Hired to Fired: Employment Law Guide

  1. Sources of law
  2. Status – employee, worker or contractor?
  3. Status – part-time or fixed term
  4. Immigration
  5. Health and safety
  6. Contract of employment
  7. Discrimination
  8. Family-friendly matters
  9. Employee representation
  10. Corporate Transactions
  11. Ending employment
  12. Redundancy
  13. Tribunal claims

1. Sources of law

Employment law in England and Wales comes principally from three main sources. These are:

  • Domestic legislation ­ statutes (“Acts”) and statutory instruments (“Regulations” and “Orders”) are the primary source of law in England and Wales. New laws generally come into force in April and October each year;
  • European legislation ­ “directives” and “treaties” are made at European level and implemented by each Member State of the European Union. Most directives and treaties will have direct effect against public bodies but need to be passed into UK law before they will have any effect for private business; and
  • Common law ­ i.e. case law arising from judges’ interpretation of the legislation through the Employment Tribunal and Court systems.

In Scotland, although technically it is a separate jurisdiction and the terminology and procedures are slightly different, in reality, since the sources of law are the same, the practice is also very similar. This briefing note concentrates on the law in England and Wales.

2. Status – employee, worker or contractor?

When a business engages an individual to provide services, it is important to establish the basis for that engagement. They may be either:

  • An employee, in which case they will have full employment rights (and obligations) such as the right not to be unfairly dismissed, the right to receive minimum notice and a redundancy payment (all subject to length of service) and the right to a statement of terms and conditions; or
  • A worker, in which case they will have limited protection, for example as regards wages and paid holiday; or
  • Self-employed, i.e. an independent contractor, in business on their own account.

The importance of establishing status is that the different categories are treated differently for employment law, immigration and taxation purposes. Some of the more striking examples of these differences are:

  • Employers are responsible for operating PAYE tax for employees and workers; the self-employed are responsible for making their own tax arrangements;
  • Employers are vicariously liable for the acts of their employees and will need to insure against that liability; independent contractors should be required to insure themselves; and
  • Employers must carry out checks on their employees’ and workers’ right to work in the UK under immigration law; they are not required to conduct such checks for contractors.

A tribunal or court will look at a number of elements to decide an individual’s status, including:

  • Whether there is “mutuality of obligation” ­ in other words, does the individual have to carry out work that is given to them by the business, and does the business have to give the individual work? If there is no mutuality, this will generally be fatal to any suggestion of an employment relationship.
  • Can the individual work for more than one business? Although having more than one job does not necessarily preclude someone from being an employee or a worker, it may be suggestive of self-employment if they work for a number of different organisations in the same line of business.
  • Does the business control how, when and where the individual performs the work? Does it provide equipment, training and premises to do the job? Are they integrated into the employer’s workforce and subject to their disciplinary and grievance procedures? The more control and integration, the more likely the relationship is to be that of employer/employee.
  • Can the individual send a substitute to carry out the work or use a sub-contractor? If so, this is much more likely to indicate that the individual is an independent contractor as the contract is not one of personal service.
  • Does the individual risk their own money if the work is not performed adequately? If so, this is suggestive of being in business on their own account.

3. Status – part-time or fixed term

Employers must not treat part-time workers less favourably than their full-time counterparts, in terms of the pay and conditions they offer them, unless the difference in treatment can be objectively justified. It is acceptable to pro-rata benefits, and in particular, holidays, for part-time workers.

Employers must also ensure that they do not treat employees on a fixed-term contract less favourably than those on a permanent contract, again unless such difference in treatment can be objectively justified.

4. Immigration

Generally speaking, employers who wish to employ a migrant worker from a country outside the European Economic Area (EEA) must acquire a licence as a sponsor from the Border Agency, part of the Home Office. The Government places annual limits on the amount of people permitted to come to the UK to work, and requires sponsors of migrant workers to maintain adequate records and HR systems which it may inspect to ensure there is no abuse of the system.

Even where a prospective employee or worker comes from a country within the EEA, there may be some restrictions on their freedom to work.

Some employees may have the right to work in the UK as the dependant of an EU national. Where the right to work is restricted in time, the employer must ensure that checks are conducted regularly so that the right to work is not lost.

An employer who does not have the correct paperwork available for inspection by the Border Agency may be liable for a fine of up to £10,000 per illegal worker, and subject to criminal proceedings. However, it is also important that prospective employees are not treated in a way that is potentially discriminatory on the grounds of race (including nationality), so employers must ensure they have a robust system, which is applicable and fair to all candidates, when checking the right to work in the UK.

5. Health and safety

Employers must have regard to their employees’ health and safety, and employees have a corresponding duty to co-operate with their employer’s efforts to keep them safe. This can be through consultation with elected safety representatives from the trade union (if there is one at the site), or, where there is no trade union, through a consultation forum with employees.

Employers need to be aware that they will be vicariously liable for accidents caused by employees acting in the course of their employment, and that they owe a duty of care both to employees and to other visitors to the premises, for which they should have insurance. There are also numerous statutory obligations on employers relating to safety in the workplace.

All employers should have a written health and safety policy, give health and safety representatives both facilities and time off for training and ensure there is a system for recording accidents and injuries at work.

6. Contract of employment

6.1 Terms

It is a common misconception that a contract must be in writing to be binding. This is not correct, and if terms and conditions are orally agreed (e.g. that an employer will allow a particular number of days’ holiday, operate a bonus scheme or provide an upgraded company car) that will be binding, although there may be difficulties in evidencing exactly what was agreed. At its most basic level, an agreement to perform work for pay could be described as an employment contract.

Parties are free to decide on many more specific terms for the contract, either orally or in writing. These are known as “express” terms, i.e. terms which are expressly agreed, such as commission arrangements, access to benefits and post-termination restrictions. The parties will also be bound by certain “implied” terms. These may be implied by a number of different means:

  • Where they are reasonable, notorious and certain, so that they have become part of the “custom and practice” of a particular organisation or industry;
  • Where they would be so obvious to an objective person that they “go without saying” (the “officious bystander” test) or where they are vital to give the contract practical effect (the “business efficacy” test);
  • Where a reasonable person could conclude what was intended by looking at the parties’ conduct; or
  • Where they are implied by common law (e.g. the implied term of mutual trust and confidence, which subsists in every employment contract).

In addition to express and implied terms, there are terms incorporated from other sources, usually collective agreements (often in relation to pay bargaining) entered into at company or national level with trade unions.

Finally, the parties will be subject to terms deriving from employment legislation, such as those relating to equal pay, minimum notice periods and paid holiday entitlement and the national minimum wage. The employer can agree to be more generous with all or any of these, but any attempt to agree less generous terms would be void.

Once it has been established that an individual is, or will be, an employee, the employer must provide them with a statement of specific terms and conditions of employment, within two months of starting work. This statement is often known as a “section 1 statement” because that is the provision in the Employment Rights Act which requires it to be given. It is not necessarily the same as a contract, although often there will be common terms in both (e.g. those relating to pay, place and hours of work, notice and annual leave) and so it is normal for a contract to incorporate all the necessary elements of a section 1 statement.

6.2 Changing terms

If changes are made to the section 1 statement, the employer must issue a revised statement within a month of the change.

If the employer wants to vary the terms of a contract however, this will generally require the consent of the employee and an element of “consideration”, usually in the form of pay or other benefits. A contract will often give the employer the right to make changes, although the more drastic the change, the more likely it is that the employer will need to consult the affected employee(s) and give more notice of the change.

If the employee refuses to give their consent to the proposed change, an employer may either implement the change unilaterally or dismiss the employee and re-engage them on the revised terms and conditions. Both these risk claims from the employee ­ in the former scenario the employee may resign and claim breach of contract and constructive unfair dismissal, while in the latter they may claim for unfair dismissal and (if the change is to pay) unlawful deductions from wages. There are also potential issues relating to collective consultation that need to be considered.

Some of the more common areas to be covered in an employment contract are considered below. Some of these areas are applicable to workers as well as employees, and the terminology used below indicates where this is.

Any term in the contract will be generally interpreted with reference to what is reasonable. Terms may be contractually binding, and therefore must be complied with, or discretionary (e.g. the provision of benefits and bonus may be in the employer’s discretion), but even where something is discretionary, that discretion must not be exercised capriciously, irrationally or perversely.

6.3 Pay

Most workers in the UK over school leaving age are entitled to the national minimum wage (NMW). Rates differ according to the worker’s age and whether or not they are in apprenticeship, and are reviewed annually. Failure to pay the NMW can lead to criminal proceedings against the employer, and fines may be payable.

It is unlawful to make deductions from an employee’s wages unless the employment contract provides for it (e.g. if there has been a previous error resulting in a overpayment), or the employee has given their express consent in writing (e.g. when taking out a season ticket loan from their employer), or where the deduction is required by law (e.g. PAYE income tax deductions or attachment of earnings orders).

Employers may choose to pay a bonus under a separate scheme, in addition to normal salary. The amount of bonus is usually discretionary in nature and often assessed by reference to the employee’s and the business’ performance. Whether a bonus is discretionary, formulaic, guaranteed, floored, or partially discretionary will depend upon the terms of the contract and/or relevant policies. There is mounting case law on the interpretation of bonus clauses and an employer’s discretion is now fettered by implied terms.

One of the most common implied terms that is never included as an express contractual term is that regarding equal pay between men and women. The law implies an “equality clause” whenever an employee is employed on:

  • Like work (i.e. work which is the same or broadly similar);
  • Work rated as being equivalent under a job evaluation scheme; or
  • Work of equal value

to that performed by a member of the opposite sex in the same employment.

On or before any wages or salary payments are made, the employer must give the employee itemised pay slips setting out the gross and net pay and the amount and purpose of any deductions.

6.4 Working time

Workers cannot be required to work in excess of 48 hours per week on average. However, this is something which is not regularly enforced in the UK, for a number of reasons. Firstly, workers can choose to opt out of the limit by giving written consent to their employer, although they are able to change their minds and opt back in if they wish, giving no more than three months’ written notice. Secondly, the employer can agree to vary the reference period during which the average is calculated (the default is 17 weeks). Thirdly, some professions are exempt, as are some positions at senior levels where the individual is expected to manage their own time. Since the provision emanates from European health and safety law, the future position of the UK’s opt-out, which is unusual within the EU, is unclear.

If a worker has more than one job, the 48-hour weekly limit applies to the total amount of work performed, and not to any one role.

UK law also restricts the amount of night work that can be performed, provides for health assessments to be carried out by the employer for night workers, and imposes the obligation to give daily and weekly rest periods as well as breaks during the working day.

6.5 Annual leave

Workers are entitled to paid annual leave of 5.6 weeks per year (the equivalent of 28 days for a full time worker, pro-rated for part timers). This entitlement may include public/bank holidays, of which there are normally eight per year in England and Wales. This statutory annual leave entitlement can be increased at the employer’s discretion, but while contractual leave may be carried over into the next holiday year, statutory leave should generally be taken in the year when it accrues. The exception to this is when the employee has been prevented by long-term sickness from taking all their leave in that leave year. As the entitlement to paid leave comes to English law from European health and safety legislation, the aim is that the worker is encouraged to take the leave, and therefore the only time when the employer can pay in lieu is when the worker leaves with accrued but untaken holiday.

The contract will normally stipulate when the holiday year runs from and to, which will usually be either the calendar, tax or financial year or the anniversary of the employee joining. Payment must be made on a pro rata basis for part-years worked.

Employers may stipulate when holiday may or may not be taken, and how much may be taken at any time. It is common, for instance where there is a shutdown over Christmas and Easter, to require workers to reserve some of their time off for that period, and to allow more than ten working days at a time only with permission.

If a worker is taken ill during a period of statutory leave, they may choose to designate their absence as sick leave and take their holiday on another occasion. Conversely, while a worker is off sick, even if they are not entitled to company sick pay, they may designate some of their period of sickness as statutory leave and will be entitled to payment during that time, provided they do not exceed their annual entitlement.

6.6 Pensions

Employers may make pension provision for their employees to boost the basic state pension. They must ensure as a minimum that employees can pay into a stakeholder pension scheme (normally a personal pension arrangement between the employee and the scheme provider) through the payroll system, although the employer is not currently obliged to make any contribution. This position will change when an employer reaches their ‘staging date’ for auto-enrolment (the earliest of which was 1 October 2012 and the latest will be 1 February 2018 ­ depending on the employer’s size (with the largest employers first)).

Where the employer runs an occupational pension scheme, the trustees of the scheme will include current and former employees. As a body, the trustees will be responsible for ensuring that the trust’s assets are correctly managed, in the interests of the scheme’s beneficiaries.

Generally there are two different types of pension scheme:

  • defined benefit (often called final salary or salary-related) schemes. In defined benefit schemes, the benefit is assessed by reference to the employee’s salary at the date of leaving the scheme or retiring, along with their years of pensionable service. The risk of the scheme’s investment performance lies with the employer.
  • defined contribution (known as money purchase) scheme. In defined contribution schemes, the benefit is assessed by reference to the value of the pension fund at the date of retirement, with the employee and/or employer making contributions in to the fund in addition to the investment returns. The risk of the scheme’s investment performance lies with the employee.

6.7 Benefits

Benefits are a common way of supplementing the employment package. They are often attractive to employers because the value of the benefits is usually not included as salary for bonus or pension calculations.

In addition to pensions, many employers offer benefits such as company cars, life insurance, permanent health insurance, private medical insurance for the employee (and their family), share schemes, gym membership and child care and other incentive vouchers. There is no legal obligation to provide any of these benefits however, although employers must ensure that if they do so, it is done without discriminating against any particular section of the workforce.

6.8 Sickness and sick pay

As a minimum, employers must pay statutory sick pay (SSP) for up to 28 weeks to employees who are off work due to illness or injury. The first three days’ absence are known as “waiting days” when the employee receives no pay. Employees must notify their employer of the sickness and produce evidence, if required, from the eighth day of illness.

Many employers offer enhanced Company sick pay in addition to SSP, and will have more detailed reporting and evidential procedures for the employee to be eligible. The employer may pay for longer periods of absence or at higher rates than under the statutory scheme.

Fit notes replaced sick notes in April 2010. Under the scheme, instead of simply advising that an employee is unfit for work, doctors may now advise that an employee would be fit to return to work earlier if appropriate support is given by the employer, such as reduced or amended hours, lighter or altered duties, workplace adaptation or a phased return.

6.9 Restrictions

Another of the most common implied terms in every employment contract is that of good faith. This includes a duty on employees not to disclose confidential business information. Once the employment contract terminates, ex-employees must still ensure they do not reveal information that would be classed as a trade secret. Given the limited nature of employees’ obligations, many employers choose to include more restrictive covenants for the period after employment ends, to protect their business interests (and not merely trade secrets).

One of the most common clauses restricting the employee’s work however applies while the employee is still employed. This is known as “garden leave” (literally because the employee does not come to work but stays at home and may, if they feel so inclined, do gardening). Because mutuality of obligation lies at the heart of an employment contract (i.e. the employer must give the employee work and the employee must do it), the employer can only keep the employee away if there is an express contractual provision to that effect, or risk being in breach of contract. The employee remains employed, and therefore must be paid, but the more onerous obligations regarding confidentiality during employment will apply, and provided the clause is drafted correctly, the employee cannot set up or join a competing business, or poach clients and staff. Garden leave clauses normally apply once an employee has given or been given notice, as an alternative to paying in lieu.

The implied duty of fidelity ceases once employment ends, so that an employer may try to restrict the employee’s freedom to compete after they have left. The starting point for courts is that such restraints on a former employee are void as being in restraint of trade and contrary to public policy ­ and therefore will not be enforced – unless they can be shown to be only as wide as is reasonably necessary to protect the employer’s legitimate business interests. For these purposes courts in the UK will consider a number of different issues, including the length (in time) and scope (in geographical area and personal nexus to the employee) of the restriction.

Broadly speaking, an employer may only legitimately protect trade secrets, confidential information and connections and the stability of its workforce. Non-competition clauses prevent the ex-employee from working for or establishing a competitor, while non-solicitation clauses prevent them from soliciting clients, customers and employees. The employer may also try to impose a non-dealing clause, so that even if the ex-employee has not solicited the business, they cannot deal with a former customer or client who is known to them, in areas of business that would compete with their former employer. Garden leave is often used before covenants apply, as an employer who acts in breach of contract by dismissing without notice will find that the covenants are no longer binding on the employee.

Please click here for our Restrictive Covenants and Garden Leave Guide.

6.10 Intellectual property

If an employee creates any works capable of protection under intellectual property law, the employer will generally own the copyright, patent, and registered and unregistered design rights, if the works were created in the course of the employee’s duties.

If works are created by a contractor however, unless there is specific provision to the contrary in the contract for services, the contractor will own the intellectual property.

6.11 Data protection

Many employers will need to be registered as data controllers with the Information Commissioners office, by completing a form and paying the appropriate fee. Their details will then appear on the Register.

Data does not just cover information held on computers but also that which is stored in a “relevant filing system” in other words, a drawer or room containing a set of personnel records will be covered, as will on-line records and email folders. Personal data is any information from which an individual could be identified, either on its own or in conjunction with other information, and will include recordings such as CCTV footage. Sensitive personal data is, as the name suggests, of a more intimate nature and includes medical and criminal records and political beliefs.

Employers must process employee records “fairly and lawfully”. “Processing” data includes storage, alteration and deletion of records, so that almost any activity relating to personal data carried out by a data controller will amount to processing. When data is “processed”, it must be done in accordance with the eight data protection principles.

If an employee makes a subject access request, the employer may require them to pay a small fee for administration of the request, and then provide copies of personal data held in relevant filing systems. There is a limited period within which to provide the data and some of it may be exempt, so it is important for employers to act quickly on receipt of any request so that what must and what may not be disclosed can be properly considered.

6.12 Whistleblowing

Employers are not permitted to treat workers less favourably or to dismiss employees who blow the whistle, or to give it its technical title, make a “public interest disclosure”. Disclosures made in good faith that tend to show criminal offences, failure to comply with legal obligations, health and safety or environmental concerns, a miscarriage of justice or an effort to cover up any of these, are protected.

It is often helpful in larger organisations to have a “hotline” which the workforce can use to report concerns in confidence (though not anonymously) to ensure both that they do not fear reprisals and that the concerns will be investigated and, if appropriate, acted upon.

6.13 Disciplinary and grievance procedures

Although employers and employees are no longer bound by statutory disciplinary, dismissal and grievance procedures, the law has been replaced by a Code of Practice on Disciplinary and Grievance Procedures, published by the conciliation service ACAS. While this is not legally binding, it should be followed in relation to dismissals for misconduct and poor performance and where an employee raises a grievance. Failure to follow the Code may affect the amount of compensation awarded, with an increase or reduction of up to 25% depending on whether the failure to follow it lies with the employer or employee.

The Code and its accompanying guidance notes are extremely helpful but not completely comprehensive, so employers will often include a reference to their own more detailed procedures in the contract (although the procedures themselves are likely to be non-contractual and set out in a handbook or manual. This ensures that any minor deviation from procedure will not give rise to a claim of breach of contract or constructive unfair dismissal).

At a disciplinary hearing (i.e. one which could result in action being taken by the employer, but not investigations) and during grievance hearings, employees have the right to be accompanied. A companion may be either a fellow worker or certified trade union official (even if the employee is not a union member and/or the union is not recognised by the employer). If the employer permits it, other companions may be used, such as a family member, and (particularly where the employee’s professional career is at stake, in the public sector and where the particular disciplinary rules provide for it), it may be appropriate to allow legal representation.

6.14 Notice

Statutory minimum notice periods are implied into every contract of employment. It is open to employers to agree longer periods of notice from either party where it is appropriate to do so. Occasionally, longer periods may also be implied where there is no express term, by virtue of the employee’s position, seniority or custom and practice. It is not necessary to have the same length of notice on either side, so for instance an employee may be entitled to receive 12 weeks’ notice but only have to give four.

It is customary to provide for payment in lieu of notice so that the employer may dismiss without requiring the employee to work their notice or placing them on garden leave. This ensures that any post-termination restrictions will not fail for breach of contract. However, it does mean that any notice payment made pursuant to such a contractual “PILON” will be taxable.

7. Discrimination

Since October 2010, legislation in the UK has brought together most of the laws relating to discrimination into one Act. The grounds on which employers and others are forbidden to discriminate are known as “protected characteristics” and they are as follows:

  • Age;
  • Disability;
  • Gender reassignment;
  • Marriage and civil partnership;
  • Pregnancy and maternity;
  • Race;
  • Religion or belief;
  • Sex; and
  • Sexual orientation.

Discrimination may be direct, by treating someone less favourably than another because of their protected characteristic (e.g. refusing to interview someone for a job because they are partially sighted) or indirect, by applying a provision, criterion or practice which their protected characteristic makes it harder for them to comply with (e.g. requiring all staff to work late three nights a week.) This may be harder for women to comply with than men because statistically, women are more likely to have childcare responsibility. It may be possible to justify indirect discrimination if it can be shown that the requirement is a proportionate means of achieving a legitimate aim (e.g. in a hospital environment, requiring all staff to be “bare below the elbows”, may be harder for a Sikh to comply with because of their religious requirement to wear a kara, or bangle, which is an article of faith. Clearly, infection control in a hospital is a significant and legitimate aim, but the issue would be whether a complete ban on jewellery worn on the arms is a proportionate means of achieving it.)

It is also unlawful to victimise employees or workers who make or threaten allegations of discriminatory conduct, or support a colleague who has done so (e.g. a perverse refusal to promote an employee who acted as a companion to an employee raising a grievance about bullying on the grounds of their race). The final example of prohibited conduct is harassment, i.e. conduct which is unwanted and violates the other person’s dignity or creates an intimidating, hostile, degrading, humiliating or offensive environment for them (e.g. circulating unpleasant “jokes” about gay men via an office email system).

Please click here for an overview of the Equality Act 2010.

8. Family-friendly matters

8.1 Pregnancy and maternity

Pregnant employees are entitled to paid time off to attend ante-natal appointments, including if wished relaxation and parenting classes. The employee must show her employer on request the appointment card for such times. An employer must not treat a pregnant employee less favourably on the grounds that she has asserted her statutory right to ante-natal care. The employee is also protected from dismissal or selection for redundancy on grounds related to pregnancy or childbirth.

Regardless of her length of service, any employee may take up to 52 weeks’ maternity leave (and must take the first two weeks after the birth, or four if she works in a factory).

The first 26 weeks are known as ordinary maternity leave, or OML. Other than in relation to pay, the employment contract continues during OML, so the employee continues to benefit from her rights and must observe her obligations under the contract (except where they are not compatible with being on maternity leave). At the end of OML, if the employee wishes to return to her existing role, she has the right to do so, and if it is no longer available as a result of a redundancy exercise, she has the right to be preferred to other candidates for suitable alternatives. The employee may however prefer immediately to take additional maternity leave (AML) and remain off for up to 26 further weeks. Once again, the contract continues other than in relation to pay and the employee is still entitled to return to her existing role at the end.

The employee is not paid throughout maternity leave. Statutory maternity pay (SMP) is payable for up to 39 weeks, at the rate in force at the time, although as usual it is open to the employer to be more generous either in duration or amount of payments, and indeed to agree a longer period of maternity leave.

While the employee is on maternity leave, she may spend up to ten days working with her employer, e.g. coming in to the office for training days, without losing her right to be on maternity leave or, where appropriate, receive maternity pay. These days are known as Keeping In Touch (KIT) days.

8.2 Adoption

When a couple adopts a child, one of the couple (which includes civil partners) is entitled to adoption leave, provided they have been employed by that employer for at least 26 weeks. The other may be able to claim paternity leave.

Like maternity leave, adoption leave, which can last up to 52 weeks, is divided into ordinary adoption leave (OAL) and additional adoption leave (AAL), and in a similar way, the employee’s rights continue just as they do during OML. Again, statutory adoption pay (SAP) is payable for 39 weeks.

8.3 Paternity leave and pay

Where an employee:

  • has 26 weeks continuous employment ending with the 15th week before the expected week of birth or placement for adoption;
  • is the biological father of the child or is married to or the partner (including civil partner) of the child’s mother;
  • has or expects to have responsibility for the upbringing of the child

they will be entitled to paternity leave of one whole week or two consecutive weeks, which must normally be completed within 56 days from the birth/adoption of the child and must be taken to care for the child or support the other parent. The rights during and after paternity leave are the same as for maternity leave.

It is currently anticipated that a new system of shared parental leave will be introduced in 2015. We will provide more information on our legal updates page when the plans have been confirmed.

8.4 Parental leave

Where an employee has a year’s service and has responsibility for a child, they are entitled to unpaid parental leave of up to 13 weeks for each child, which must be taken before the child’s fifth birthday (up to 18 weeks to be taken for a disabled child, to be taken before that child’s 18th birthday). The leave must to be taken for the purpose of caring for a child and in blocks of no less than a week.

8.5 Flexible working

Any employee may request a change to their hours or place of work (and those with more than 26 weeks’ service have the statutory right to do so), provided they are making the request in relation to:

  • A child under 17 years old (18 if the child is disabled) for whom they have or expect to have responsibility for the upbringing or in order to care for the child.
  • A person aged 18 or over who is in need of care where the employee is, or expects to be caring for such a person.

The employer may only refuse the request on certain legitimate business grounds. If the request is successful, the employment contract will need to be updated to reflect the change(s), which will be permanent and binding.

8.6 Time off for dependants

All employees are entitled to take time off work to deal with an unexpected emergency involving a dependant. A dependant will often be a family member or perhaps an elderly neighbour who relies on the employee for support. The time off is unpaid (although the employer may agree to make payments).

The emergency must not have been foreseeable. It may for instance include the death of an elderly relative, or where a childminder is taken ill and cannot care for the employee’s child. However, it would not include an instance where a childminder was going on pre-booked holiday and the employee had simply failed to make alternative arrangements.

9. Employee representation

9.1 Trade unions

All employees have the right to join (and the right not to join) an independent trade union. If the employer recognises the union, there will be an agreement in place as to the scope of bargaining between the union and the employer. This may cover health and safety, collective redundancies and business transfers and, most likely, pay.

Unions can request that an employer voluntarily recognises a union, but if that is not successful, the union may apply to the Central Arbitration Committee (CAC) for compulsory recognition. It may be necessary to conduct a secret ballot of the relevant workers before the application can continue as this will govern the point at which the employer must recognise the union.

Although there is no legal right to strike, those who take official industrial action following a lawful ballot will be protected from dismissal, although since they will be in breach of contract, they will not be paid. It is also unlawful to treat employees less favourably on the grounds of their union membership, non-membership or participation in trade union activities.

9.2 European works councils

An employer with at least 1,000 employees across the EEA (at least 150 of whom must be in each of at least two of the relevant member states) must establish a European works council (EWC). The EWC has the right to receive information about the business and must be consulted about some of the business’ activities.

9.3 Domestic works councils

Since 2009, employers employing at least 50 employees in the UK may also be asked, or choose, to establish a domestic or national works council, or “Information and Consultation Body”. In fact, these need not be either works councils as such, nor national, but they can be used to discuss matters of significance in a non-unionsed workforce.

9.4 Employee representatives

If an employer intends to make large-scale redundancies or to transfer the business to another owner, where there is no union and no relevant works council, arrangements will need to be made for the election of employee representatives from within the workplace for that specific period. They must be informed and, in certain circumstances, consulted, about the proposals.

10. Corporate Transactions

10.1 Share sales

The sale of shares in a business does not trigger a change in the employer and accordingly all the existing employees’ contractual and statutory rights are preserved.

10.2 Business transfers

By contrast, when a business (or part of one) is sold as a going concern, or when there is a change in service provision, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (known as TUPE) will apply.

Unless they refuse to transfer, those employed by the seller (“transferor”) immediately before the transfer will automatically pass into the employment of the buyer (“transferee”). Their rights and obligations are protected, and their continuity of service is unbroken. It is automatically unfair to dismiss any employees because of the transfer, unless the employer can show that the reason was an economic, technical or organisational (ETO) reason entailing changes in the workforce. If they opt out of the transfer, the employees’ contract of employment ends at the moment of transfer and they have no claim for compensation against either transferor or transferee.

In good time before the transfer takes place, the transferor must inform and (depending on whether any measures are to be taken that will affect the employees) sometimes consult with the workforce via representatives, who may be union representatives if there is a union in place, or other representatives who are either standing representatives or elected for this particular purpose.

11. Ending employment

Other than by either party giving notice, there are a number of ways in which employment may end. The parties may mutually agree that the employment is terminating, or a fixed-term contract may expire without it being renewed. The employer may summarily dismiss the employee (i.e. dismiss without notice. This is usually on grounds of gross misconduct) or the employee may resign immediately in response to a breach of contract by the employer (i.e. constructive dismissal). Finally, the contract may be “frustrated” ­ i.e. it may be impossible for one or both parties to perform their obligations. The most common examples would perhaps be a long and serious illness or a lengthy period of imprisonment. The key is that the contract is unlikely to be capable of performance within a reasonably foreseeable period.

There are 5 potentially fair reasons for dismissal: capability, conduct, redundancy, some other substantial reason and illegality. Perhaps the most relevant in recent times has been redundancy.

12. Redundancy

Redundancy occurs when:

  • The business in which the employee works has or will cease to exist;
  • The business has or will cease to exist in the employee’s place of work; or
  • The requirements of the business for employees to carry out work of the particular kind carried out by the employee either generally, or at the place where the employee works, have ceased or diminished or are expected to cease or diminish.

An employee who has been continuously employed for at least two years has the right to receive a statutory redundancy payment if they are made redundant. Redundancy payments are calculated by reference to the employee’s age and length of service and the statutory amounts payable are reviewed each year. As usual, an employer may decide to be more generous in the amount of redundancy payment paid, although care must be taken not to discriminate on any of the protected grounds. If the employee refuses suitable alternative employment, they forfeit any right to a redundancy payment.

In order for a redundancy to be fair, the employer must show that it followed a fair procedure. This will include, but not be limited to a fair method of selection of who is to be made redundant, genuine consultation with employees “at risk” of redundancy before making a final decision and considering alternatives to dismissal, including whether there are any suitable jobs elsewhere in the business or wider Group.

The law requires an employer that ‘makes a proposal’ to dismiss 20 or more employees by reason of redundancy over any 90 day period at one establishment (i.e. a collective redundancy situation) to consult with appropriate representatives of affected employees. There are minimum consultation periods depending on how many redundancies are proposed. Where the number of redundancies is 20 – 99, a 30 day period applies; where it is 100 or more, it is 45 days. An employer proposing to make 20 or more employees at the same establishment redundant within a period of 90 days or less must also notify the Secretary of State of the plans. The employer is required to give the representatives the following information in writing:

  • Reasons for its proposals.
  • Numbers and descriptions of employees whom it is proposed to dismiss as redundant.
  • Proposed method of selection.
  • Proposed method of carrying out the dismissals.
  • Proposed method of calculating redundancy payments.

The consultation must discuss ways of avoiding, reducing the number and mitigating the consequences of the dismissals and must be undertaken with a view to reaching agreement with the representatives.

13. Tribunal claims

Most litigation relating to employment law claims is brought in the Employment Tribunal. This is a relatively informal forum which may however deal with complex claims of very high value, particularly in relation to discrimination, where there is no cap on the amount of compensation that may be awarded. There is a limited right for employers to counter-claim in certain circumstances. However, normally the forum for employers to bring claims against employees (or ex-employees in the case of enforcement of covenants) is in the High Court.

Most claims must be started within three months from the date the act complained of occurred, although in some instances (equal pay and redundancy payments) the time limits are longer, and in discrimination claims the tribunal may extend the deadline if it is satisfied it would be just and equitable to do so.

At present there is no fee for bringing a claim in the Employment Tribunal and conversely it is unusual for an award of costs to be made against an unsuccessful party. Set out below are some of the more common complaints made in tribunal. A fee system is due to be implemented shortly together with new rules of procedure. (Exact dates are not yet known but Summer 2013 is set.)

13.1 Wrongful dismissal

An employee may bring a claim for wrongful dismissal if the employer terminates the contract (either directly, by dismissing the employee outright or indirectly by behaving in such a way that the employee resigns in response to the breach) without giving adequate notice. The claim will be for the period of notice, less any earnings by the employee (“mitigation”). In this instance, as the tribunal has a cap on the amount it can award of £25,000, it is one claim that is sometimes started in the court, where there is no limit.

13.2 Unfair dismissal

Generally speaking, an employee must have two years’ continuous service to bring a claim for unfair dismissal, although when they are dismissed for protected reasons such as whistleblowing, trade union membership or pregnancy, that qualifying period is not necessary.

The employer will need to show that the reason, or principal reason, for the dismissal was a potentially fair one. The reason may relate to the employee’s capability (including their health, qualifications or skills), their conduct, a redundancy situation, the illegality of the contract or “some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held”.

The tribunal will need to be satisfied that the employer followed a fair procedure in dismissing the employee.

If the dismissal is found to be unfair, the usual outcome is that the employer will be ordered to pay compensation to the employee. This is broken down into a basic award (equivalent to the statutory redundancy amount and not payable if the employee has already received a redundancy payment) and a compensatory award (subject to a statutory cap, reviewed annually) which reflects the amount of net losses suffered by the employee as a result of the employer’s unfair act. There may also be an uplift or reduction in compensation for a failure to follow a disciplinary and/or grievance procedure.

Compensation may be reduced where the employee has contributed to the outcome through their own bad conduct, or where there is a procedural unfairness but the tribunal is satisfied that the outcome would have been the same in any event.

13.3 Protective award

If an employer fails to comply with its obligations to consult collectively during a large-scale redundancy exercise, the tribunal may make a protective award of up to 45 days’ pay per employee. A similar amount may be awarded to affected employees where an employer fails to comply with its information and consultation obligations on a business or service provision transfer. Unusually, these awards are punitive, unlike other compensation in the Employment Tribunal which generally tends to reward loss rather than punish a defaulting employer.

13.4 Discrimination

For an employee or worker to bring a claim for discrimination they do not need to have left employment. Indeed, where the discrimination occurred during the recruitment process, they do not need to have started work in the first place.

Compensation for discriminatory conduct is also based on net losses (although without a statutory cap) and in addition a tribunal may award an amount for injury to the individual’s feelings, which will depend on the severity of the injury. Individuals who discriminate may be held personally liable and ordered to pay compensation to a claimant. Damages may also be reduced or increased for a failure to comply with a disciplinary and/or grievance procedure.
 

This publication is intended for general summary guidance. It is not and should not be considered legal advice. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.