21 st July 2012 Lecturer: Rowin Gurusami. The body of laws, administrative rulings, and precedents...

EMPLOYMENT LAW

21st July 2012

Lecturer: Rowin Gurusami

EMPLOYMENT LAW

The body of laws, administrative rulings, and precedents which address the legal rights of, and restrictions on, working people and their organisations.

Mediates many aspects of the relationship between trade unions, employers and employees

Largely a creature of Statute rather than Common Law. Leading Employment Law Statutes include the Employment Rights Act 1996, the Employment Act 2002 and various legislative provisions outlawing discrimination on the grounds of sex, race, disability, sexual orientation, religion and, from 2006, age.


WHAT IS AN EMPLOYEE?

‘An individual who has entered into, or works under a contract of employment’ (Employment Rights Act 1996)

1. Someone under a contract of service2. Someone under a contract for services

Tests:- Control Test- Integration Test- Economic Reality Test


EMPLOYEE OR INDEPENDENT CONTRACTOR?

Court will look at reality of situation (Ferguson v. John Dawson & Partners [1976])

In case of doubt, court looks at agreement between parties (Massey v. Crown Life Assurance [1978])

Control Test – Whether the employer has control over the way in which employee performs duties

(Walker v. Crystal Palace Football Club [1910]) Integration Test: Whether employee is so skilled that he

cannot be controlled in performance of his duties The test in Cassidy v. Ministry of Health [1951] was

whether the employer appointed the employee, selected him for the task and so integrated him into the organisation.



Multiple (Economic Reality) Test: Whether employee was working on his own account.

Fall v. Hitchen [1973]:

- No exhaustive list of relevant considerations- Control to be considered- Other factors such as providing own equipment,

hires own helpers, degree of responsibility for investment and management



Multiple (Economic Reality) Test

Market Investigations Ltd v Minister of Social Security (1968)

- Woman doing market surveys at fixed rate- Own working hours- Could work for other organisation- Rigid work rules (interview instructions, delay for

work)

- Court held she was an employee



Relevant Factors:

- Control- Provision of own equipment- Whether hiring own helpers- Degree of financial risk- Method of payment (regular?)- Mutuality of obligation- Opportunity of profit from sound management of

organisation- And so on....


WHY DOES IT MATTER?

What right are available to individuals and how they are treated for tax purposes

ERA 1996 and EA 2002 provides protection to more than employees. Drafted to cover ‘workers’.

- Social Security- Taxation- Employment Protection- Tortious Acts- Implied Terms- VAT- Bankruptcy- Health and Safety


CONTRACT OF EMPLOYMENT

Contract of service or apprenticeship, whether express or implied, and (if express) whether it is oral or in writing

Just like any other contract – requires offer and acceptance, consideration and intention to create legal relations

Contract of employment consists of:

- Express Terms- Terms implied by courts- Terms implied by statute


EXPRESS TERMS ERA 1996 requires employer to provide employee

with written statement of certain particulars of employment within two months of commencement of employment

- Name of employer and employee- Date employment began- Pay rate and intervals- Hours of work- Holiday and holiday pay- Sick leave and sick pay- Pension and pension schemes- Length of notice of termination- Title of job- Details of disciplinary procedures


COMMON LAW DUTIES Employee’s duties: Fundamental duty of faithful

service

- Duty to obey lawful and reasonable orders (Pepper v Web [1968])

- Duty of mutual co-operation (Secretary of State for Employment v ASLEF [1972])

- Duty to exercise reasonable care and skill (Lister v Romford Ice & Cold Storage Ltd [1972])

- Duty of good faith (Sinclair v Neighbour [1967])- Duty to render personal service- Duty to account for all money and property

received during course of employment (Boston Deep Sea Fishing and Ice Co. v. Ansell [1888])


COMMON LAW DUTIES Employer’s duties: To take reasonable care of his

employees

- Duty of mutual trust and confidence (Isle of Wight Tourist Board v. Coombes [1976])

- Duty to pay reasonable compensation- Duty to indemnify the employee- Duty to provide a safe system of work (Latimer v

AEC Ltd [1953])- Duty to give reasonable notice of termination of

employment- Duty to provide work (William Hill Organisation Ltd v

Tucker [1998])- Provision of reference (Cox v Sun Alliance Life [2001])


STATUTORY DUTIES Mainly concerns pay, maternity leave, work-life balance

generally, time off, health and safety and work time Most rights provided to employee who has one year’s

continuous service

Pay: Equal Pay Act 1970 states that ‘employment terms

should be at least as favourable as those given to an employee of opposite sex.’

Covers terms such as sick-pay, holiday pay and working hours (applying to all forms of full-time and part-time work)

Other factors considered: Length of service, location (time of the day does not matter)

National Minimum Wage Act 1998 (£5.73 per hour)Lecturer: Rowin Gurusami

STATUTORY DUTIES Time off work:

- Trade union officials [ss 168-169 Trade Union and Labour Relations (Consolidation) Act 1992]

- Redundant employers to find new work- Allowing to perform public duties (e.g. Magistrate)

Maternity Leave:- Maternity and Paternity Leave and Pay- Right to return to work on the same terms


STATUTORY DUTIES Flexible working:

To be eligible:- Have child under 6 years- Have continuously employed for 26 weeks- Have responsibility of child’s upbringing

Can be refused only if:- Burden of additional cost- Detrimental effect on ability to meet consumer

demand- Inability to re-organise work


STATUTORY DUTIES Health and Safety: Health and Safety at Work Act

1974 (Health and Safety at Work Regulations 1999) To ensure health, safety and welfare of employees,

as far as is practicable

- Provide and maintain plant and systems of work safe and without risk

- Ensure safe use, handling, storage and transport of articles

- Provide adequate training, instruction, supervision- Adequate access in and out- Provide safe and healthy work environment


VARYING TERMS OF EMPLOYMENT CONTRACT

Can only be varied if contract expressly gives that right, or if all parties consent to variation

Varying terms without changing contract (e.g. Existing express clause)

Changing existing contract (Consent)

Signing a new contract


TERMINATION BY NOTICE

When employment terminated by notice, there is no breach of contract (unless contents are notice are in breach)

Rules:- Period of notice no less than statutory minimum.

Statutory rules only prescribe the minimum period.- May be given without specific reason- If contract mentions notice to be given only in

specific circumstances, then no others should be entertained. (McClelland v Northern Ireland General Health Services Board [1957])


PERIOD OF NOTICE Statute imposes a minimum period of notice of

termination to be given on either side, depending on employee’s length of service: s86 of ERA 1996

- Continuously employed for 1 month or more but less than a year: not less than a week’s notice

- Continuously employed for 2 years or more but less than 12 years: one week’s notice for each year of continuous employment

- Continuously employed for 12 years or more: not less than 12 weeks’ notice

If employee gives notice, minimum one week if employed one month or more


DISMISSAL

If employee dismissed in any way, he/she may request his employee gives him/her a written statement of the reasons for dismissal and it must be provided within 14 days.

Dismissal: Termination of an employment of contract by employer

- Summary Dismissal- Constructive Dismissal- Wrongful Dismissal (Common Law)- Unfair Dismissal (ERA 1996)


SUMMARY DISMISSAL

Summary Dismissal: Where employer dismisses employee without notice

If employee has committed a serious breach of contract, employer incurs no liability

Will depend on circumstances (Wilson v Racher 1974 decision contrary to Pepper v Webb 1969)


CONSTRUCTIVE DISMISSAL

Constructive dismissal occurs when employer repudiates some essential term of contract (e.g. Change of duties ) and employee resigns. Employer liable for breach of contract

Employee must show:- Employer committed serious breach of contract- Left because of breach- Has not ‘waived’ the breach

Breach must be serious one (Western Excavating (ECC) Ltd v Sharp 1978)


WRONGFUL DISMISSAL

Where employer summarily dismissed employee without notice, there may be claim for damages at common law for W.D.

Case must be brought before County Court or High Court

Claimant must show dismissal in breach of contract

Usually only damages for loss of notice period awarded (Johnson v Unisys Ltd 2001)


WRONGFUL DISMISSAL

Dismissal not wrongful if justified

Justifiable circumstances:- Wilful disobedience of lawful order- Misconduct- Dishonesty- Incompetence or neglect- Gross negligence- Immorality- Drunkenness (specific situations only or if

repeated: Williams v Royal Institute of Chartered Surveyors 1997)


REMEDIES FOR WRONGFUL DISMISSAL

Only effective remedy available to wrongfully dismissed employee is claim for damages based on the loss of earnings

Measure of damages is the sum that would have been earned if proper notice had been given

Wronged party is expected to mitigate his loss (e.g. Seeking other employment)


UNFAIR DISMISSAL Important element of employment protection

legislation

ERA 1996 s94 provides a right not to be unfairly (NOTE: fair can still be harsh) dismissed

People not included are: Working outside Great Britain, unofficial strike action and other categories, e.g. Police.

Conditions to obtain compensation:- Continuously employed for one year- Have been dismissed (determined by tribunal)- Have been unfairly dismissed


UNFAIR DISMISSAL

Exceptions to continuous service rule:- Matter concerns safety representative penalised for

carrying out legitimate health and safety activities- Where employee is being denied statutory right- Where employee is pregnant

Effective date of dismissal:- If given by notice, the date on which notice expires- If not by notice, the date on which termination

takes effect- When employee’s term not renewed, date on which

term expiredLecturer: Rowin Gurusami

FAIR REASONS FOR DISMISSAL: S98 Capability or qualifications of employee for performing

work of the kind which he was employed to do (Lewis Shops Ground Ltd v Wiggins 1973 – nature and quality of incompetence)

Conduct of employee

Redundancy

Legal prohibition

Some other substantial reason justifying dismissal

Automatic fair reasons (unofficial strikes, national security threat)


UNFAIR REASONS FOR DISMISSAL Victimisation of health and safety complainants or

whistleblowers Pregnancy or use of maternity leave Trade union membership/activities (legal) Assertion of a statutory right Unfair selection for redundancy

Dismissal on ground of retirement only fair if:- Applies after default age of 65, and- Written notice of intended retirement at least 6

months in advance and notified employee of his/her right to request to continue work.


UNFAIR DISMISSAL Dismissal also unfair if employer acted

unreasonably in dismissing employee (s98)

Reasonableness of employer:- Has correct procedure been applied? (e.g.

Warnings)- Did employer take all circumstances into

consideration?- What would any reasonable employer do?

Tribunal must set rights and interests of employee against interests of employer’s business and decide whether any reasonable employer could come to a different conclusionLecturer: Rowin Gurusami

UNFAIR DISMISSAL

Employee making a claim for compensation:

- Apply to tribunal within 3 months of dismissal- Show he is qualifying employee and has in fact been

dismissed- Employer must prove what was the alleged principal

reason for dismissal and that it was one of reasons listed in s96 or otherwise substantial reason of a kind

- Tribunal must decide if principal reason justified dismissal and whether employer acted reasonably in treating the reason as sufficient

- Dismissal is unfair if principal reason is not one of fair ones in s98


DISCIPLINARY PROCEDURES- Statement of grounds for action and invitation to

meeting- Nature of meeting- Appeal Stage

Requirements (EA 2002):- Timing and location of meeting must be reasonable- Meeting conducted in a way to allow both sides to

explain their case- If more than one meeting, employer to be represented

by a more senior person at first meeting

Under s98A, dismissal automatically unfair if procedures not complied with by employer


REMEDIES FOR UNFAIR DISMISSAL Reinstatement Re-engagement Compensation (basic award, compensatory award,

additional award)

- No re-engagement order if there had been breakdown in confidence (Wood Group Heavy Industrial Turbines Ltd v Crossan 1998)

- Compensation may be reduced if:- Employee contributed to own dismissal (s123(6))- Employee unreasonably refused offer of

reinstatement- Just and equitable to reduce basic award (s123(1))


REDUNDANCY Dismissal treated as redundancy if:- Employer ceased (or intends to cease) to carry on

business for which employee has been employed, or- The employer has ceased (or intends to cease) to

carry on the business in the place where the employee was employed, or

- Requirements of business have ceased or diminished

Key test is to see whether there has been reduction of employers’ requirements for employees to work at the place where concerned person is employed

Redundancy pay is calculated on same basic as basic compensation for unfair dismissal


REDUNDANCY Exceptions to right to redundancy payment:

- If person does not fit definition of employee by statute

- Not been continuously employed for 2 years- Have been or could be dismissed for misconduct

(Sanders v Neale 1974)- Offer to renew contract is unreasonably refused- Claim is made out of time (after 6 months)- Employee leaves before being made redundant

having been notified of possibility of redundancies


21 st July 2012 Lecturer: Rowin Gurusami. The body of laws, administrative rulings, and precedents...

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