice, and at termination they will receive their redundancy pay and any accrued holiday due.
Where there is a need to select employees from a group
It may be necessary to make more than one person in a particular role or department redundant. The employer must select the staff on a fair and objective basis. Criteria that are used must be as objective and relevant as possible and based on skills and knowledge. Employees may be disadvantaged by discriminatory criteria – be careful of absence criteria that discriminate against disabled people, or women who have been or are on maternity leave.
The selection procedure should place everyone in the same or similar role being considered for redundancy into a pool for selection. This generally consists of those staff who are genuinely interchangeable. They will then be subject to a selection matrix. Factors or criteria can be chosen and given marks, which, say, add up to 100, with a time frame of eg the last 12 months They may include matters such as performance (where there are clear objective criteria that can be fed into the matrix), casual absence record, disciplinary record, qualifications, flexibility etc.
Any claim for unfair dismissal will be less likely to succeed if two people do the marking and their mark is averaged.
Before the employer actually applies the selection criteria and does the marking, it should undertake the individual consultation process laid out above.
Everyone who is at risk of redundancy should have an opportunity to have input on the planned selection process before it is carried out, so there is one more meeting here than there is in the consultation process laid out above. The first meeting will be to consult on the selection criteria and then the second is to place the selected employees at risk, with the third confirming the selection and giving the employee notice. At that first meeting the employees at risk have a chance to see the matrix, take it away and comment on it. This is also likely to mean that the consultation period will, in total, be likely to be slightly longer where a selection for redundancy needs to take place.
As stated above, only after consultation has been concluded should the employer give notice of termination. The notice must be in writing and should include a right of appeal. Again this is not obligatory, but is considered to be good practice.
If the employee exercises his or her right of appeal, then an appeal hearing must be arranged at which the employee is given the right to be accompanied. The employee must be informed after the meeting (preferably in writing) of the outcome of the appeal.
Some new cases on redundancy
Packman t/a Packman Lucas Associates v Fauchon2012
F was employed by P largely to carry out bookkeeping services. There was a reduction in the need for this work following a downturn in business and a new accountancy package being used. She was asked to agree to a significant reduction in her working hours and was dismissed when she refused to do so. The employer argued that there was no redundancy situation and no need to pay her redundancy, since there was no reduction in headcount.
Held
The legislative provisions focus on the needs of the business in terms of employees to ‘carry out work of a particular kind’ this meant that if the need for work of a particular kind has diminished ie that less work of that particular kind needs to be done, there will be a redundancy situation.
This case is very significant since there is conflicting authority in the EAT which states that you do need a reduction in numbers, not just hours and this case poses questions for employers who seek to reduce all its staff’s hours of work or pay as part of an economic reorganization which is very common nowadays. The EAT rejected the employer’s appeal. This was a redundancy.
It said the focus must be on the employer’srequirementsforemployeestocarryoutparticularwork,notontheworkthatanindividualemployeecarriedout.Iffeweremployeesareneededtodothesameamountofwork,thereisadiminishedneedforworkofaparticularkind.Andthesameappliesifthereisareductioninworkforthesamenumberofemployees.Areductioninheadcount
Isnotalwaysnecessary.
Redundancy Selection
‘The pool’
Generally, if an employer wishes to make a redundancy or redundancies, but does not wish to dismissal all employees of a particular type, it will have to make a pool of interchangeable employees from which to select. Two recent cases are helpful on this.
Capita Hartshead v Byard 2012
B was employed by CH as an actuary. She acted for clients in relation to the management of their pension schemes. Her line manager and two other actuaries were employed at the same location. Each pension scheme was required to have a named scheme actuary. Although CH would propose a particular actuary to be allocated to the scheme when it pitched for the work, it was prepared to propose a substitute if the actuary did not suit the client and would vary its choice where eg there was long-term absence of a particular member of staff.
Following the loss of some of B’s clients and unsuccessful bids for new work, there was insufficient work for B to fulfil a full time role. The other actuaries’ portfolios had barely diminished. There was no suggestion that B was responsible for the loss of her clients – her ability was praised and it was acknowledged that she was a good and conscientious worker. CH decided a redundancy situation existed and since it was B’s work in the main that had gone, she should be placed in a pool of one and made redundant. She challenged this.
Held
The employers argued that there was a risk of loss of clients if B was retained and other work was transferred to her. The tribunal was not satisfied that it was a foregone conclusion that B would have been selected if all the actuaries had been included, or that there was actually a real risk of losing clients, since there were circumstances in which the actuary had been changed and it had not resulted in losing the client. The EAT agreed with the decision that there had been an unfair dismissal.
NOTE though that tribunals will not readily interfere with an employer’s selection of a pool. They are always a bit suspicious when the size of the pool is exactly the same as the number of redundancies to be made, as it is rather convenient for the employer not to have to undergo any consultation process. If they examine the employer’s reason and finds it is not really justified, they will presume that the employer either did not think about the constitution of the pool or only gave it a passing thought, rather than looking at it properly.
HOWEVER
Halpin v Sandpiper Books 2012
SB was a book distributor and asked one of its administrator/analysts to move to China to develop sales in China. As his role developed he was spending at least 3.5 days per week on sales and the rest on admin. SB Ltd decided to close the China office and to outsource the sales work to a local agent in China. There was extensive consultation and he was offered part-time admin work in London which he declined and then he was made redundant. He argued that there should not have been a pool of one. Held – he had been ‘fairly selected insofar as he was in a pool of one given his unique position dealing solely with sales and based in China’.
He appealed arguing that he should not have been put in a pool of one.
Held
This was a logical decision by the employer – H was on his own dealing with sales in China and this work had stopped. The fact that H had previously carried out tasks in admin and analysis which were still mainly carried out by others did not alter the analysis. There were no other similarly qualified candidates for redundancy and a pool of one was appropriate.
Seminar 9: Grievance and Termination Procedure
Week Beginning 2ndMarch 2015
1. Vincent has not attended work for three days. He fell out with his department head and, after a very public row, threw his security pass on the floor and told his boss ‘you can keep your stinking job’. Since then no one has heard from him.
What action should the employer take?
2. Sarah is conscious of the fact that her manager seems to pay her rather too much attention but is rather timid and does not feel able to approach him to discuss the matter.
What would you advise her to do?
3. What is a grievance?
4. Why is it important that a firm has a grievance procedure?
5. Smith’s Bar is a ‘niche’ market bar which has a reputation for attracting wealthy young local residents. Adam has worked as a waiter at the Bar for 3 years. Ben joined the firm as a waiter 9 months ago. Coleen, a cleaner has worked for the firm for 3 years. On 14th December 2014, as it was his birthday, Adam spent his lunch break in the bar and was joined by Ben and Damian, the headwaiter. Although Damian had to leave after half an hour, Adam and Ben continued to drink their way through a bottle of spirits between them. Coleen was cleaning around the bar area and continually told Adam and Ben that they ought to stop drinking before someone saw them but then, following repeated requests from Adam and Ben, she accepted a drink of orange juice during her lunch break. Damian returned to find Adam and Ben in an intoxicated state (very drunk) just as David, the conference manager, accompanied by a potentially highly lucrative customer, arrived in the bar. After viewing the scene on the hotel’s CCTV, the management of the Bar dismisses the staff mentioned here for gross misconduct.
a) Do you think that summary dismissal for gross misconduct was warranted for each staff member?
b) What other action could have been taken?
c) How can the Bar ensure that this type of behaviour does not happen again?
Lecture 10: Transfer of Undertakings
Week Beginning 9th March 2015
The recommended text does provide sufficient detail on this subject. Please consult another text book.
The sale or transfer of a business
The rights of an employee whose employer sells the business or part of a business in which s/he is employed are now governed by the Transfer of Undertakings (Protection of Employment) Regulations 2006. These rules originated in Europe (The Acquired Rights Directive) and were designed to protect the precarious position of employees in this situation – traditionally if their employer’s business was sold or transferred, the contracts did not; the new owner could choose whether or not to employ them.
Relevant Transfer
There needs to be a ‘transfer of an undertaking, business or part of an undertaking or business situated immediately before the transfer in the UK, to another person where there is a transfer of an economic entity that retains its identity’.
The undertaking can be either a private or public undertaking engaged in some sort of economic activity – doesn’t matter whether profit is involved and the undertaking is non-commercial.
Economic entity – is defined as an ‘organised grouping of resources with the objective of pursuing an economic activity, whether or not that activity is central or ancillary.
Retention of identity – there needs to be some continuance after the transfer – ie the nature of the business must not change.
Service Provision Change
These Regulations also apply in three other situations.
The first is where the original employer (the transferor) decides to ‘contract out’ some part of its activities eg its canteen, its cleaning or its security, to a separate company which provides those services. Any employee engaged wholly or mainly on that activity will transfer to the new service provider.
The same is the case the other way round ie where the employee is working for a company providing services to a client, and the client decides to take those services back in house.
Finally it applies on a transfer of contracts where the employee is working for an employer company (A) that is providing a service to a client and loses that contract to another service provider (B). In that situation, any employee of A who spends all or most of his or her time working for that client will transfer to the new contractor, B. For example Emily is a cleaner employed by Pristine Ltd. She only works three days per week, and all of that time is spent at Pristine’s client, Coombs Ltd, which has a large distribution depot. Coombs Ltd decides that Pristine has become too expensive and accepts an offer from another company Sparkles Ltd, to clean the depot. Emily’s employment will transfer to Sparkles automatically because the contract has transferred.
The effect of a transfer
The employees’ contracts will not terminate but will be automatically transferred to the transferee, just as though the transferee had always employed the employee
Where any employee is dismissed before the transfer is dismissed and the reason for the dismissal is solely or principally the transfer, then that employee is automatically unfairly dismissed
it is next to impossible for the transferor to dismiss an employee fairly leading up to the transfer, but once it is completed sometimes the transferee will undertake a redundancy programme – it is not unfair to dismiss employees for an economic, technical or organisational reason that entails changes to the workforce (usually reduction in numbers required following the transfer)
The transferee will not be able to alter the transferred employees’ contracts eg to harmonise theirs with existing employees as the transferred employees have an absolute right to their original terms being preserved and not altered because of the transfer. Alteration can only be made where the reason is unconnected with the transfer or where it is for an economic, technical or organisational reason that entails changes to the workforce.
Where an employee refuses to transfer he is normally regarded as having resigned and he will be entitled to no compensation. However, if the transferor proposes making changes to his employment which mean that he will suffer substantial and detrimental change to his working conditions, he is entitled to regard himself as unfairly dismissed and can claim compensation.
Seminar 10: Redundancy
Week Beginning 9th March 2015
1 When does a redundancy situation occur?
2 What was the issue in the case of Robinson v BI Airways [1978]? What did the tribunal focus on to reach a decision?
3 In Murray v Foyle Meats Ltd [1999] Lord Irvine stated that the Tribunal considering whether a redundancy situation had occurred had only to ask two questions – what were those questions?
4 What is meant by the phrase ‘bumped redundancy’? Give an example.
5 Under what circumstances is the employee facing redundancy required to accept alternative employment within the organisation? Quote a case as an example.
6 Why is consultation so important in relation to redundancy?
7 Discuss the main reasons why employers fail to consult? Do you agree that these reasons are valid?
8 Why might the LIFO selection process be considered discriminatory?
9 Discuss RS Components v Irwin [1973]. Do you think the decision in this case was justified? How far do you think this type of protection should extend?
10 Are the following people working for Kelner Inns Ltd entitled to a redundancy payment?
a Daniel who has been working as a full time chef for 18th months?
b Clara who has been working as a part time waitress for 4 years?
11 Kevin is a bricklayer and Karen is an administrator. They have been working for three years on a large building site in Havant where their employer, Crocus Development has been engaged in constructing a sports and leisure centre along with a small estate of low cost housing. The project will be over in a month and the company is due to start another similar project on a site which is 5 miles from the Havant site. Both claim that they are redundant and are seeking a redundancy payment.
What issues will the court take into account when deciding whether they are redundant or whether their jobs continue at the new site?
Lecture 11: Week Beginning 16th March 2015
Current Issues
In this week’s lecture we will look at issues which are currently being highlighted in the media.
Seminar 11: Week Beginning 16th March 2015
Transfer of Undertakings
1. What is a “transfer of Undertakings”?
2. What is meant by “Goodwill”?
3. Find and explain Regulation 3 of TUPE 2006 following the amendments made by The Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014.
4. Find Regulation 4 of TUPE 2006 – what is meant by “the employee’s contract shall have effect after the transfer as if originally made between the person so named and the transferee?”
5. Why was Litster v Forth Dry Dock [1989] distinguished from Secretary of State for Employment v Spence [1987]?
6. How does the defence of “ETO” operate?
7. What is the significance of Wheeler v Patel [1987]?
8. Do the TUPE Regulations apply in the following situation? If you think they do, who is legally responsible for the dismissal?
Company A decides to contract out the maintenance of its computer systems to company B. Both companies employ staff with the relevant technical expertise in this area. Company B does not want to employ staff from company A as it has sufficient staff to meet the needs of both companies. Company B informs company A that it will agree to the contract only if, prior to the transfer, company A agrees to dismiss the relevant employees. Company A agrees to this and dismisses the staff. Twenty four hours later company B concludes the contract with company A.
Lecture and Seminar 12: Week Beginning 23rdMarch 2015
There are no formal sessions this week. Please see the Moodle site for Business and Employment Law where you will find work on Current Legal issues. Please answer the questions on the quiz.
I hope you have enjoyed this part of the unit
Regards Pat Feast
