Introduction
The labor market is one of the aspects of macroeconomics that governments use to ensure growth in the economy of a country. It is essential in the creation of revenue for the country as well as providing a means to earn an income for the population. As such, governments need to formulate and develop policies that maximize revenue creation while keeping capital input low. They also formulate policies that govern the interactions in the workplace. The essence of this move is to ensure the smooth running of affairs while minimizing conflict and optimizing the resulting benefits for both the employer and the employee.
Some of the policies that are set include the duties for both the employer and employee, working conditions that employers need to keep constant, the rules concerning payment for the employee, as well as rules concerning the termination of an employer-employee relationship. All these workplace rules ensure that both parties in the relationship are under protection and that there is mutual benefit for both parties. This paper focuses mainly on the rules that apply to the termination of employment of an employee, particularly when the employer initiates the process. It explains the reasons that the law considers fair and unfair, the procedure involved in dismissal, and remedies that are available to the employee including legal redress.
Legal provisions on dismissal
The conservative government passed the Employment Rights Act 1996 to codify the law on individual rights that existed as part of the United Kingdom labor laws. The Act spells out the components that constitute the various aspects of dismissal such as wrongful termination, unfair dismissal[1], termination due to redundancy,[2] and constructive termination. It also includes some of the procedural aspects that are involved in the employment termination process including the provision of notice of termination and the time requirements for such notice[3], summary dismissal, and compliance with company procedure regarding disciplinary rules.
It also gives the remedies available to an employee in the case that there is a lack either in the conducting of the termination procedure or in the reason for such termination*. Case law creates precedents to rulings made based on similar facts, providing support for the provisions stipulated in the Act.
In explaining these provisions, this paper looks at various situations that involve dismissal. The first example involves elements of wrongful dismissal as well as unfair dismissal. Mark, as an employee of Fit & Well co., had worked for twelve years as an accountant for the company. It is not until the appointment of Rebecca as head of the finance department that things started going awry, with the creation of tension between him and his new boss. He regarded her as authoritarian and thought she gave him more work than his workmates, while she regarded him as having an unprofessional attitude towards his work. However, the point of concern is an incident whereby Rebecca asked her subordinates to work overtime to reduce the backlog of work created by a shortage of employees as the financial health of the company depended on it.
Mark refused, stating that he was under no contractual obligation and had a date. He added further that he had no confidence in the qualification of Rebecca as a manager and did not see a reason for obeying her in the future. Rebecca reports the incident to the Managing director, Peter, who invites Mark into his office the following morning and informs him of his summary dismissal, accompanied by a letter stating the same.
He is denied the chance to have a disciplinary hearing but is accorded the chance to appeal as according to Peter, the circumstances negate the need for a disciplinary hearing, although provided in the company’s disciplinary procedure. Several issues stand out in this situation. First is the summary dismissal. Since Mark had worked in the company for over twelve years, he was entitled to twelve weeks’ notice, as is the provision of the Employment Rights Act under Section 86, a lack of which would amount to wrongful dismissal.
This section demands employees to have a right to reasonable notice before the termination of their employment contracts, which is a mutual obligation carried by both the employer and the employee, as the employee should also give equal notice before terminating the contract.
However, the Act also provides that the employer may use payment instead of notice if the terms of the contract or employee handbooks and other regulations expressly state so. Peter did not give Mark such notice or payment instead of the notice, which Peter, in this case, would be entitled to. Secondly, Peter decided to contravene the disciplinary procedure by not providing for a disciplinary hearing as stipulated by the company’s policy. In addition, it is usually difficult to justify a summary dismissal for a first-time offense unless the employee commits a heinous offense [4].
However, it is reasonable to take such a course of action if it is clear that issuing warnings would not work. For instance, in this case, Mark clearly states his lack of confidence in Rebecca’s qualifications and suggests that he plans to continue his disobedience in the future[5]. In looking at dismissal, the employment tribunal considers two factors, viz. whether the dismissal is fair and whether it is reasonable. The fairness of the dismissal is usually dependent on the circumstances of the case. However, reasonability is dependent on the tribunal’s view of whether any other employer acting reasonably would have come to the same conclusion. Therefore, an employer’s decision may be fair but be toppled over on the grounds of reasonability.
Factors that affect reasonableness include whether the same course of action has previously been taken for employees with the same offense, and years of service provided by the employee. Therefore, had Mark decided to exercise the appeal, he would have had grounds for the same and a chance of winning based on reasonableness considering that this was a first-time offense. However, Peter’s actions can be termed as reasonable based on the refusal by Mark to carry out lawful and reasonable instructions[6].
The request to work overtime was applicable for all employees and a good reason. In addition, it was an isolated incident, and thus Mark cannot claim that the request would substantially change the contract. In conclusion, had Mark decided to exercise his right to appeal, he would have had a chance at claiming pay for wrongful dismissal against the terms of his contract. He would also have had the chance at proving that although the dismissal was fair, it was also unreasonable on the basis that it was an isolated incident and no warnings had been issued to him.
However, his chances of winning the claim would have been low for during the incident, he suggested intention of future disobedience negating his claim on the lack of reasonableness on the part of the employer. Secondly, the company issued instructions to work overtime to all employees for a short period, which would not necessarily result in the alteration of the terms of the employment contract.
The second involves aspects of performance, capability, and what falls under the category of what is fair and reasonable. In this example, Simon works as e receptionist for Fit & Well Co.’s Brightsea Centre, a position that he has held for over ten years and has never had training on the use of a computer. The manager of the company decides to install a computerized booking system to enhance efficiency and three weeks later, after following the requisite disciplinary procedures, dismisses Simon without notice on grounds of poor performance as is unable to cope with change in the system. One of the issues that arise in this situation is wrongful dismissal, which occurs because of the lack of provision of notice to the employee as per the contract of employment.
As stated in the previous example, employees have a right to reasonable notice before the termination of employment, as stipulated under section 86 of the Employment Rights Act 1996. Therefore, Simon was entitled to at least ten weeks’ notice before his dismissal, seeing as he had worked at the company for over ten years. An alternative to giving notice would be to provide payment instead of notice if such provisions are made in the employment contract, an alternative that is also not made possible for Simon. Secondly, the manager did not give Simon any warning to the effect[7], which makes the dismissal unfair.
Ideally, the employer needs complaints from customers and other employees to prove poor performance as the standard of proof is based on sufficient evidence[8]. Capability can be influenced by various factors, including physical factors such as the occurrence of an injury, mental reasons, and general health. The best approach for the manager would have been to dismiss him with a notice on grounds of inadaptability[9]. Although underperformance is a reasonable basis for dismissal[10], the argument of poor performance is a weak one because Simon has worked at the company as a receptionist for over ten years without any complaints from customers and other employees.
The Act also provides for a reasonable period to allow for the improvement of performance in the case of poor performance. Simon can also argue the lack of training resulted in his lack of capability to perform his duties effectively. The introduction of the computerized system was a substantial change that required a grace period for training and adaptation to the new requirements. In consideration of his age, it is easy to raise the queries on whether the dismissal is a scheme by the employer to avoid payment of retirement packages at the end of Simon’s period. The facts lead to the premise that Simon has a good case as far as suing for payment for wrongful dismissal as well as a claim on unfair dismissal. However, the manager was reasonable in dismissing him albeit for a considerably weak reason. Therefore, Simon has a good case.
The last example involves the concepts of redundancy and constructive dismissal. It explores what is considered fair and reasonable, depending on the circumstances. Fit & Well Co. decides to close down its branch at Kent. The company follows all the requisite consultations and procedures to enable the dismissal of the entire staff on grounds of redundancy. Laura, a thirty-five-year-old woman who has been the manager at the branch for five and a half years, is however offered an alternative job at the company’s branch in Seaport. The company proposes to offer the same rate of pay and a relocation package. Laura turns the offer down on grounds that she prefers staying in Kent where she has always lived, which is where her two young children go to nursery school and her husband works as a plumber.
The company dismisses Laura with notice but refuses her claim for a statutory redundancy payment. The main issue in this scenario is whether Laura is entitled to payment based on the redundancy of constructive dismissal. Redundancy means either that the job is no longer existent, the place of business is no longer existent or that some of the positions previously available at the workplace are no longer existent. This aspect happens when companies dissolve, relocate or find ways of cutting down on costs by combining some of the duties that were previously allocated to different people.
Constructive dismissal happens where the employer changes the description of the job substantially so that it involves duties previously not provided for in the employment contract or duties that the employee is unable to comply with [11]. For instance, the alteration of an employee’s work hours from day to night duty amounts to constructive dismissal.
A reshuffle within the company does not amount to redundancy, as was the tribunal’s decision in the case of Alyward v Glamorgan Holiday Hotel[12], where the employee claimed redundancy payments on grounds of a reshuffle that led to his demotion. The law on redundancy requires that the employer conduct consultations[13] with the employees that risk the loss of their jobs. Such consultation should be carried out as soon as the employer proposes[14] or decides on the idea so that the employees get ample time to obtain alternative employment. The contravention of this requirement leads to a loss in job-seeking time for the employee, and thus allows for the compensation of such an employee for the loss[15].
In the example, the company carried out all the proper procedural obligations, thus enabling it to carry out its procedure for redundancy. However, Laura was not informed of the company’s decision to transfer her in due time[16]. In addition, the company’s decision to move her two hundred miles away from her home[17] made it unsuitable for her to comply with, and substantially changed the terms of her contract, hence resulting in constructive dismissal. Laura might not be able to win a claim for compensation based on redundancy, but she stands a better chance if the claim is adjusted to that of constructive dismissal for the company did offer her alternative employment.
Remedies
Remedies awarded to employees in the case of successful claims include reinstatement, the provision of a new job, and often the award of compensation.
Conclusion
The Employment Rights Act 1996 protects both the employer and the employee in the event of termination of an employment contract. The law allows the employer to exercise the right to terminate the employment of an employee while the employee has an avenue through which to air his or her grievances if he or she feels as though such termination is wrongful or unfair. There are procedures that the employer must follow in exercising his or her right to dismiss an employer for the various reasons that he or she might have. The considerations followed by courts and tribunals depend on the reasons and the circumstances given for the termination of employment.
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