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Dispute Resolution Ii Unfair Dismissal Notes

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This is an extract of our Dispute Resolution Ii Unfair Dismissal document, which we sell as part of our Labour Law Notes collection written by the top tier of Oxford students.

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Labour 4 II

Dispute Resolution

DISPUTE RESOLUTION II Abbreviations: EE Employee ER Employer COE Contract of Employment EAT Employment Appeal Tribunal ET Employment Tribunal TU Trade Union D&M Deakin & Morris' textbook FT Fixed term (contract) SOSR Some Other Substantial Reason

UNFAIR DISMISSAL Statutory Concept of Dismissal

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Statutory concept builds on common law contract of employment. EE has to satisfy a number of qualifying conditions to show that he has been dismissed. S95(1) ERA 1996 provides for 3 situations that constitute dismissal

A. B. C.

Common law CoE terminated by ER (with/without notice)

1. Applicant was employed as employee - s95(1)/s230(1) ERA

Expiry of limited-term contract

Constructive dismissal NB: application of ACAS code to (A) and (C), but not fixed term contracts and redundancy. Unreasonable failure to comply with ACAS code by ER/EE may result in +/- of the award of up to 25%
respectively. NOT entirely comprehensive. Doesn't cover cases of expiry of FT contract where EE signed valid wavier before 25.10.1999, or where EEs are protected by CA establishing dismissal procedures
[both above are statutory derogations; there are also other situations which courts have excluded from scope of statutory provisions - eg. Discharge by way of frustration]
Qualifying conditions

2. Crown servants (s138) and Parlt staff are also covered.

Used to be that those above the "normal retiring age" couldn't claim, but removed by EA 2010 Continuity of employment of at least 2 years (if employed after 6.4.2012) - s108(6) ERA, but not necessary for automatically unfair dismissal

Note that after SoS for Employment, ex p EOC, 1994: no longer necessary to establish a weekly hours threshold.

For those employed before 6.4.2012, the qualifying period is still one year.

3. *

R v SoS for Employment, ex p Seymour Smith, 1999: challenged the 2 year rule, arguing it was indirectly discriminatory against women. ECJ said it was probably discriminatory, but could be objectively justified - when returned to HOL, HOL said it was objectively justified (but didn't really scrutinise and require real evidence). Might be problematic cos ECJ in recent cases on age discrimination has required real evidence of justifications.

There is no empirical evidence to show that a shorter qualifying period helps economically to make the business more flexible. Evidence of a dismissal within the meaning of s95.

Exclusion from statutory protection by agreement? Agreement by EE that he is taken to have resigned in the event that he commits a particular breach of discipline/some other act?

1 Labour 4 II

Dispute Resolution

Likely to be struck down under s203(1) ERA 1996: renders void any contract/term purporting to exclude operation of the Act. Igbo v Johnson Matthey Chemicals Ltd, 1986: EE granted extended holiday leave, on condition that she sign document stating that failure to return by agreed date would automatically terminate CoE. ER argued this was an agreement to terminate, not dismissal, hence not within scope of stat protection. CA held that EE had been dismissed, since the agreement was void for limiting the operation of the right to claim unfair dismissal! Otherwise, whole object of Act could easily be defeated. . BUT note there are 3 strictly defined exceptions to the rule in s203(1):

1. 2.

3. 1.

Where agreed settlement was made as result of intervention of a conciliation officer Where EE enters valid compromise contract satisfying conditions in s203(2) Where collective parties to dismissal procedure agreement successfully applied under s110 ERA to have EEs covered by the CA exempted from the Act.

Forms of Dismissal/Termination of the CoE - 3 categories in ERA s95(1). Dismissal by ER (s95(1)(a))

No formalities necessary! Might be in writing/words/conduct.

If based on words/conduct, depends on ER's intentions and EE's reasonable understanding

One side can't rely on undisclosed intention that the other couldn't have reasonably known of. But if both subjectively understand the contract to be terminated, reasonableness of their understanding becomes irrelevant! (contract principles) Ambiguity? If words are uttered in the heat of the moment, then tendency not to construe it as a clear resignation by EE - Sovereign House Security Services Ltd v Savage, 1989

Should have reasonable grace period allowed, and if circumstances arise to put ER on notice that further inquiry should be undertaken to check if resignation was really intended/can be assumed, then ER should check - Kiwk-Fit v Lineham, 1992 Test of causation:Sometimes, it is evident that EE was dismissed by ER - eg, where EE is told he is no longer required, or is expressly invited to resign. If EE agreed to go cos of offered severance terms, tribunal might find it was generosity of the severance terms, not the initial threat of dismissal, which was the operative cause. Birch v University of Liverpool, 1985: Uni offered scheme where EEs taking early retirement would get pension and lump sum. B applied, and later claimed statutory redundancy payment too. But court held there was no threat of compulsory early retirement, and no pressure on B to resign, hence contract terminated by mutual consent. Cf Scotch Premier Meat Ltd v Burns, 2000: EAT was more generous to EE, holding that 'whole background' of departure was ER's decision to close factory and make EEs redundant - fact that some EEs accepted payout does not preclude finding of dismissal. Sandhu v Jan de Rijk Transport Ltd, 2007: "resignation implies some form of negotiation and discussion" - genuine choice by EE Roberts v West Coast Trains Ltd, 2004: EE dismissed after disciplinary hearing, and launched internal appeal. Before outcome was known, EE started proceedings in ET for unfair dismissal, but internal appeal then reduced punishment from dismissal to demotion. CA held that he had not been dismissed - CoE terms permitted the replacement of demotion - initial dismissal would have stood if EE had not started internal appeal, or withdrawn appeal before decision was made.
but note that now, dismissed EE who fails to appeal against dismissal may risk reduction of up to 25% in eventual award (ACAS) But where ER has given notice to EE to terminate CoE, courts unlikely to find that any later agreement to end the employment before notice period expires amounts to 2

Labour 4 II

2. Dispute Resolution termination by consent - initial decision to dismiss is operative, especially if shown that EE was pressurised into leaving. Dismissal under s95(1)(a) by ER usually, but not necessarily, involves ending of employment r/s. The statute only requires termination of the employment contract.

In Hogg v Dover College, 1990, H was full-time teacher, but after illness, was offered parttime teaching job with lower salary (ER's unilateral imposition of radically diff terms dismissal or just a repudiatory breach which could be accepted by EE so as to be constructive dismissal?)

EAT held that letter amounted to termination of H's contract (dismissal, regardless of whether he continued in employment. Alternatively, there was constructive dismissal =
employment continued under new CoE, H having accepted ER's repudiation and terminated the old)

Upheld in Alcan Extrusions v Yates, 1996: EAT affirmed that the change from terms of existing CoE was sufficiently substantial to constitute withdrawal of contract. Not a mere repudiatory breach which might lead to potential constructive dismissal under s95(1)(c).

Constructive dismissal (s95(1)(c))

Where EE terminates the CoE (with/without notice), but under circumstances where he is entitled to terminate it without notice cos of ER's conduct. Generally, EE doesn't have to inform ER of reason for leaving, for constructive dismissal. But an unreasonable failure to comply with ACAS and raise grievances may result in reduction of up to 25% of compensatory award. Test of whether ER was guilty of misconduct incorporates common law of contract = EE's right to resign in face of ER's repudiatory breach of contract.

Earlier, courts had considered generally whether ER acted unreasonably.

But in Western Excavating Ltd v Sharp, 1978: CA imposed contract test, to avoid duplicating test of reasonableness (s98(4) ERA) within scope of concept of dismissal.

This has not led to limiting of scope of Act to the technical law of repudiatory breach of contract, thanks to the expansion of the implied duty of co-operation.

In the case itself, Lawton LJ thought it unnecessary to go into the depths of detail of repudiatory breach. Rather, ***a breach by ER of duty to maintain mutual trust and confidence will suffice.

Attempt at unilateral variation of contractual terms by ER will almost certainly be seen as a repudiation.

Duty to maintain trust and confidence can arise before actual commencement of employment - prospective EE might bring claim for constructive dismissal!

Can consider series of separate acts, taken together. Final straw itself doesn't have to amount to a breach of contract. Rather, just contribute something to the breach so that when taken in conjunction with those earlier, it amounts to breach of implied term of trust and confidence.

REPUDIATORY? Test: looking at all the circumstances objectively, ER showed intention to abandon and altogether refuse to perform the contract - must be immediate threat to express contractual terms.

Woodar Investment Development v Wimpey Construction Ltd, 1980: assertion of contractual right does not amount to repudiation just cos assertion was wrong in law (unless in bad faith). To amount to repudiation, D must show intention not be bound by the contract.

Qualified in BBC v Beckett, 1983: EAT held that the Woodar v Wimpey principle did not derogate from general rule that party might act in a manner that, viewed objectively, amounts to a fundamental breach. Hence, though ER might have purported to exercise express power in good faith (dismissal for negligence, causing injury to another), it was still a repudiatory breach!
So EE has to show (Brown v Merchant Ferries, 1998): 3

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Dispute Resolution

1. 2.

3. 4.

3. EE must leave in response to the breach (not cos of some other reason)

EE must not delay for too long, otherwise might be deemed to have waived the breach and agreed to vary the contract. Favouring EE: no ready assumption of waiver/estoppel where...

1. 2.

3.breach of contract by ER of express/implied term (can be anticipatory breach - Financial Techniques Planning Hughes) breach is sufficiently impt to justify EE resigning - Lewis v Motorworld Garages, 1985

EE hesitates due to ignorance of rights ER's breach amounts to statutory wrong which EE has no right to waive there is a continuing breach.

Walton & Morse v Dorrington, 1997: long-serving secretary for firm of solicitors claimed constructive unfair dismissal cos of ER's breach of implied term of providing safe place of work (smoking environment). Fact that she didn't resign instantly was not interpreted as waiver, cos she had been looking for alternative employment as a single parent and didn't have the money to resign straightaway Note a constructive dismissal is not necessarily unfair! Could still be for potentially fair reason while protecting EE from unilateral variation, the law still grants overriding priority to certain interests of ER (especially those of economic efficiency).

'self-dismissal' and resignation

Doubtful in the first place whether the doctrine of 'self-dismissal' is actually valid. Serves to protect ER, where EE commits a repudiatory breach of contract.

Typically, elective theory holds that CoE will be terminated only when ER (innocent party here) has accepted the breach. If so, then CoE is terminated by ER, and there will be dismissal under s95(1)(a), though EE's breach will probably make it easy for ER to establish that there was a potentially fair reason and that it acted fairly. London Transport Executive v Clarke, 1981 (Lord Templeman):

4. Confirmed that ER's acceptance of EE's repudiatory breach, where EE wishes to continue in employment despite repudiatory conduct, will constitute determination of the CoE by ER. (elective theory!)

However, distinguished this from the situation where EE walked out without wishing to continue the employment r/s , and ER accepted repudiation by taking no action to affirm contract. Dismissal legislation could apply only if there was constructive dismissal. In such cases, elective theory will not apply!
Also possible for self-dismissal to arise under the automatic theory, where EE's conduct evinces intention not to carry on with employment r/s, and this is seen as terminating the CoE!
But such an inference should not be drawn easily, and is rarely appropriate.

Expiry of limited-term contract (s95(1)(b))

Limited term contracts include fixed term contracts (paradigm case), completion of performance of specific task, occurrence of an event when that event happens. In the past, indivs could waive right to unfair dismissal on expiry of fixed term contract, if contract was for at least a year + waiver in writing. But no longer possible since ERelA 1999. So now, EEs are protected in cases where ER just keeps hiring them on succession of FT contracts, so as to deprive them of job security, There will be dismissal for the purposes of the Act where EE is employed under limited-term contract, and contract terminates by virtue of the limiting event, without being renewed under the same contract. [so expiry of fixed term contract IS a dismissal still!].

"limited-term contract":

1. 2.

Employment under the contract is not intended to be permanent Provision made in the contract for it to terminate by virtue of a limiting event 4

Labour 4 II

Dispute Resolution

Before 1.10.2002, legislation confined to expiry of fixed-term contracts without renewal. But now, 'limited-term contracts' are defined more widely!
AFTER 2002 (complying with Directive 99/70/EC): restriction on use of successive fixed-term contracts. Preconditions: i. EE was continuously employed under subsequent contract/previous fixed-term contract, for four years or more

"continuous" is a considerable restriction!

In the Adeneler case (below), ECJ held that national rule that FT contracts were not "successive" if separated by more than 20 working days was precluded by the Directive. Hence, British courts should construe continuity differently in this context. ii. Employment under FT contract NOT justified on objective grounds at the time where contract was last renewed (or when it was entered into, if not renewed) - no objective reason for not granting permanent status.

But possible objective grounds are not defined in the Regs or the Directive. Possible reasons are where A is hired to cover someone who went on leave.

Adeneler v Ellinikos Organismos Galaktos, 2006: ECJ held that it refers to precise and concrete circumstances which can justify use of successive FT employment contracts, possibly arising from specific nature of tasks or inherent characteristics of tasks or MS' pursuit of legit social-policy objective. If conditions are fulfilled, then the FT contract will be of no effect so that EE will be deemed a permanent employee!-5.

NB: Labour Govt declined to make it automatically unfair where ER dismisses EE in order to prevent him from acquiring permanent status! Hence such an EE will never acquire a right to permanence, and dismissal would have to be judged on ordinary unfair dismissal principles. Frustration

Once frustrated, the contract will be terminated automatically - by operation of law. Hence does NOT fall within s95(1)(a)/(c) - statute requires one of the parties to take steps to bring contract to an end. (but would still be dismissal for redundancy purposes - s136) Still, doctrine of frustration does apply to the contract of employment. Exceptions to the doctrine: if parties had made provision for the event in their contract, and expressly allocated risk, then the contract will not be frustrated merely by supervening event/force majeure. Neither will it be frustration if event was due to fault of one party. D&M thinks it is highly arguable that the normal CoE which is terminable by either party on short notice already deals with risk of supervening event - allocation of risk, hence doctrine of frustration should be excepted.

Doctrine of frustration not needed to protect ER, for instance if EE becomes incapable of working cos of injury/illness, since ER can just terminate by giving notice.

Doctrine is invoked only cos ER wants to avoid triggering unfair dismissal thru s95(1)(a)

Harman v Flexible Lamps Ltd, 1980: [Bristow J] - frustration is normally relevant only where CoE is for long term, and cannot be determined by notice.

But cf Notcutt v Universal Equipment Co Ltd, 1986, where CA disagreed with this sensible approach, instead holding that frustration applied to contract terminable by short notice: 1) contract could've been intended to last for many years; 2) ER's power to terminate is still subject to statutory protection of EE against unfair dismissal.

Still, Williams v Watsons Luxury Coaches, 1990: EAT stressed that frustration in employment contracts will be rare. Gryf-Lowczowski, 2006 illustrates this: though surgeon suspended for 2 years cos of concerns about performance, still no frustration cos there was chance that he could be retrained. Note that finding of frustration does not necessarily mean EE wins - ET might decide that ER acted reasonably, under s98(4). 5

Labour 4 II

Dispute Resolution

But while event allegedly giving rise to frustration is a potentially fair reason, this is different from using doctrine of frustration to find that there was no dismissal in the first place (ET doesn't even consider the merits of the case here - statutory entitlements are wiped out) Essential question: whether future performance of EE became impossible at that time

Egg Stores (Stamford Hill) v Leibovici, 1977: relevant factors are length of EE's previous employment, parties' expectations of continuing employment, availability of a replacement, risk to ER of incurring statutory or other obligations by retaining EE, and whether in all circumstances a reasonable ER could be expected to wait longer.

When is the effective date of termination? (EDT)

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Important for EE's claim in 2 ways:

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Qualifying length of continuous employment - usually requires 2 years continuous employment to qualify, employed on/after 6 Apr 2012. (if before, then just 1 year)

2. Limitation period for unfair dismissal claims - must be presented to ET within 3 months of EDT. But ET has limited power to extend period if EE can show it was not reasonably practicable to present complaint within the time period - s111(2) Defined in s97(1)!S97(2): if EE does not receive minimum statutory notice, EDT will be extended for certain purposes to the date on which statutory notice would have expired.
-if EE received notice from ER, but then exercised statutory right to give shorter counter-notice under s95(2), EDT will be the (earlier) date on which counter-notice expired.

Fairness of Dismissal

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GENERAL INTRODUCTION TO ERA TEST Governed by s98 ERA 1996 - 2 stage test of fairness

1. 2.

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ER has to show that dismissal took place for reasons which are "potentially fair"

Whether ER acted reasonably in treating that reason as sufficient, in the circumstances, for dismissing EE. Test has strong element of discretion: ET must decide if ER acted reasonably in accordance with equity and the substantial merits of the case. Grant of remedies of reinstatement/re-engagement is also discretionary!
Identifying the relevant reason

ER has to show the reason (or principal reason, if multiple), for the dismissal, AND that it comes within one of the "gateways" for potentially fair reasons. Burden of proof: if EE contests the reasons, no burden on EE to disprove those reasons, or even positively prove a different reason. But need some evidence to support the allegation. It will be for the ET to consider evidence as a whole - might find itself not satisfied that principal reason was that asserted by ER, but doesn't necessarily then have to find the reason to be that asserted by EE. Must be the reason which ER had at the time of the dismissal: is ER's action in treating this reason as the reason for dismissing EE reasonable and sufficient?

**Abernethy v Mott, Hay and Anderson, 1974: (the Abernethy principle) some leeway allowed to ER! In an appropriate case, ET can infer from the evidence that ER was motivated by a reason which was not clearly expressed at the relevant time. Hence. If ER gives reason at time of dismissal, this will be evidence, but will not necessarily constitute the real reason! 3 possible situations:

1. Where false reason given out of kindness

2. 3.

Where ER might have difficulty in proving facts that actually led him to dismiss
**Where ER described reason wrongly cos of mistake of language/law.

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ET cannot accept a reason which was NOT established in fact/believed to be true on reasonable grounds, as reasonably sufficient. Error of law otherwise!
ER's immunity from unfair dismissal - 2 possibilities 6

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