The Essential Employment Law in the UK (1)

These are the highlights if you want to know the essential of the employment Law in the UK.  This entry was drafted by  McCarthy Denning Law Firm for”E-IURE COMPENDIUM” 2018. Link to e-IURE Network.

This collaboration is a brief step-by-step guidance. In no case it can be considered as legal advice. If you want -or need – legal advice, ask for a lawyer or a law firm. In that case “McCarthy Denning is an excellent option in the United Kingdom.

 

1.-Framework

Employment law in the UK is based on both common law and statute.  Although the employment law regime is not as onerous for employers as in many other European countries, in recent years there has been a significant increase in employment regulation, in particular, with the implementation of EU Directives.

 

2.-Employment Contracts

An employer is required to provide an employee with a written statement of specified employment particulars within two months of the start of their employment.  This includes details of the disciplinary, dismissal and grievance procedures that apply to his employment.  Any changes to the statement must be notified within one month of the date of the change.

 

3.-Cost Of Dismissal And Wrongful Dismissal

There are two issues to consider when dismissing an employee: contractual rights and statutory rights.

 

Contractual Rights

If an employee’s contract of employment is terminated in breach of that contract, the employee may be entitled to claim damages for wrongful dismissal or breach of contract.  The amount of damages claimed will be the sum that would put the employee in the position he would have been in had the contract been terminated correctly.  Usually, this is the amount of salary and benefits to which the employee would have been entitled during the notice period or until the end of any fixed term contract.  This entitlement to damages is subject to the employee’s duty to mitigate the losses he suffers by finding alternative employment. Claims for breach of contract may be brought either in the High Court or the County Court or, for claims limited to £25,000 in an employment tribunal.

 

Statutory Rights

Statute provides for minimum periods of notice.  After the employee has been employed for one month, the employee is entitled to receive one week’s notice of termination for each complete year of service up to a maximum of 12 weeks’ notice for 12 years of employment.  The employer is entitled to receive at least one week’s notice of termination from the employee, irrespective of the employee’s length of service.  However, usually the contract provides for a period of notice which can be more generous (but not less generous) than the statutory minimum.

It is significant to note that for claims in the Employment Tribunal, each party bears their own costs so costs are not awarded against the unsuccessful party save in exceptional circumstances. This is different than the position in the civil court where costs will usually be awarded against the unsuccessful party.

 

4.-Unfair Dismissal

For employees who have two year’s continuous employment with the employer, it is open for such employees to bring a claim for unfair dismissal in the employment tribunal.  It should be noted that certain unfair dismissal claims (for example, dismissal for family reasons, including pregnancy, statutory maternity, adoption or parental leave, or dismissals for whistleblowing, for exercising a statutory right or for trade union membership) do not require a qualifying period of employment to be able to bring a claim.

In order to avoid claims for unfair dismissal, an employer should ensure that employees are only dismissed for a “fair” reason, following a “fair” procedure.  The five potentially “fair” reasons for dismissing an employee are conduct, capability (ie competence or on health grounds), redundancy, statutory bar or “some other substantial reason” justifying the dismissal of an employee holding the position held by that employee.  The procedures to be followed in relation to each category of potentially fair reason for dismissal are slightly different but they all involve consultation with the employee before the dismissal. The Tribunal will also consider whether the employer has acted reasonably in all the circumstances in treating the reason for the dismissal as a sufficient reason for dismissing the employee.

In interpreting whether the employer acted reasonably, the courts and tribunals will look to see whether the employer followed a fair procedure when dismissing an employee.  In relation to dismissals for conduct and performance, this includes following the ACAS Code of Practice and Disciplinary and Grievance Procedures.  Employers must follow fair processes or risk both unfair dismissal and an uplift to compensation, at the discretion of the Employment Tribunal.  In determining whether such an uplift should be applied, the Tribunal shall take into consideration the extent to which the employer has complied with the ACAS Code.

If an employee is successful in bringing an unfair dismissal claim, an employment tribunal can order reinstatement, re-engagement or compensation.  Compensation is the most common award and comprises the following elements:

  • a basic award which is calculated in the same way as a statutory redundancy payment depending on the age and length of service of the employee and a week’s pay, which is currently capped at a maximum of £489 per week;
  • a compensatory award which will be assessed on the basis of the losses suffered by the employee. The maximum award is currently £80,541 (this figure is usually raised annually in April).
  • Employment Contracts For Directors

Employment contracts for directors are commonly referred to as service agreements and should be approved by the board of directors of the company before they are entered into.  They usually contain more onerous provisions specifying the director’s duties to the company as well as protection for the company’s confidential information, “garden leave” provisions, intellectual property rights, and restrictions on activities during employment and possibly post termination restrictive covenants.  It is also common for directors to have longer contractual notice periods than other employees. A service agreement usually provides for the director to resign his office of director on termination of the employment.   There is no special regime for the employment of directors.  However, there are requirements in the Companies Act 2006 which limit the guaranteed term of a director’s service contract to less than two years without the prior written consent of the shareholders of the company. There are also special provisions regarding notice and remuneration which apply to directors of UK quoted companies.

 

5.-Employees’ Representatives And Union Representation

 

Collective Consultation with Employee Representatives

In a situation where an employer is proposing to dismiss 20 or more employees by reason of redundancy within a 90-day period, or where a transfer of a business (or part thereof) is proposed, employers have a statutory duty to carry out collective consultation and to inform (with specified information) and consult with the affected employees either through a trade union (if that is appropriate) or through their own elected representatives.  The penalty for non-compliance with this obligation to inform or consult over collective redundancy is up to 90 days’ actual pay for each affected employee if an affected employee or his representative brings a successful claim for a protective award in an employment tribunal. The penalty for failure to comply with the obligation to inform or consult over a TUPE transfer is 13 weeks’ actual pay.

 

European Works Councils

The purpose of a EWC is for employers to inform and consult their workforce on an ongoing basis about measures which are proposed which may affect employment prospects and decisions which are likely to lead to substantial changes in the organisation such as redundancies or transfers of the business. The Transnational Information and Consultation Regulations 1999 (TICE Regulations) apply if central management of a “Community scale” undertaking or group of undertakings is in the UK.  There must be at least 1,000 employees within the EU and at least 150 employees in each of two member states.

Information and Consultation obligations are not automatic; if there is no European Works Council (EWC) (either because central management has not initiated one or the employees have not requested one) there is no obligation to inform or consult.  However, if a written request has been made by employees (or their representatives) covering 100 or more employees in at least two member states, central management must set up a special negotiating body to negotiate an EWC or a procedure for Information and Consultation.  If management refuses to commence negotiations for an EWC agreement within six months of the request or when no EWC agreement has been reached within three years of an EWC request, the default model EWC provisions apply and Information and Consultation obligations arise on matters which concern the undertaking as a whole or at least two undertakings in at least two different EEA states.

 

Union Representation

Almost one in four employees in the UK belongs to a trade union.  A trade union is an organisation which consists wholly or mainly of workers of one or more description.  A trade union’s main aim is to reach agreements with employers over the contractual terms under which workers will work.

An employee who is a member of a trade union has rights which include the following in relation to his employer: to be accompanied to a grievance/disciplinary hearing by a trade union official; not to be refused employment, dismissed or subjected to any detriment by reason of his trade union membership or activities and the right to reasonable paid time off work to take part in trade union activities; where a trade union is recognised for collective bargaining purposes, the employer has a duty to consult on training for workers within the bargaining unit.

 

Collective Bargaining Agreements

A collective agreement is an agreement or arrangement made by or on behalf of a union and an employer which relates to matters such as terms and conditions of work, termination/suspension of employment, disciplinary matters or allocation of work. In large sectors of industry in the UK, levels of pay and other principal terms are agreed in a collective agreement.

Where a union has been formally recognised by an employer for collective bargaining, it can negotiate pay and other terms on behalf of a group (or groups) of workers.  This will result in a collective agreement being formed.

The provisions of a collective agreement will be legally enforceable provided the agreement is in writing, and expressly states that the parties intend to constitute the agreement as a legally binding agreement between the employer and the union. To be enforceable between the worker and the employer, the collective agreement must be incorporated into the worker’s individual terms and conditions of employment.  Such provisions will be enforceable between the employer and the worker even if the collective agreement is not legally binding as between the employer and the union.

There are statutory rights in the UK for trade unions to be recognised by employers for collective bargaining purposes, provided various conditions are satisfied.  The regime seeks to promote voluntary recognition wherever possible. The recognition procedures are complex and were introduced in the Employment Relations Act 1999. The recognition machinery is contained in The Trade Union and Labour Relations Consolidation Act 1992.

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