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LABOUR: UNFAIR DIMISSAL1. DISPUTE AVOIDANCEThe context: avoiding dismissals where possible and getting cases resolved locally
? 1.1 Grievance and Disciplinary ProceduresStatute was designed to reduce tribunal proceedings by encouraging Alternative Dispute Resolution ("ADR").Employment Act ("EA") 2002: Introduced new minimum standard procedures to be used in disciplinary and dismissal cases. S.30 provided that the requirement to comply with the statutory procedures could be implied into every contract of employment. The Government decided not to commence s.30, waiting to see how the procedures operated in practice. These disciplinary and grievance procedures came into force in October
2004.The Employment Act 2002 (Dispute Resolution) Regulations 2004 were based on a government (Department for Trade and Industry) consultation paper of 9 July 2003.There were grievance procedures and disciplinary and dismissal procedures which both had a modified and standard procedure.
? 1.2 Gibbons ReviewGibbons Review: A Review of Employment Dispute resolution in GB: (http://www.berr.gov.uk/files/file38516.pdf) Found that the unpopular procedures were not a success.Statutory dispute resolution procedures
? The statutory dispute resolution procedures introduced in 2004 have brought some benefits. Employers and employees have more clarity about the steps they must follow when formally pursuing a disciplinary or grievance issue and as a result many employers now place more emphasis on training managers to handle such situations effectively. Employers also have an opportunity to consider an employee's grievance before a tribunal claim is submitted, giving a valuable opportunity for early resolution. Single-claimant employment tribunal claims have fallen following the introduction of the procedures. However, the procedures carry an unnecessarily high administrative burden for both employers and employees and have had unintended negative consequences which outweigh their benefits. Many businesses told the Review that they have caused an increase in the number of disputes.Formalising disputes
? Rather than encouraging early resolution, the procedures have led to the use of formal processes to deal with problems which could have been resolved informally. This means that problems escalate, taking up more management time. Employees find themselves engaged in unnecessarily formal and stressful processes, which can create an expectation that the dispute will end in a tribunal. The complexity of the procedures and the penalties for failing to follow them mean that both employers and employees have tended to seek external advice earlier.One size does not fit all
? The use of formal processes in cases where other approaches would be more appropriate affects the climate for resolution, and makes parties defensive and more likely to consider an employment tribunal from the outset. For smaller employers the need to put things in writing is often countercultural and can actually exacerbate a problem rather than help to solve it. The Review heard that the procedures apply to many situations where they do not fit or are excessive. For example, the three-step process is inappropriate in agreed redundancy situations or where fixed-term contracts terminate. It frequently does not fit well where an employee wishes to make a complaint after employment has endedOn the same day as the Gibbons review was published, the Government published a consultation document:Resolving disputes in the workplace. A Consultation": (http://www.berr.gov.uk/files/file38553.pdf) Set out measures for taking the Gibbons Review forward and seeking views on a package of measures to help solve employment disputes successfully in the workplace so that:
? Productivity is raised through improved workplace relations
? Access to justice is ensured for employees and employers
? The cost of resolving disputes is reduced for all parties
? Disputes are resolved swiftly before they escalateThese measures include repealing the statutory dispute resolution procedures; providing better help and guidance to resolve disputes at an earlier stage; and improving how employment tribunals work
? 1.3 Employment Act 2008 and Dispute resolutionThe relevant Code of Practice can be found at: http://www.acas.org.uk/CHttpHandler.ashx?id=1047&p=0. It lays down general principles and then more specific rules for discipline and for grievance.See also the non-statutory guidance at http://www.acas.org.uk/CHttpHandler.ashx?id=1043.S.1. Statutory dispute resolution procedures
? In the Employment Act 2002 (c. 22), sections 29 to 33 and Schedules 2 to 4 (which make provision for statutory dispute resolution procedures) are repealed.S.2. Procedural fairness
? In the Employment Rights Act 1996 (c. 18), section 98A (procedural fairness) is repealed.S.3. Non-compliance with statutory Codes of Practice
? (1) The Trade Union and Labour Relations (Consolidation) Act 1992 (c. 52) is amended as specified in subsections (2) and (3).
? (2) After section 207 there is inserted---
? "207A Effect of failure to comply with Code: adjustment of awards(1) This section applies to proceedings before an employment tribunal relating to a claim by an employee under any of the jurisdictions listed in Schedule A2.(2) If, in the case of proceedings to which this section applies, it appears to the employment tribunal that---(a) the claim to which the proceedings relate concerns a matter to which a relevant Code of Practice applies,(b) the employer has failed to comply with that Code in relation to that matter, and(c) that failure was unreasonable,
? the employment tribunal may, if it considers it just and equitable in all the circumstances to do so, increase any award it makes to the employee by no more than 25%.(3) If, in the case of proceedings to which this section applies, it appears to the employment tribunal that---(a) the claim to which the proceedings relate concerns a matter to which a relevant Code of Practice applies,(b) the employee has failed to comply with that Code in relation to that matter, and(c) that failure was unreasonable, the employment tribunal may, if it considers it just and equitable in all the circumstances to do so, reduce any award it makes to the employee by no more than 25%.(4) In subsections (2) and (3), "relevant Code of Practice" means a Code of Practice issued under this Chapter which relates exclusively or primarily to procedure for the resolution of disputes.The general principles
????????1. This Code is designed to help employers, employees and their representatives deal with disciplinary and grievance situations in the workplace.
Disciplinary situations include misconduct and/or poor performance. If employers have a separate capability procedure they may prefer to address performance issues under this procedure. If so, however, the basic principles of fairness set out in this Code should still be followed, albeit they may need adapting
? Grievances are concerns, problems or complaints that employees raise with their employers.
? The Code does not apply to redundancy dismissals or non-renewal of fixed term contracts on their expiry.2. Fairness and transparency are promoted by developing and using rules and procedures for handling disciplinary and grievance situations
? These should be set down in writing, be specific and clear. Employees and, where appropriate, their representatives should be involved in the development of rules and procedures. It is also important to help employees and managers understand what the rules and procedures are, where they can be found and how they are to be used.3. Where some form of formal action is needed, what action is reasonable or justified will depend on all the circumstances of the particular case.
? Tribunals will take the size and resources of an employer into account when deciding on relevant cases and it may sometimes not be practicable for all employers to take all of the steps set out in this Code.
????????4. That said, whenever a disciplinary or grievance process is being followed it is important to deal with issues fairly. There are a number of elements to this:
? Employers and employees should raise and deal with issues promptly and should not unreasonably delay meetings, decisions or confirmation of those decisions.
? Employers and employees should act consistently.
? Employers should carry out any necessary investigations, to establish the facts of the case.
? Employers should inform employees of the basis of the problem and give them an opportunity to put their case in response before any decisions are made.
? Employers should allow employees to be accompanied at any formal disciplinary or grievance meeting.
? Employers should allow an employee to appeal against any formal2. ROLE OF ACAS AND EARLY CONCILIATION
? 2.1 IntroductionThe composition of ACAS is governed by Part VI of TULR(C)A 1992 and the functions by Part IV.TULR(C)A 1992 s.209: ACAS is under a general duty in to "promote the improvement of industrial relations".Between 1975 and 1993 the section continued "and in particular to encourage the extension of collective bargaining and the development and, where necessary, the reform of the collective bargaining machinery". Since this did not coincide with the Tory government's objectives this was dropped by TURERA 1993.TULR(C)A 1992 s.209 (Amended by TURERA 1993): ... "in particular by exercising its functions in relation to the settlement of trade disputes under sections 212 and 212."This "fire-fighting function" has now been replaced by a "fire-prevention" function by the Employment Relations Act 1999, which removed the 1993 wording.ACAS's staff are employment relations experts. Most of their time is spent advising on how to avoid disputes through good practice and dealing with individual cases. They do this in a number of ways:Providing impartial information and help on employment issues (over 760,000 calls a year)Preventing and resolving problems between employers and their workforcesSettling complaints about employees' rights. Cases must now go to Early Conciliation before they go to an employment tribunalEncouraging people to work together effectively through workshops and seminars
? 2.2 Early conciliationSection 7 of the Enterprise and Regulatory Reform Act 2013 inserted new ss. 18A and 18B into the Employment Tribunals Act 1996 making early conciliation mandatory. Where an agreement is reached it is recorded on a COT3 (see further below).Failure to use early conciliation will mean that the case cannot be brought to a Tribunal. Where agreement can't be reached, a certificate number is provided and you can take the matter to an employment tribunal.
? 2.3 Encouraging Settlements Outside LitigationThe Coalition wanted "to facilitate the use of settlement agreements" (formerly "compromise agreements"). S. 14 Enterprise and Regulatory Reform Act 2013 inserted s. 111A in the ERA 1996. It came into force on 29 July 2013The amendment gives employers more freedom when offering employees settlement agreements outside the context of litigation, since evidence of such offers has been made inadmissible in unfair dismissal claims. Thus the legislation protects so called 'protected conversations'.Employment Rights Act 1996: s.111A. Confidentiality of negotiations before termination of employment
? (1) Evidence of pre-termination negotiations is inadmissible in any proceedings on a complaint under section 111. This is subject to subsections (3) to (5).
? (2) In subsection (1) "pre-termination negotiations" means any offer made or discussions held, before the termination of the employment in question, with a view to it being terminated on terms agreed between the employer and the employee.
? (3) Subsection (1) does not apply where, according to the complainant's case, the circumstances are such that a provision (whenever made) contained in, or made under, this or any other Act requires the complainant to be regarded for the purposes of this Part as unfairly dismissed.
? (4) In relation to anything said or done which in the tribunal's opinion was improper, or was connected with improper behaviour, subsection (1) applies only to the extent that the tribunal considers just.
? (5) Subsection (1) does not affect the admissibility, on any question as to costs or expenses, of evidence relating to an offer made on the basis that the right to refer to it on any such question is reserved." The Employment Code of Practice (Settlement Agreements) Order 2013 (SI 1665/2013) was also made on 4 July 2013. This provides that the statutory ACAS Code of Practice on Settlement Agreements will operate from 29 July 2013. http://www.acas.org.uk/media/pdf/j/8/Acas-Code-ofPractice-on-Settlement-Agreements.pdf;
http://www.acas.org.uk/media/pdf/o/a/Settlement_agreements_(the_Acas_Guide)JULY2013.pdfA. UNFAIR DISMISSAL: THE STATUTORY POSITION: THE QUALIFYING CRITERIAEwing and Hendy in 'Unfair dismissal law changes - unfair?': "The truth is that unfair dismissal law does not impose undue burdens on business
[contrary to the Conservative Government's claims]. Rather, it offers minimal protection for workers: too many are excluded from the legislation; it is too easy for an employer to justify a dismissal as not being "unreasonable", and the remedies for those who are dismissed remain wholly inadequate. This is the legal regime that needs reform."
? 1. Employee (s. 94(1))1.1 EmployeesIn addition crown servants (s.138 ERA) and Parliamentary staff are covered but not a former apprentice who was sponsored by the company (to which he had formerly been apprenticed) to undertake a university degree:
? GE Caledonian Ltd v. McCandliss UKEATS/0069/10. Employee Shareholders S. 31 of the Growth and Infrastructure Act 2013 inserted a new section 205A into the Employment Rights Act 1996, which creates a new employment status of employee shareholder.
? Employment Rights Act 1996: Section 205A: Employee shareholders(1) An individual who is or becomes an employee of a company is an "employee shareholder" if(a) the company and the individual agree that the individual is to be an employee owner, and(b) in consideration of that agreement, the company issues or allots to the individual shares in the company which have a value, on the day of issue or allotment, of no less than PS2,000 and no more than PS50,000.(2) An employee who is an employee shareholder does not have(a) the right to make an application under section 63D (request to undertake study or training),(b) the right to make an application under section 80F (request for flexible working),(c) the right under section 94 not to be unfairly dismissed, or(d) the right under section 135 to a redundancy payment.(3) The following provisions are to be read in the case of an employee who is an employee owner as if for "8 weeks' notice", in each place it appears, there were substituted "16 weeks' notice"(a) regulation 11 of the Maternity and Parental Leave etc. Regulations (S.I. 1999/3312) (requirement for employee to notify employer of intention to return to work during additional maternity leave period), and(b) regulation 25 of the Paternity and Adoption Leave Regulations 2002 (S.I. 2002/2788) (corresponding provision for additional adoption leave).(4) The reference in subsection (2)(c) to unfair dismissal does not include a reference to a dismissal(a) which is required to be regarded as unfair for the purposes of Part 10 by a provision (whenever made) contained in or made under this or any other Act, or(b) which amounts to a contravention of the Equality Act 2010.(5) The reference in subsection (2)(c) to the right not to be unfairly dismissed does not include a reference to that right in a case where section 108(2) (health and safety cases) applies.(6) In this section, "company" means a company (as defined by the Companies Act 2006) limited by shares (but not does not include a community interest company).
? J. Prassl, ''Employee Shareholder 'Status': Dismantling the Contract of Employment' (2013) 42 ILJ 307
2. Necessary qualifying serviceNow a two-year qualifying period by the effective date of termination ("EDT" - s. 108 ERA). This was raised to two years in April 2012 but only in respect of those employees whose employment began after 6 April 2012.R v. Secretary of State for Employment, ex parte EOC  IRLR 176; HL Held: It is no longer necessary to establish a weekly hours threshold:R v. Secretary of State for Employment, ex parte Seymour Smith  IRLR 253 (ECJ) //  IRLR 263 (HL): Argument that continuity requirement indirectly discriminated against women - Reference to CJEU and agreed with this argument, but determined that the discrimination could be objectively justified on the basis that the level of continuity is there to protect employers.The qualifying service rule is subject to two new exceptions:(1) The first is intended to implement the European Court of Human Right's judgment in:
? Redfearn v. The UK  ECHR 1878: Applicant worked for Serco and transported children and adults who had physical/mental disabilities within the Bradford area. Majority passengers were Asian. Applicant was a member of the BNP, who only admitted people who were of white origin. No complaint had been made of his behaviour. He was elected as a local councillor for the BNP and summarily dismissed on the basis his continued presence was a health-and-safety risk due the anxiety it may cause among passengers. Did not have a claim in unfair dismissal. CJEU Held: that there had been a violation of the applicants Art 10 and 11 rights; he had been dismissed on the basis of his political affiliation.
? Section 13 of the Enterprise and Regulatory Reform Act 2013 introduced a new s. 108(4) into the Employment Rights Act 1996, which reads:
? ERA 1996 S.108(4) Subsection (1) does not apply if the reason (or, if more than one, the principal reason) for the dismissal is, or relates to, the employee's political opinions or affiliation.(2) The second comes from section 48 of the Defence Reform Act 2014 into force, with effect from 1 October 2014. This section removes the statutory qualifying period for unfair dismissal where the dismissal is connected with the employee's membership of the Reserve Forces (the Territorial Army, Royal Naval Reserve, Royal Marines Reserve or Royal Auxiliary Air Force).
3. Exclusions3.1 Exclusions from the right to claimOriginally: upper age limit: s.109 ERA "the normal retiring age", usually specified in the contract and in any case 65 (cf Secretary of State for Employment v. Rutherford (No.2)  IRLR 551). This has now been removed by the Equality Act 2010.Those employed under an illegal contract? But if employees do not gain personal advantage from the illegality, statutory protection may be availableCertain employees, such as certain Crown servants and domestic servants in a household where the employer is a close relative (s. 192(1)).Employee shareholders (s.205A ERA 1996)Employees dismissed for reasons of national security (s.10 ETA 1996)Fishermen and police officers (s.199, 200 ERA 1996)Finally, certain categories of employees were excluded from the right to make a complaint of unfair dismissal based on the geographical location where the work is being undertaken. The enacting provision under s196 ERA was later repealed by the UK government. This left a gap in the legislation; was unclear whether the employee with some foreign element to his employment ought to demonstrate that he was employed in Great Britain at the time of his dismissal or whether some other criterion should be adopted.
? Lawson v Serco Ltd  IRLR 289: Lord Hoffmann in HL divided employees generally into four separate camps. Held that unfair dismissal protection would apply to employees falling within these four categories as a matter of statutory construction:
? (1) 'The standard case: working in Britain': Where workers ordinarily worked in Britain but who worked abroad from time to time as part of their employment duties. If the employee was working in Britain at the date of dismissal, he will fall under the coverage of the regime.
? (2) 'Peripatetic employee': e.g. airline pilots, international salesmen or international consultants. At date of dismissal, the base of the peripatetic employee, rather than his location at the time, should be treated as his place of employment.
? (3) 'Expatriate employees': Employees posted abroad by a British employer for the purposes of business carried on in Britain or operating within an extra-territorial enclave in a foreign country.
? (4) 'Exceptional category': Other expatriate employees which had 'equally strong connections with Britain and British employment law'; e.g. Duncombe v Secretary of state for Children, Schools and Families  UKSC 36: expatriate teachers working in European schools education children of EU officials and employees fell within this residual category.?1.2End result appears to be mere nationality of working for a British employer is not enough. There were questions whether Hoffmann intended these four categories to be exhaustive:
? Ravat v Haliburton Manufacturing & Services Ltd  ICR 389: SC Held: Hoffman's list was not exhaustive. Adopted a more open textured test which prevented employers unscrupulously changing their employment set up to avoid the coverage of unfair dismissal protection. A relevant factor will be a governing law clause under the contract of employment. If the governing law is England this is a finding in favour of unfair dismissal protection applying. Lord Hope: 'the starting point... is that the employment relationship must have a stronger connection with Great Britain than with the foreign country where the employee works... [and] it will always be a question of fact and degree as to whether the connection is sufficiently strong to overcome the general rule that the place of employment is decisive.'
3.2 Exclusions by agreement
??????In general any agreement to give up a right to pursue an unfair dismissal claim in an Employment Tribunal is void: s. 203 ERA 1996. Therefore, a contract term is "void" in so far as it has the effect of limiting or excluding the employee's statutory rights:
? Igbo v. Johnson Matthey Chemicals  IRLR 215: Igbo wanted to extend her holiday leave in order to visit her husband and family in Nigeria. Employers agreed to this provided that the employee signed a statement that she would return to work on a particular date. Statement went on to say that if you fail to do this, your contract of employment will automatically terminate. She returned before this date, however, due to illness she did not return to work until after that date but sent a medical note. Employers treated the contract as automatically terminated. CA Held: The effect of the document was to limit the operation of s94 of ERA and thus was contrary to what is now s203 ERA. Parker LJ: If this was not to be the case, the whole object of the act would be defeated by the inclusion of the term, for example, that if the employee was late to work on the first Monday of the month, the contract would automatically terminate: 'This agreement converts right not to be unfairly dismissed, into a conditional right not to be unfairly dismissed.'
? Zulhayir v. JJ Food Service Ltd UKEAT/0593/10: Confirmed Igbo
??????However, there are three strictly defined exceptions to the basic rule in s. 203, designed to encourage domestic settlements and compromise agreements:
? (1) where an agreed settlement has been made as a result of the intervention of a conciliation officer under section 18 A and B of the Employment Tribunals Act 1996 (ie early conciliation) (inserted by Enterprise and Regulatory Reform Act 2013 section 7(1)): s.203(2)(e) ERA 1996). This applies to all issued on or after 6th May 2014. The agreement is recorded on a COT3.
? (2) where the employee enters into a valid compromise agreement, renamed "settlement agreements" as a consequence of s. 23 Enterprise and Regulatory Reform Act 2013 (s.203(2)(f) ERA 1996), satisfying the conditions set out in s.203(3) ERA:(a) the agreement must be in writing,(b) the agreement must relate to the particular [proceedings],(c) the employee or worker must have received [advice from a relevant independent adviser] as to the terms and effect of the proposed agreement and, in particular, its effect on his ability to pursue his rights before an [employment tribunal] ,(d) there must be in force, when the adviser gives the advice, a [contract of insurance, or an indemnity provided for members of a profession or professional body,] covering the risk of a claim by the employee or worker in respect of loss arising in consequence of the advice,(e) the agreement must identify the adviser, and(f) the agreement must state that the conditions regulating [settlement] agreements under this Act are satisfied.
? (3) where the collective parties to a dismissal procedure agreement have successfully applied under s.110 ERA to have the employees covered by the agreement exempted from the Act (now superseded). This was used only once
??????Note, under s. 197(1) ERA individuals could waive their right to claim unfair dismissal on the expiry of a fixed term contract provided the contract was for a year or more (two years or more in the case of redundancy) and the waiver was in writing. The exclusion did not apply in respect of dismissal taking place during the course of the contract (e.g. for misconduct). This possibility was removed by s.18 ERelA
1999. ????????(b) Settlement agreements and protected conversations
??????As we have seen, if there is a settlement agreement in place with the employer, the individual will not be able to bring a claim before an ET. The Coalition wanted "to facilitate the use of settlement agreements" outside the context of litigation, since evidence of such offers has been made inadmissible in unfair dismissal claims. This has led to the provision on protected conversations in s.111A ERA.
3.3 Firms with fewer than 10 employees?
????????Beecroft: 'Dealing with Dismissal and Compensated no fault dismissal for micro businesses':
??????Consultation paper on "no fault dismissal" proposals
? Beecroft states that the increase of the qualifying threshold is a step in the right direction, however, it does not deal with situations where the employee's attitude/motivation changes or where they are no longer competent. Beecroft felt that although it would be "politically unacceptable to simply do away with the concept of unfair dismissal [he] strongly favour[ed] an approach which allows an employer to dismiss anyone without giving a reason provided they make an enhanced leaving payment." New legislation would prescribed that it is not unfair dismissal if the employer simply states he is not happy with the employee's performance and then consults, gives notice and pays a defined level of compensation linked to the employee's salary and length of employment.
? A "benefit" of this 'Compensated No Fault Dismissal' is that "constructive dismissal claims would largely become a thing of the past. Somebody feeling that they are being constructively dismissed would have to ask their employer if the employer would like them to leave." If yes, the traditional dismissal route applies. If not, the resulting conversation would resolve an issue.
? "The result of this change would be that the onus would then be squarely on the employee to perform well enough for the employer to value them as an employee. It would no longer be possible to coast along, underperforming in a way that is damaging to the enterprise concerned but not bad enough for the employer to want to undertake the whole rigmarole of the unfair dismissal process with its attendant threats of tribunals and discrimination charges."
? Beecroft also suggested a number of exemptions for small businesses due to the burden such regulations pose. They would have an option to opt out of a number of regulations if they wished: "Nobody would be forced to join a company that had opted out of a regulation that they felt any company they worked for must follow."
????????Government Response; Dealing with dismissal and 'compensated no fault dismissal' for micro businesses:
? With regard to the Government response, many of the respondents found that [2.21] a no fault dismissal would have a potentially detrimental impact on the behaviour of employers. "The terms 'hire and fire' or 'fire at will' culture were frequently used. Some respondents were of the view that unscrupulous employers could take advantage of NFD to engage in unfair practices. A commonly discussed misuse was the use of NFD as a cheaper method of dismissing redundant employees. This was based on the assumption that an employer could remove redundant employees using NFD without consultation and avoid making contractual redundancy payments, if the tariff for NFD was based on statutory redundancy pay. This practice would be particularly attractive in the case of long-serving staff, who would be entitled to larger payments. Others felt that employers and managers would be more likely to bully workers if NFD were a tool available to them. This was a particular worry for employees who are likely to be subject to discrimination
? Furthermore, many respondents were alive to the detrimental impact this would have on employee motivation and investment [2.25 -
2.27]. The decreased job security NFD would engender could hurt morale, job satisfaction, productivity, loyalty, and the employer/employee relationship. For example, it was suggested that employees would feel less loyalty to a business if they are less invested in its long term success since they could be dismissed at any time without warning. A number of respondents made reference to a?"climate of fear" that would develop. There was also the potential for such NFD to impact on health and safety reporting. NDF would also have a greater impact on more "vulnerable" workers, including low-paid workers, part-time workers, flexible time workers, and as a result, women and the elderly.
????????Government Consultation Paper and Response: "Ending the Employment Relationship (2012):
??????Background to recent changes to dismissal law.
? Many responses to the idea of NDF in SMEs below 10 employees were "lukewarm". Many submissions questioned the evidential basis of alleged economic benefits of the no fault dismissal proposal, arguing that it might stymie growth as micro business may be less inclined to grow above the threshold as this would disqualify them from access to no fault dismissal as a dismissal mechanism.
? Instead, the Coalition Government raised the possibility of extending the provision for "settlement agreements": this would require the employees consent to leave business at a designated price, whereas no fault dismissal enables the employer to force the employee to leave at a price stipulated by the legislation.
????????J. Howe, 'Poles Apart? The Contestation between the Ideas of No Fault Dismissal and Unfair Dismissal for Protecting Job Security' (2013) 42 ILJ 122:
? The primary arguments being used by proponents of the no fault dismissal proposal pertain to efficiency, simplicity and reducing regulatory burdens upon business. The author questions whether these arguments provide a sufficient basis for replacing traditional unfair dismissal with no fault dismissal, arguing that the latter relies upon a commodity conception of work that does not account for benefits other than the economic value which an individual receives from their job. In summary, the article argues that the current proposals for NFD are based primarily on rhetorical arguments of dubious foundation and that the real agenda of the proponents of this idea are to deregulate unfair dismissal law and return to the common law of wrongful dismissal.
? NFD may be in potential conflict with Article 4 ILO Convention 158 which requires a valid reason for dismissal connected with the capacity or conduct of the worker or based on the operational requirements of the business. Similarly, Art 33 of the EU's Charter of Fundamental Rights states that "every worker has the right to protection against unjustified dismissal, in accordance with Community law and national laws and practices." NB: Belgium has a similar scheme to NFD.
??????In Britain and Australia, new ideas for how to regulate dismissal are being considered as part of the on-going debate about re-regulation of labour laws in pursuit of a more efficient labour market. These ideas are challenging traditional notions of unfair dismissal law which have sought to provide job security protection for employees through enabling external scrutiny of the employer's dismissal decision. This normative ideal of external scrutiny is being contested by those advocating compensated no fault dismissal. They believe that efficient termination is achieved by unconstrained managerial prerogative to dismiss staff except for a statutory requirement to pay a set amount of compensation.
? NFD seeks to challenge external scrutiny of reasons by an independent adjudicator. This can be contrasted to the climate of opinion in Britain following the Donovan report that embraced the concept of "industrial justice" if it meant less 'lost' days to strike action and a mitigation of the "British diseases" of destructive industrial relations. However, a tension began to emerge between the ideas of industrial justice and freedom of choice. The latter advocating deregulation of unfair dismissal law because tribunal adjudication of unfair dismissal disputes is seen as too time consuming, expensive, encouraging vexatious outcomes and provides a disincentive to job creation. The Conservative Government of 1979 accepted "an argument of principle against unfair dismissal legislation, namely that it discouraged employers from taking on labour and so contributed to unemployment" (Davies and Freedland). The freedom of choice model has been successful in putting the pressure on the unfair dismissal system to facilitate the resolution of disputes by means other than tribunals. This has resulted in longer probation periods, arbitration, reforms to conciliation, a right to accompaniment, statutory grievance procedures and restrictions on small firms.
? Epstein has argued that statutory unfair dismissal law alters the entire fabric of contract law by creating an environment that makes it difficult for the vast majority of good employers and good employees to structure their relationships efficiently. He says that the whole purpose of the unfair dismissal system is to target the less likely occurrence of a bad employer and thus it is inefficient as "it exposes every decision in labour markets to second guessing by either a court or an administrative agency." This consideration effects employers, "who will be slow to hire and slow to fire in order to minimise their exposure to liability under the unjust dismissal laws." The essence of Epstein's neoliberal opposition to unfair dismissal rests on a belief in the illegitimacy of the case for protecting job security as an unjustifiable interference with managerial prerogative. The achievement of an efficient labour market ultimately "protects" dismissed employees as it promotes a free labour market in which jobs are frequently created and readily available.
? An alternative idea is one of "job property", that (like marriage) the unilateral termination of the employment relationship by the employer requires a similar recognition that the property vested in the job needs to be divided by an external adjudicative mechanism. While unfair dismissal does not recognise unilateral termination, the point is the recognition of the parties' respective contribution to the employment relationship and how this should be divided. This may provide a basis for building a legal framework protecting against arbitrary dismissal and for rejected NFD.
? This rests on the discernment of an employee's proprietary interest in the job acquired during his time in employment. Frederic Meyers pioneered this concept in his comparative study of unfair dismissal in which he sought to develop an argument in favour of recognising employees' property rights. Meyers defines the idea of property in the job as the right to undisturbed possession of a job which cannot be taken away without due process of law. Meyers conceives the employment relationship as existing between the employee and their job, rather than as between the employee and their employer. The tangible asset being taken away by dismissal is the employee's labour services which are in the employee's possession, causing income and other property in the job to be foregone. This includes an employee's dignity, autonomy, livelihood, sense of self-worth, membership of a union and place in the community. Meyers was a strong proponent of reinstatement as being the remedy for unfair dismissal.
? Meyers view could be seen to counteract the no fault dismissal concept's belief in managerial prerogative which upholds employers' countervailing property rights to determine the composition of their staff without interference. Howe discusses the structural inequality contained within the employment relationship with reference to quotes of Kahn-Frued and Henry Bourne Higgins. Employer dissatisfaction with unfair dismissal is to be anticipated because it is a system specifically set up to scrutinise their decision making and detracts their power to dismiss staff without external review. In other areas of regulation, we recognise the trade-off between the imposition of rules and systems as against the right of individuals to operate freely and without restraint. Unfair dismissal laws exist to protect vulnerable workers from being dismissed without good reason or in an unjust manner. "Inherent in the notion of "job security" is an acknowledgement of the significant investment that employees make in their jobs and that this investment should not be viewed as subordinate to the employer's investment in the employment relationship. The [NFD] concept subordinates the employee's investment in their job because it allows this job to be arbitrarily taken away as long as a set fee is paid to the employee." This argument can be strengthened by moving away from a commoditised view of employment.
? Howe looks at the difference between NFD and unfair dismissal as it stands. He notes that reinstatement is incredibly rare: out of 40,000 unfair dismissal claims in 2010-11, there were 8 orders for reinstatement. Even then, the employer can just pay off the order. Renton suggests that there are three "victories" that a claimant may set out to achieve: (1) the vindication from the tribunal that the dismissal should never have occurred and was unfair; (2) the opportunity to return to one's old job; (3) compensation for economic losses suffered since dismissal. Only (1) is feasible in practice, however, with unfair dismissal there is the potential for acknowledgement by an independent body that an employee should not have been dismissed in the first place. "The presence of unfair dismissal law provides a check on managerial prerogative and provides employees with a greater sense of security about their jobs."
B. THE MEANING OF DISMISSAL
? 1. The position under statuteThere are three categories of dismissal:ERA s. 95(1):
? (a) the contract under which he is employed is terminated by the employer(whether with or without notice);
? (b) he is employed under a limited term contract and that contract terminates by virtue of the limiting event without being renewed under the same contract;
? (c) the employee terminates the contract under which he is employed, with or without notice in circumstances in which he is entitled to terminate it without notice by reason of the employer's conduct.ERA s.97: Definition of effective date of terminationERA s.111(2): The complaint must be presented before the end of the period of three months beginning with the effective date of termination of the employee, or some longer period which the tribunal considers reasonable where it is satisfied that it was not reasonably practicable for the complaint to be presented before the end of the three month period.The burden of proof rests with the employee to show that a dismissal has taken place.
? 2. Termination by the employer: dismissal2.1 "You're sacked"With or without notice:
? Western Excavating v. Sharp  IRLR 27: Lord Denning: 'this is a situation where the employer himself terminates the contract by saying "You must go"': This requires the use of unequivocal words of dismissal; contrasted with constructive dismissal where employee terminates the contract: "I can't stand this any longer."However, it is important to note that caution should be exercised when interpreting the words used by the employer, or the employers' representative. Must ask whether this really was a dismissal.
? Chesham Shipping ltd v Rowe  IRLR 391: After having issues with a ship that was to set sail from Poole, Captain Rowe informed the employer's representative, Mr Briggs, of certain issues with the vessel. Mr Briggs and a super-intendant of the ships visited the vessel in the evening, and it is there where Mr Briggs flew into a fit of rage and dismissed all three officers on the ship. Held: Must assess what the intention of the employer had at the forefront of his mind. Phillips J: "this sort of situation arises frequently in cases that come before... [the Tribunals], that is to say where the employer's representative, speaking with anger, behaves in a way which ordinarily he might not do and utter words of dismissal. In those circumstances [tribunals] ought to be careful to ensure that what has taken place really is a dismissal, and not merely some words uttered for particular reasons which everybody quite understood were little more than abuse or something of that sort.".2.2 Employment relationship is continued: 'stand and sue' situationsWhat is the situation if the employer unilaterally imposes radically different terms of employment? Does this constitute a dismissal under s. 95(1)(a) or does it constitute merely a repudiatory breach which, if accepted by the employee, constitutes constructive dismissal under s.95(1)(c):
? Hogg v. Dover College  ICR 39: Teacher received a letter from his employers stating he was no longer head of department or fulltime, and his pay would be halved. He continued working under this regime but also claimed unfair dismissal. ET Held: This was a dismissal situation under s95(1)(a); 'as a matter of law and common sense, his former contract had gone.'
? Alcan Extrusions v. Yates  IRLR 327. Employer moved from a 37-hour week shift system to a rolling system, which deprived employees of overtime payments. Employee said this amounted to a dismissal and he would work the new system under protest. EAT Held: C could therefore could claim unfair dismissal in relation to the old contract (subject to a reduction in compensation due to working the new job). Said: it does not follow .. that very substantial departures by an employer from the terms of an existing contract can only qualify as a potential dismissal under s.55(2)(c) [s.95(1))c)]. In our judgment the departure may, in a given case, be so substantial as to amount to the withdrawal of the whole contract". It is a matter of fact and degree; can the employer be taken to be saying "Your former contract has, from this moment, gone".The issue for the tribunal is how to distinguish between a substantial departure from the contract, thus amounting to a dismissal, and a variation of the original contract.
? Robinson v. Tescom Corporation UKEAT/0567/07: EAT Held: Employer's decision to double the territorial sales remit of the employee who was a sales manager was not sufficiently serious as to amount to a withdrawal and termination of the contract of employment, it was a variation. Further, an employee who agreed to work under new terms of employment under protest (that is, to "stand and sue") but subsequently insisted on working on his old terms of employment, had not been unfairly dismissed. Having agreed to work under the new terms, the employee could not subsequently refuse to do so. The employer's decision to dismiss him in these circumstances was within the band of reasonable responses (see below).
? So, in these situations, if employees don't want to resign they can:(1) agree to the change and work under protest, or(2) refuse to work under the varied contract.
? Robinson did both and so prejudiced his position.'Forced resignation' cases have been accommodated within s95(1)(a) via a purposive interpretation of the legislation. A forced resignation occurs where it appears that the employee has dismissed himself, but it becomes known that the resignation has been obtained by undue pressure, deception, or pursuant to a threat or ultimatum.
? Martin v Glynwed Distribution Ltd  ICR 511: Warehouse manager was told by employers there would be an inquiry into an incident in which the employee had severely damaged the employers' mini-bus by driving it into three stationery cars. He was told the inquiry would probably result in his dismissal and that it would be in his best interests to resign. He did resign but alleged unfair dismissal since since the employers had given him no option but to resign. ET Held: The employee voluntarily terminated his contract. EAT Held: The tribunal had erred in law. Sir John Donaldson MR: The letter of resignation could not be conclusive in and of itself; 'at the end of the day the question always remains the same, "Who really terminated the contract of employment?"' If the answer is the employee, a further question then arises, "Did he do so in circumstances such that he was entitled to do so without notice by reason of the employer's conduct?" If the answer is yes, this is still a dismissal.
? Haseltine Lake & Co v Dowler  ICR 222: Employee with ten years' service informed by employer that he ought to look for another job and that his failure to do so would result in his eventual dismissal. No specified date given. Employee continued to work and every now and again, the employer offered reminders that its expectation was that he would leave within a few months' time. Employee offered another job and asked employer whether his failure to accept the job would result in his immediate dismissal: employer said he would not instantly dismiss, but that this did not mean that he would not be asked to leave in the near future. With that in mind, the employee gave notice of termination of his contract of employment and accepted the job offer which had been made to him. Question whether threat of future dismissal was enough to be a dismissal by the employer under s95(1)(a). Waterhouse J Held (EAT): The employer's actions were insufficient to demonstrate a termination of the contract of employmentAlso note s95(2) where the employer serves notice and the employee serves counter-notice with an earlier date of termination. The employer will still be deemed to have dismissed the employee.3. Expiry of a limited term contract ("LTC")
The statute provides where an employee under a limited term contract and that contract terminates by virtue of the limiting event without being renewed under the same contract; this constitutes dismissal. Therefore the following types of contracts are covered:fixed term contractscompletion of performance of a specific taskoccurrence of an event when that event happens.LTCs are deemed to be 'permanent' (indeterminate) on the first renewal if the employee has four years' continuity and there is no objective reason for not granting permanent status:Reg. 8 SI 2002/2034 The Fixed Term Work (Prevention of Less Favourable Treatment) Regulations 2002.For example if you have a LTC for 5 years, when that contract ends that is an unfair dismissal (can sue). A renewal for another year turns that LTC into a permanent contract unless there are good reasons to the justify this. For example, new Chaplin can't start work for another year, need another to fill the gap.
4. Constructive dismissal4.1 The basic rulesUnder what circumstances is the employee entitled to quit and claim unfair dismissal? The courts have a adopted a "contract test", i.e. the question is whether the employer has committed a repudiatory breach of the contract of employment and not in accordance with a test of "reasonable conduct by the employer":
? Western Excavating (ECC) Ltd. v. Sharp  IRLR 27: Courts talked about a significant breach 'going to the root of the contract' or conduct which shows that the employer no longer intends to be bound by one or more terms of the contract. In either case the breach must be sufficiently serious. Sharp requested three hours off work one afternoon; when this was refused he left anyway and was dismissed the next day. Disciplinary panel recommended five day suspension without pay. Sharp was in financial difficulties, so he then asked for a loan of PS40. When this was refused, he resigned in order to get his holiday pay. Held: No constructive dismissal; no serious breach by the employer. Lawton LJ did not think it was necessary to provide a list of the types of conduct that would be sufficient to ground a claim in constructive dismissal; "what is required for the application of this provision is a large measure of common sense."The bilateral theory applies here:
? Buckland v. Bournemouth University Higher Education Corporation  IRLR 445: Professor involved in argument with University after remarking transcripts without authorization, which resulted in alteration to the scores that had been given. He resigned and claimed constructive dismissal even though an inquiry held that he had not breached rules and thus had exonerated him. Employers argued there could only be a fundamental breach of contract if the employers actions fell outside the range of reasonable responses. CA Held:
? (1) In constructive dismissal cases, the question of whether the employer has committed a fundamental breach of the contract of employment is not to be judged by a range of reasonable responses test. The test is objective: a breach occurs when the proscribed conduct takes place. The following stages apply to the analysis of a constructive dismissal claim:(i) in determining whether or not the employer is in fundamental breach of the implied term of trust and confidence the unvarnished Malik test applied;(ii) if acceptance of that breach entitled the employee to leave, he has been constructively dismissed;(iii) it is open to the employer to show that such dismissal was for a potentially fair reason; and(iv) if he does so, it will then be for the employment tribunal to decide whether the dismissal for that reason, both substantively and procedurally, fell within the range of reasonable responses and was fair.It is nevertheless arguable that reasonableness is one of the tools in the employment tribunal's factual analysis kit for deciding whether there has been a fundamental breach. There are likely to be cases in which it is useful. But it cannot be a legal requirement. Take the simplest and commonest of fundamental breaches on an employer's part, a failure to pay wages. If the failure is due, as it not infrequently is, to a major customer defaulting on payment, not paying the staff's wages is arguably the most, indeed the only, reasonable response to the situation. But to hold that is not a fundamental breach would drive a coach and four through the law of contract, of which this aspect of employment law is an integral part.Where, if at all, the reasonableness of the employer's conduct may enter the picture is through the statutory additions to the law of contract. Assuming that there can be conduct which is both reasonable and a fundamental breach of contract, a constructive dismissal claim would be impossible to decide unless stage (i) was tested objectively on ordinary principles and reasonableness deferred to stage (iv). So, in the hypothetical example set out above, if the employer could satisfy a tribunal that the unexpected lack of funds amounted to some other substantial reason for dismissal, and that in all the circumstances the employer had acted reasonably in treating it as a sufficient reason for dismissing the employee, as required by the statutory provisions on unfair dismissal, it might be arguable that the claim should fail.
? (2) A repudiatory breach is not capable of being remedied so as to preclude acceptance. The wronged party has an unfettered choice of whether to treat the breach as terminal, regardless of his reason or motive for so doing. All the defaulting party can do is to invite affirmation by making amends: See below.
? Brown v. Merchant Ferries Ltd  IRLR 682: Expressly cited Harvey on Industrial Relations, to say an employee must show:
? (1) a breach of contract (actual, or anticipatory Financial Techniques Planning Hughes  IRLR 32) by the employer of an express term or an implied term, usually mutual trust and confidence;
? (2) the breach must be sufficiently important to justify the employee in resigning or possibly, it must be the last in a series of breaches: Lewis v. Motorworld Garages  IRLR 965;
? (3) the employee must leave in response to the breach and not in connection with some other reason; Although, Nottinghamshire County Council v Meikle  ICR 1 states that it is enough that the employer's breach is a reason for resigning, it need not be the principal reason;
? (4) the employee must not delay too long in terminating the contract in response to the employer's breach: Lord Denning in Western Excavating v. Sharp  IRLR 27, otherwise he may be deemed to have waived the breach and agreed to vary the contractHowever, on this final point see:
? Waltons & Morse v. Dorrington  IRLR 488: Long serving secretary in solicitors firm. Resigned and claimed constructive dismissal because she was required to work in an environment where everyone smoked. EAT Held: recognised that the employer had committed a fundamental breach of contract; namely breach of implied term of providing a safe working environment. Employer said that even if there had been a breach, she had delayed leaving in response to that breach. Court disagreed; fact she delayed a few weeks before resigning was understandable as she needed to find alternative employment and she needed to work due to her family commitments and, therefore, she had resigned in response to the breach.
? Jones v. F.Sirl  IRLR 493:Similar to construing the employer's utterance of words of dismissal, the court are equally as cautious when interpreting words by the employee that are intended to represent resignation. This is due to the fact that a finding that there was no repudiatory breach by the employer but there was a valid resignation by the employee, can deprive the employee of unfair dismissal protection.
? Sovereign House Security Services Ltd v Savage  IRLR 115: CA Held: A pronouncement by an employee that he was "jacking the job in" was sufficiently equivocal and effusive not to amount to a resignation. Court cautioned tribunals against taking utterances by an?
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