Major changes to unfair dismissal law

Posted on April 24, 2012 by

Warning over unfair dismissal move

What is unfair dismissal (in its current form)?

An unfair dismissal occurs when:

An employee has been dismissed without a fair reason (such as job performance being poor);

An employer did not follow the correct procedure;

An employee has been dismissed for an automatically unfair reason (such as exercising statutory rights to maternity leave, minimum notice period or not being discriminated in the workplace).

Up until this month to bring a claim for unfair dismissal an employee must:

have worked for the employer for at least 1 year

bring the claim to the Employment Tribunal (cannot bring a claim to court)

bring the claim within 3 months of the dismissal date

What changes?

The new legislation, which came into force on 6 April 2012 has increased the length of employment before a claim can be brought from one to two years. It is hoped that this change will give employers more protection, save them money and give them the confidence to take on more staff. It should also save the tribunal time and mean that clams can go through the system more expeditiously.

Who will be affected?

The changes apply to employees who started work on or after 6 April 2012. According to the Trades Union Congress (TUC) around 2.7 million workers might be affected by the changes and face an increased risk of losing their job without being able to claim unfair dismissal. The TUC worries that the change will discriminate against young workers who tend to have less chances of having worked for the qualifying 2-years period, as well as part-time working women, people with temporary jobs and people from ethnic minorities.

How will the changes affect employees?

The qualifying period has already been changed in 1999 when it was reduced from 2 years to 1 year. According to TUC 1.7 million jobs were created since then and the current change will do nothing to help the state of economy. The only thing the reform will do is to create a fear of job insecurity amongst the employees and encourage the ‘hire and fire’ culture amongst the employers.

Businesses want consumers to start spending again and not having to be cautious of the fear of unemployment.

With one in four university graduates being unemployed or doing temporary jobs which they are highly overqualified for the government’s move seems like a very risky idea.

Making it easier for the employer to dismiss an employee will create job insecurity and lead to people staying in jobs out of fear that they will not find better suited employment. There are, of course, other factors taken into consideration when claiming unfair dismissal such as how gravely unfair the dismissal was but if an employee cannot get over the first hurdle of not working for an employer long enough they will never be able to receive compensation. 2 years is a long time in this day and age and on the current job market. It is difficult to understand who the reforms will benefit. They are supposed make sure that the employment tribunals deal with fewer cases but could lead to employees claiming wrongful dismissal or discrimination instead. Different cause of action may result in courts being congested with cases that would normally have gone to the tribunals.

Employers beware an increase in discrimination claims

Posted on April 22, 2012 by

Over the next 10 years companies may well face an expansion in employment discrimination tribunal cases. There are 2 primary reasons for this :-

Discrimination law has been expanded and employers can be caught out in many ways by not having the right procedures and policies such as when recruiting staff
With the qualifying period for making an unfair dismissal claim now raised from 1 year to 2 years, those employees who do not have sufficient time with the employer to claim unfair dismissal may look for other claims. There is no qualifying period for discrimination claims.

It is therefore important that companies become aware of what they need to do to avoid extra costs and burdens for their business.

The slogan of ‘equality in the workplace’, and others such as ‘respecting diversity’ are ones that many employers will have heard. Many begrudgingly promote these slogans throughout their business, so it can be said they are complying with equality legislation and ‘care’ for their employees. Others merely denote the slogans as irrelevant to their businesses.

The fact of the matter is that if an employer saw that various employees in its workforce were drug-abusers, alcoholics, or intimidating/violent to others, they would probably take active steps to ensure that the reputation of the company is not tarnished and its employees are safe. The same however, cannot be said for more subtle forms of discrimination, particularly the type which involves bullying and harassment. Often those that are accused of partaking in this sort of behaviour will defend their actions, claiming that it was merely ‘a joke’, or that the ‘victim’ was oversensitive and trying to get them in trouble. However, it is important to note that legislation does not focus on the motives of those who are accused of bullying or harassment, but instead focuses on how these actions are perceived by the victims.

Employers therefore must recognise that preventing treatment like this is grounded in the principle of strong company responsibility. Every employer, no matter what size of business they own, the nature of their business or their client base, has a duty to ensure that its employees are not subjected to any type of this behaviour, whether that be from other employees, clients or suppliers. It is important to recognise that discrimination is not just in terms of gender, but also in terms of race, age, disability, religion, ethnicity, nationality etc.

The problem with these types of discrimination cases is that many go unreported, as the victims are aware that there is a probability their employers will not take the report seriously. Additionally, some employers may even attempt this sort of behaviour as purely being part of the work-place culture! It is only those that do not accept these excuses, or company pay-outs, whose cases we then see end up in employment tribunals.

Companies are now finding that their workforce are no longer accepting excuses or justifications, and instead are securing internal hearings and preparing for employment tribunals. Employers should therefore ensure that they have procedures and policies in place from the get go to ensure that all forms of discrimination, both direct and indirect, are dealt with in a timely manner. Not only is this morally correct, but it will also save businesses huge compensation costs and the costs involved in going to a tribunal.

Racial discrimination is set to increase in the workforce, as racial minorities are set to increase to 27.5% of the workforce by 2025. Regions in the UK where there is a naturally low concentration of non-white residents are more likely to be the regions which experience higher levels of racial prejudice in the workplace. Those that choose not to develop their discrimination policies and procedures accordingly will have to then face the consequences.

Constructive dismissal – the basics

Posted on April 15, 2012 by

Constructive dismissal occurs when an employee resigns from his employment because the employer’s behaviour has left the employee no other choice. In the circumstances the employee is entitled to terminate his or her employment contract without giving the employer any required notice.

What needs to be shown?

The employee must be able to show that the employer’s conduct amounted to a fundamental breach of contract and the employee felt forced to leave employment as a result of that breach and has done nothing to show that he or she accepted the breach.

What amounts to a fundamental breach?

Examples of employer’s behaviour, which can be treated as constructive dismissal, include:

Failure to pay employee’s wages

Demoting or changing the rank of an employee (changing the status of their employment)

Forcing an employee to relocate, work outside their contracted hours (such as night shifts) or accept responsibilities which are not part of their duties

Forcing an employee to work in dangerous conditions risking their health and safety

Bullying or harassing an employee or failing to protect him or her from such acts or acts of violence from other colleagues

How to resign?

Before deciding to resign you should speak to the employer and try to resolve the matter amongst yourselves. If that proves impossible you can try mediation through the Advisory, Conciliation and Arbitration Service (ACAS). You could also try to resolve the matter by going through the grievance procedure however if none of the above are possible then in order to quit your job you need to inform your line manager or HR department if such exists.

Claim against the employer

If you decide to take legal action against your employer you need to follow the company’s grievance procedure. Constructive dismissal claims are usually difficult to prove and their outcome normally depends on:

Whether the employer’s breach was serious enough to amount to a fundamental breach of contract destroying the relationship between the employee and the employer;

Whether the employee’s resignation was a direct effect of the employer’s action (it must be a direct consequence and the main or only reason for resignation);

Whether the employee acted promptly and resigned or took action after the breach of contract occurred or whether he or she has done anything to show that they accept the breach (such as continued to work under the change of circumstances).

A constructive dismissal is not a cause of action itself but a way to prove that the dismissal occurred. The employee might have a claim for wrongful and/ or unfair dismissal and if so he or she can bring a claim against the employer to the Employment Tribunal.

Wrongful dismissal

A wrongful dismissal is a breach of contract by an employer by failing to give notice or providing insufficient notice before dismissing an employee. Providing that an employee did not commit an act of gross misconduct they will have a claim for wrongful dismissal, which:

Can be brought by workers as well as employees

Can be brought to the Employment Tribunal (where damages are limited to £25,000) or High Court or County Court (no limit on damages)

Needs to be brought to the Employment Tribunal within 3 months from the dismissal date or 6 years to court

Unfair dismissal

An unfair dismissal occurs when:

An employee has been dismissed without a fair reason (such as a job performance being poor);
An employer did not follow the correct procedure;
An employee has been dismissed for an automatically unfair reason (such as exercising statutory rights to maternity leave, minimum notice period or not being discriminated at workplace).

To bring a claim for unfair dismissal an employee must:

Have worked for the employer for at least 1 year

Bring the claim to the Employment Tribunal (cannot bring a claim to court)

Bring the claim within 3 months of the dismissal date

How much can I receive?

As mentioned above, if you bring a claim to the Employment Tribunal, the amount of damages that you can receive if your claim is successful will be capped at £25,000. There is no limit on damages for wrongful dismissal awarded by the court, however there is a statutory limit for damages allowed for the compensatory award in unfair dismissal claims set by the government every year, which is currently £72,300. A dismissal can be wrongful as well as unfair and in that situation, to avoid a double recovery by an employee, the wrongful dismissal award is set off against the compensatory part of unfair dismissal award.

Unfair dismissal

Posted on March 31, 2012 by

If you have been dismissed and feel that your employer was not reasonable in ending your employment, you may be entitled to bring your case before an Employment Tribunal on the grounds of unfair dismissal and receive compensation.

What is unfair dismissal?

There are two main types of dismissals – unfair dismissal and constructive dismissal. Contrary to popular belief these terms do not exactly mean the same. Unfair dismissal covers the following situations:

When your employer did not have a fair reason for ending your employment;

Your employer did not follow the correct dismissal procedures when dismissing you or acted unreasonably;

You were sacked because of one of the protected reasons such as maternity or paternity leave.

What reasons are automatically unfair?

Some reasons are legally considered unfair without the need of proving it. If you are dismissed for any of these reasons then you should be able to make unfair dismissal claim to Employment Tribunal. Virtually, any dismissal that is caused because of you trying to enforce your statutory employment rights is classified as automatically unfair.

Below is a list of most important employment rights that when breached result in automatic unfair dismissal:

You are entitled to receive a written statement of your employment particulars including your job description and duties;
A detailed pay statement showing breakdown of what you are getting paid for;
If you are sacked because you requested maternity, paternity or adoption leave, you will be able to claim unfair dismissal.
Those with children aged below 5 are entitled to take unpaid time off work to look after their children or make necessary arrangements for their welfare (i.e. if your child is disabled or you have to organise a day care). This right is known as parental leave. The maximum time off that you can take is thirteen weeks during the first five years of your child’s life.
A minimum notice period has to be given to all those being made redundant – this can be either defined in your contract of employment. In the case it is not, you are entitled to statutory minimum notice period of one week per each year of employment, excluding the first 12 months for which you are only entitled to one week of notice.
Women are entitled to take time off for antenatal care.
Compassionate leave entitles you to unpaid time off to care for those dependent on you in the case of emergency situations. Emergency includes situations like illness or injury, unexpected incident involving the dependent or death.
The right to request flexible working. Some popular arrangements include flexi time (you choose when to work), annualised hours (your total working hours are calculated over a year), working from home, job sharing your position with somebody else or taking up part time hours.
You have the right not to be discriminated against because of your sex, race, disability, religion or belief, sexual orientation or age
Guaranteed pay entitles you to receive a minimum payment for any complete day you were laid-off work. To qualify you must have been employed for at least one month, be reasonably available for work, not refuse any reasonable alternative offers of work including duties that are not within your contract of employment and the lay-off must not have been caused by industrial action.
You can take time off to fulfil your public duties such as jury service.
Unlawful deductions are deductions that are not authorised by either statute or the employment contract. All deductions that you give prior written consent for are also fair.
If you are suspended on medical grounds you are still entitled to remuneration.
Even if you have entered into an employment contract requiring you to work on Sunday doing shop or betting work, you can still refuse to do so.
Unfair dismissal laws also offer protection to those who speak out about malpractice in the workplace, providing such disclosure is made in good faith and to the right person.

Am I eligible to claim unfair dismissal?

To bring an unfair dismissal claim you must have been continuously employed for at least twelve months, which period is about to double under new legislation. Any of the above mentioned protected leaves such as paternity or maternity leaves do not break the qualification period. Unfair dismissal can only be claimed by those employed under a contract of employment. If you are self-employed you will not be able to bring a claim for unfair dismissal.

Redundancy rights

Posted on March 23, 2012 by

Redundancy occurs when your employer dismisses you due to the need to reduce the amount of its workforce or where the employer moves it’s operation. As with unfair dismissal law generally, there are 2 major aspects to a redundancy issue in law :-

In substance can the employer justify the claim of redundancy
Has the employer followed fair procedure

Most employees do not know that it is in fact the procedural issue where most employers get it wrong and that it can be quite difficult for an employee to successfully challenge a decision by the employer to reduce staff. In other words, it is not the job of an employment tribunal to second guess business decisions of employers except where it is blatantly obvious that the employer is simply seeking an excuse to get rid of staff.

In order to be compliant with the applicable laws your employer will need to observe your redundancy rights. These rights include:

Right to consultation;
Fair and transparent redundancy selection criteria;
Notice periods;
Offer for retention by alternative employment;
Reasonable time off work for re-training;
Redundancy pay.

Please note that this article is about redundancy rights for those employed under a contract of employment. It does not apply to self-employed, contractors and freelancers.

REDUNDANCY RIGHT TO CONSULTATION

Before any redundancies take effect employers must consult their employees, explaining the reasons for their decision and considering any possible ways of avoiding or at least minimising the impact of redundancies. The most common redundancy reasons include:

Implementation of a new technology or system that makes your job unnecessary;
The business closing down its operations or cutting costs and downsizing;
Entirely liquidating the position that you were hired for.

Consultations can be either individual or collective. If more than 20 employees are being made redundant in your company within 90 days, your employer will in the first instance contact union leaders or designated employee representatives. They will discuss potential ways of resolving the redundancy situation, selection criteria for those employees to be made redundant, the criteria for accepting volunteer redundancies and organisational matters such as redundancy payments. Once collective consultations are completed, your employer will still need to speak to those included in the redundancies process on an individual basis.

If the ultimate number of dismissals is to be lower than 20 employees, your employer will proceed directly to individual consultations. Please remember that if your employer does not conduct individual consultations in any of the above scenarios, your redundancy rights will be violated and dismissal is likely to be found unfair.

NOTICE PERIODS

Most employment contracts will contain relevant provisions regarding notice periods. In the absence of such, all employees to be made redundant have the redundancy right to a statutory minimum notice period. At the moment, the law provides for one week’s notice for every full year of service, up to a maximum of 12 years, with the exception of the first 12 months (the qualifying period). Therefore, if you were employed for less than two full years you will be entitled to one week’s notice. On the other hand, if your employment lasted for four and half years, your entitlement will be 4 weeks’ notice.

REDUNDANCY PAY

Employers may have their own redundancy policies, often superior to the statutory legal minimum. Nonetheless, all employees are by statute entitled to redundancy pay if they have continuously worked for their employer for at least two years. Naturally, only those who are made redundant are eligible for redundancy payment. If you resign voluntarily you will not be entitled to any redundancy rights. The statutory redundancy payment is based on an employee’s age, length of service and is calculated back from the date of dismissal. The length of employment is capped at a maximum of 20 years and weekly redundancy pay is limited to £430. Therefore, the maximum you can receive is £12,900.00. Exact amount of statutory redundancy payment is calculated in accordance with the following entitlements:

For less than two years of continuous service – no payment.
For employees with more than 2 years of continuous service:

half a week’s pay for each full year of undisrupted service below the age of 22;
one week’s pay for each full year of undisrupted service between the ages of 22 and 40;
one and a half weeks’ pay for each year of undisrupted service over the age of 41. In the case of employees over 64, the total amount of the statutory redundancy payment will be reduced by one twelfth for each month over the age of 64.

Bumping

Posted on March 19, 2012 by

Bumping

What is Redundancy Bumping?

Redundancy bumping involves one work colleague being transferred into another work colleague’s job because their job has dissipated, thus making the second colleague redundant.

Redundancy bumping is a way for companies to cut down on staffing costs whilst maintaining their most highly qualified or skilled workers and often a senior employee will be more than happy to take a junior position with lower remuneration rather than risk facing redundancy.

Redundancy bumping is also known as transferred redundancy and should always be carried out legally. Any employee made redundant must have been done so because a genuine redundancy situation had arisen.

What Constitutes Unfair Bumping?

There is a list of stringent guidelines which an employer must adhere to when bumping employees. If these guidelines aren’t followed then the employee who has been unfairly bumped may well be able to make a claim for compensation against the employer.

Redundancy bumping can be considered unfair if:

If there was no genuine redundancy situation and no ethical reason for the employee to have been made redundant.

If the employee was not given the option of a consultation to look into alternative employment options or placements within the company. The employee has the right to a four week trial period in an alternative employment placement within the company.

If the employee was not given the right to fair selection procedures.

If the employee was not given a satisfactory explanation of the decision and why it was decided that the colleague taking their place was more suited to the role.

If the employee was not given the right to appeal against the decision to make him/her redundant.

If the employee was not given the right to either a payment in lieu of notice or a satisfactory period of notice.

If the employee was not given the right to take a certain amount of paid time off work to seek alternative employment.

If the employee was eligible for redundancy pay but didn’t receive any payment.

How Does an Employer Make the Decision to Bump an Employee?

There are several factors that an employer should take into consideration when decided whether or not to bump an employee.

The employer should first make sure that there is an open position and should compare the two positions in question to ensure that the employee being considered for the transfer is suited to that particular job.

The employer will need to take into account both employees’ length of service within the company as well as their qualifications. Often a senior employee who has been with the company for a considerable length of time may be bumped when he/she could have easily taken on a position currently filled by a junior member of staff with a much shorter length of service.

The employer will also need to take into account the difference in remuneration between both posts but should not assume that a more senior employee would automatically reject the remuneration of a more junior post. Many senior employees would much rather take the pay cut to stay within the company.

The employer should also always ensure that the redundancy selection process is fair to all parties involved.

In this ‘dog eat dog’ world it makes good business sense for an employer to keep on his most highly trained and experienced members of staff to eliminate the further costs and time taken to train less experienced or qualified staff but the employer must make sure that the decision he/she makes is an ethical one and, by following the guidelines, will be able to make a fair and informed decision that, hopefully, has a satisfactory outcome for all parties involved.

Wrongful dismissal

Posted on March 17, 2012 by

Wrongful Dismissal

What is Wrongful Dismissal?

Wrongful dismissal, not to be confused with unfair dismissal, is when a contract of employment is unlawfully terminated by the employer.

What Constitutes Wrongful Dismissal?

There are a number of factors which may constitute wrongful dismissal including dismissal without sufficient notice, termination of the employment contract without just cause or dismissal of the employee due to discrimination.

Generally, under the contract of employment, an employee is entitled to one week’s notice for working the period of one month to one year and a further week for each year worked thereafter. If this agreement of notice isn’t honoured by the employer then the employee may be able to make a claim of wrongful dismissal against the employer. However, occasionally the dismissal of an employee can be justified by the employer if that employee has committed a serious breach of contract himself.

How to Make a Claim

Before making a claim you will need to establish that your dismissal was in fact wrongful. Ask your solicitor to go through your contract of employment with you to ascertain whether the dismissal was unlawful and once this has been established you can start taking steps towards making a claim against your employer.

The first step to making your claim is to fill out an ET1 form. The ET1 form can be obtained from the Citizens Advice Bureau (CAB), the Jobcentre or the Employment Tribunal Service or, alternatively, you can complete the form online. This document becomes the basis for your claim and should clearly underline your reasons for making the claim.

It isn’t necessary to document every single factor associated with your employer in the ET1 as further evidence can be catalogued in your witness statement.

Although the ET1 form can be very complicated your solicitor will be able to help you complete the form and tell you which information to include and which can be left out or put into your witness statement. When compiling your witness statement it is best to keep it as simple and ‘to the point’ as possible. You may want all your grievances to be heard but the main issue here is your dismissal and not your past treatment by your employer.

When the ET1 form has been completed it should be presented to the Employment Tribunal Office for consideration. It is important to note that any claim made should be done so within three months of the dismissal.

Once your ET1 has been received your employer will also receive a copy of your claim and be given the option to respond. An employer’s response form is called an ET3 and you will receive a copy of this once your employer has returned the form to the Tribunal office.

Tribunals never happen very quickly so you should be prepared to wait quite some time for your case to be heard depending on how long the courts think your case will need. The more time required for your case to be heard, the longer you will have to wait.

When the date of your tribunal finally arrives both you and your employer will be given the chance to have your say and go through the circumstances of your dismissal. If the compensation expected for your claim is less than £25,000 then your case will be heard at an Employment Tribunal but anything over this figure will result in your case being heard in a County or High Court.

If it is agreed that you will be awarded compensation for wrongful dismissal then the compensation will be calculated on the amount you would have received had you worked through your notice period.

Restraint of trade

Posted on February 23, 2012 by

Restraint of Trade

It is often the case that employers will seek to introduce Restrictive Covenants into employment contracts in order to protect their business should an employee leave, either on their accord or via company procedures, notably termination or redundancy. It is very important that both employers and employees have a clear understanding as to what terms they can introduce as Restrictive Covenants prior to entering into them. If terms are seen as too onerous or go further than is necessary to protect legitimate business interest then they can be a restraint of trade. If clauses are seen as a restraint of trade then they will be void and unenforceable.

This is based on the presumption that an individual should be free to follow his trade without undue interference. So a term seeking to restrict such actions will be void unless it is no wider than reasonably necessary and designed to protect a legitimate business interest.

Whether a clause amounts to a restraint of trade will turn on the facts in particular circumstances. For example, it will be easier to justify a longer Restrictive Covenant for an employee who is more senior and subject, for example, to confidential or sensitive information. The clause will be seen as a restraint of trade if it is purely designed to prevent competition by a former employee, it has to be justified on the grounds highlighted above. In the case of Marshall –v- NM Financial Management Limited a clause stating that an agent was entitled to commission only after the termination of the relation if he did not compete with the company, was seen as restraint of trade and unenforceable.

An employer will have to show that any restraint of trade clause is reasonable and only goes so far as is necessary to protect a legitimate business interest. The reasonableness of a particular restraint of trade clause will depend on the facts, and the test will be on the expectation of the parties at the time that the contract was entered into, and not at the time when the issues arise post termination.

The Courts will also consider geographical location and duration. For example, a restraint of trade call seeking to enforce a 3 mile radius upon which an employee cannot work, is more likely to be reasonable in a rural location are as opposed to central London.

The Courts have recognised that restraints of trade are appropriate in certain circumstances. They may also be appropriate on business sale. A company will seek to protect the goodwill, trade secrets, client base and staff, so it is right and proper that they have a mechanism in order to do so.

Employers need to consider this carefully when entering into a contract. Employees also need to consider it before agreeing to contractual terms and should review it again on termination. It is often the case that employees are simply unaware of the constraints by which they are bound and any breach could mean legal action being taken against them.

Employers can seek to enforce a restraint of trade clause either by taking out an injunction or bringing an action for loss of profit. There has been a recent case law in this area, particularly in relation to team moves. If one employee seeks to move to another company and/or set up his own business then he needs to be extremely careful when other employees join him. If he has a restrictive covenant preventing soliciting or enticing away existing staff, then he may be in breach. The key would be whether he has taken proactive steps to encourage existing to move and on the facts based on his working relation and the new company.

The restraint of trade test will also apply to covenants in joint venture agreements as well as employment contracts and business/share acquisition agreement.

From a company’s point of view, if they are seeking enforce a restrictive covenant or restraint of trade then they will need to do so with significant evidence to confirm a breach. It is expensive to bring an injunction and any action must be accompanied by sufficient evidence. A company will always have to taken into account what is at stake and how important it is for them to prevent further damage to their business.