Areas of Employment Law

Contracts of Employment

The contract of employment is a fairly historic document originating from the days of master and servant. To give it its modern day feel, it’s the document which enshrines all the non-statutory rights and obligations that employers and employees have towards each other from the moment their working relationship begins.

Ironically, statute does not actually recognise a contract of employment. The closest we get is in Section 1 of the Employment Rights Act 1996, which simply states that within two months of the employee starting work for the employer, the employer must provide a written statement of terms, conditions and particulars. The word “contract” is not mentioned in the Act.

There are around one dozen separate matters that Section 1 of the Employment Rights Act 1996 covers. These are the most important terms and conditions of any document covering the employment relationship such as job title, pay, hours, holidays, and so on.

However, whilst this short form arrangement may be acceptable for unskilled workers, there will come a time when a more complicated version is necessary, for instance in the case of senior employees, particularly those who enjoy fringe benefits such as pensions, company cars and healthcare.

The contract of employment is an absolutely vital tool in exercising control over employees as far as statute will allow. A contract of employment cannot be used to circumvent statute i.e. the employee cannot, even by signing an agreement, waive his or her right to holidays or maternity pay, for example.

Failure to provide an employee with at least the short form of the terms and conditions within 2 months can lead to an application to an Employment Tribunal by the disgruntled employee. No compensation is payable but clearly an employer who does not provide a written statement of terms and conditions, let alone a contract of employment, runs the risk of an unregulated working arrangement and perhaps even a claim.

We therefore believe it’s vital for all employees to have written contracts and we offer a tailor made service to suit your business needs in this area.

Disciplinary/grievance and other procedures

For many years, the ACAS code of practice set out best practice guidelines for handling disciplinary and grievance procedures. This has become so common that it’s regarded, although not itself law, as being part and parcel of the overall picture when disciplinary and grievance situations are entered into.

From 1 October 2004 however, there is now a statutory right to a formal disciplinary hearing and grievance procedure wherever they arise. This has not made much difference in reality to the advice we will offer in each and every situation, given that it would’ve been just as much unfair dismissal to have dismissed without a disciplinary hearing before 1 October 2004 as it now is after that date. It’s important to note however that if you fail to carry out even the bare minimum procedure, not only will an unfair dismissal take place but that compensation can be increased by up to 50%.

Therefore, merely having a fair reason in one’s mind for dismissal is not enough. An employee has to be given the right to at least one meeting with his or her employer to discuss matters which give rise to a disciplinary hearing and, wherever possible, this should be preceded by an investigatory meeting. The employee must have a right of an appeal, wherever possible to a different person in the organisation, against any disciplinary action which is taken. These procedures must be confirmed in writing.

It’s therefore absolutely essential that the procedures carried out to effect any dismissals (although the law applies to disciplinary proceedings generally including measures short of dismissal) are transparently fair, unambiguous and documented.

Therefore, in the event of any such scenario arising, we would suggest you contact us for guidance as to the best course of action to take.

Unfair dismissal claims

Unfair dismissal is by far the largest area of employment law in terms of applications to Employment Tribunals. Great care is therefore required when effecting any dismissal, no matter how long the employee has been employed and no matter how clear cut or obvious the reason for dismissal appears.

Broadly, an employer has to satisfy two criteria to effect a dismissal fairly in law. Firstly, they have to have a fair reason and secondly the employer must act reasonably in effecting the dismissal for that particular reason. It’s no good having a fair reason and then proceeding to a soap opera style exit.

In law, the four recognised fair reasons for dismissal are misconduct, incapability (either incompetence through lack of ability or ill health), redundancy and some other substantial reason (i.e. a business reason). In respect of each of these particular reasons however, there is a certain procedure that an employer has to go through to ensure that the dismissal procedure is handled fairly.

In addition, the employer also has to ensure that any contractual obligations, such as paying the correct notice pay, are observed and fulfilled.

It’s therefore essential that before dismissing anyone, or before even entering into the procedure, you should contact us for advice.

Redundancy

This is a fairly specialised and often complex reason for dismissal and is what most people understand by the term “laid off”.

A redundancy can occur in one of three scenarios. The first scenario is the complete closure of the business. The second is a closure of a particular part of the business in which the redundant employee works. The third is that the business is not closing but is shedding staff because it does not need as many people doing the same job as previously existed i.e. the workforce is shrinking.

However, the employer has to ensure that those affected by redundancy are kept properly informed and consulted with before each individual’s redundancy is officially confirmed. In addition, where more than one person is to be made redundant, the employer must fairly select them for redundancy by reference to objective criteria such as length of service, productivity, disciplinary record, attendance and so on. It’s unlawful to use the redundancy procedure to discriminate against an employee on the grounds of sex, race, disability, and therefore the criteria must not be discriminatory in any way.

Wherever possible, the employer has a duty to look for suitable alternative employment within the organisation for the employee. This will not always be possible and the employee is not obliged to create a job where none previously existed and where it would be uneconomical to do so.

Once a redundancy is confirmed, then the employer has to decide whether or not those affected should serve notice or be paid in lieu of notice. Anyone who has worked for the employer for over 2 years is entitled to a redundancy payment together with any notice pay and accrued holiday pay. As at 1 February 2005 the maximum amount of a redundancy payment is £280 per week for every year worked, although this is sometimes subject to variations taking into account age and length of service.

Therefore, before beginning redundancy procedures it’s vital that you let us know at the earliest possible opportunity.

Restrictive covenants

These are legally binding promises given by an employee that upon termination of employment he or she will not, amongst other things, compete with the employer, poach staff or clients and generally act in a manner that could cause losses to the employer.

Unfortunately, whilst they are valuable as a deterrent, they have little practical effect as they are very rarely upheld by Court. This is because they are, on the face of them, void as they are in restraint of trade. English law adopts the doctrine of free trade which means that an employee is free to work for whoever he chooses.

However, in some cases, these clauses will be upheld as long as the employer can show a genuine business reason why the employee should be restricted in his post termination activities.

Careful consideration is therefore required when drafting these clauses to ensure they are not too wide so as to be unenforceable. It’s therefore important that if you consider that a particular employee needs to have such a clause in their contract of employment, you should contact us for guidance.

Discrimination

This is a fairly complex and fast expanding area of law which had an initial burst of activity in the mid 1970s. However, recently there has been a further raft of legislation.

As at 1 February 2005, it’s now unlawful to discriminate against anyone on the grounds of sex, race, disability, religion, sexual orientation, fixed-term contract status or part-time status. Discrimination means unfavourable treatment, or more specifically, less favourable treatment than someone who does not have the particular characteristics of that employee i.e. favouring men over women, whites over blacks and so on.

Unlike most other areas of employment law, discrimination claims can take place without the need for an employment relationship in the first place. For instance, if an employer refuses to employ a woman simply because of her gender, then that would be discrimination irrespective of the fact that she had not ever worked for that particular employer.

Whilst direct discrimination is very difficult to prove in practice, employers should thoroughly desist from adopting any discriminatory practices, rules or procedures and should adopt equal opportunities policies, which we can draft for you.

It’s also extremely important to note that a person who is discriminated against can claim unlimited compensation from an Employment Tribunal.

Transfer of Undertakings

Despite being the subject of government proposals for reform for some time now, the old rules, which we enacted in the early 1980s, still apply.

A transfer of undertakings is quite simply a transfer of a business from one owner to the next. In that scenario every employee is entitled to be transferred to the new owner upon the same terms and conditions of employment as before.

Unless the new employer has a very good business reason, entirely unconnected with the transfer itself, for making anybody redundant, dismissing for any other reason or amending or altering the contractual terms of transferring employees, then any attempt to dismiss or otherwise change the terms and conditions of employment will be automatically unlawful. In this case anyone with over 12 months continuous service can apply to an Employment Tribunal for compensation.

Therefore, if you are the person or organisation selling the business (known as the transferor), or the person or organisation buying the business (known as the transferee), it’s vital that you are made aware of the precise operation of these regulations. Even if no changes are envisaged, both parties have a duty to their existing workforce and to each other to make full and frank disclosure of the way in which the transfer is going to take place. The potential complexity of this matter makes it essential that you contact us for advice at that time.

European Law

Many of the laws passed in England and Wales have their origins in European law, particularly the discrimination laws.

Broadly speaking, the European Union will set member states a period of time to enact in their national legislation various European legislation. Examples of this are found in the Transfer of Undertakings (Protection of Employment) Regulations 1981 which enacted the Acquired Rights Directive, and the Sex Discrimination Act 1975 which enacted the Equal Treatment Directive.

Whilst European Legislation is more theoretical than practical until it becomes the law of England and Wales, it’s useful to be aware of the proposed changes.  

Maternity/parental leave and other rights

The rights of employees to take both paid and unpaid leave for domestic reasons have been broadly expanded upon under the Labour government, particularly in the second term of office. It’s now possible to take up to one year maternity leave and have at least six months of that paid, albeit mainly at £100 per week.

In addition, it’s perfectly lawful to take unpaid leave to care for a dependent, normally a child, if they are suffering from illness, long-term sickness or any other good reason why their carer should be with them.

Whilst many business leaders take the view that the government are going too far with these rights, nevertheless the rights enshrined in law cannot be ignored and it’s vital that all employers become aware of the rights that those with children, particularly mothers, now have in the workplace.

Therefore, when confronted with any pregnant employee or any parent or carer asking for time off, whether on a paid or unpaid basis in order to look after a sick child, great care should be taken and the request should not immediately be turned down without careful thought and without going through some form of procedure. Again, we can offer advice and support with this.