Chapter 2

On-the-spot question

The above fees would have a very negative effect on the poorest in society if introduced without a system of remission. The current system used in the civil courts, where the fees can be waived for those without the resources to pay, applies to these costs in both the employment tribunal and the EAT. Is that sufficient to prevent potential claimants from pursuing their rights through tribunals?

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Answer

Fees were introduced into claims submitted to employment tribunals on the basis of the perceived unfairness towards employers who might face unmerited claims from disgruntled employees. Previously, no costs were awarded in cases submitted to employment tribunals, nor were employees subject to paying a fee to use the service. Employers, faced with a claim to tribunal, had to answer the claim regardless of how spurious the allegations may have been. This necessitated a level of bureaucracy in gathering data, completing a response form (ET3) and enabling members of staff sufficient time to attend the tribunal to give evidence. Where an employer decided not to attend the hearing, the tribunal would award in favour of the claimant.

The introduction of fees was designed to remedy this perceived unfairness by requiring employees who had sufficient funds, to pay a fee on the issue of the claim, and further fees on hearings and appeals (where necessary), which would be returned if the claimant was successful at tribunal. The introduction of fees has been criticised by many as being unduly harsh and unfair, particularly to poorer claimants who may not have the fees waived because of their assets, but who may struggle to pay the substantial fees involved. Coupled with the lack of success most employee-claimants have in claiming a tribunal, a statistic made significantly worse when the claimant is underrepresented (and remember that many more employers are legally represented), the requirement of paying a fee can be a serious barrier to claimants seeking to access their rights. It is also worth bearing in mind that if no fee, or an incorrect fee, is included when the claimant submits the form to the tribunal service, the claim form is returned and the individual has to resubmit. This is particularly problematic because of the strict timeframes in which claims to tribunal operate, and any such time period is not extended during the return and resubmission phase.

Ultimately, there is a rationale to the government's introduction of fees. It is only fair that those who use the tribunal service should be expected to contribute to their operation, and it must have been problematic for employers to have to answer claims at tribunal where there was no previous financial implication or penalty for an employee who undertook such action. However, the fees introduced for employment tribunal claims are evidently not in proportion to similar fees required on application to the County Court, which range from a £35 fee for claims up to £300, along a rising scale to a fee of £685 for claims in excess of £50,000–£100,000. Therefore, tribunal fees appear to be somewhat unfair and may produce a disincentive for claimants to seek a remedy other than through alternative dispute resolution. Statistics will certainly follow to demonstrate the impact of this initiative.

On-the-spot question:

Consider how interlinked domestic employment law is with EU parent laws. What are the potential barriers created by these dual sources of law?

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Answer

Employment law is just one jurisdiction where the influence of the European Union has been seen, and continues to impact strongly on the creation of legislation and its interpretation through the case law of the Court of Justice of the European Union.

Employment law on the European Union level is seen through social policy initiatives whereby various forms of antidiscrimination legislation – such as those relating to part-time workers, workers on fixed-term contracts, issues relating to sexual orientation or sex discrimination, and the various forms of discrimination, including its direct and indirect forms, have led to the creation and modification of employment law. Protection of rights at work has also been a matter of European Union development through various forms of health and safety legislation, protection of workers' rights on the transfer of undertakings, protection of workers’ hours through the working time regulations, and furthering the rights of individuals to join trade unions and to be represented by such bodies in negotiations with employers.

These initiatives led to legislation, but they have also been subject to a broadening of many of the principles in the form of statutory interpretation adopted by the Court of Justice, known as a purposive or teleological approach, which seeks to interpret the law regarding the spirit of its intentions. The UK's domestic courts have also been required to:

• have a knowledge of EU law, and to incorporate within its operations;
• have access to primary EU law through the principles of direct effect and indirect effect;
• be knowledge of the existing decisions of the Court of Justice;
• take into account applications for preliminary references to the Court where appropriate.

The potential barriers may affect employers more than employees because of fundamental principles, such as the supremacy of EU law over inconsistent domestic law and the requirement for the interpretation of domestic legislation following instruction given in Marleasing.It is important to be knowledgeable about both sources of law. This is a complex issue but one that is unlikely to go away in the near future. Employment lawyers generally have to be EU lawyers and be prepared to consider both sources of law when issuing advice.

Chapter 3

On-the-spot question

How many individuals receive neither a written contract nor statement of written particulars and what are the potential consequences for their rights and responsibilities?

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Answer

There are many potential problems where an individual has either not been provided with the statement of written particulars, or a physical copy of their conduct of employment, when seeking to enforce employment rights. Many individuals may not understand the significance of these documents, nor will they necessarily be aware that they haven't been provided. As employment lawyers, it is important to recognise that individuals may not fully appreciate the importance of maintaining records or be aware of the legal requirements on the employer, and this may only come to light when that individual seeks legal assistance and enquiries are made regarding these documents.

The documents provide details of important matters such as the names of the parties – which clearly have significance where documents are served and forms completed (e.g. the ET1). The date on which the employee began employment is significant for claims such as unfair dismissal and redundancy, which are based on a period of continuous employment. While evidence may be sought from dates of payments of wages to retrospectively identify the specific date, it is far less contentious and problematic if a document is available which clearly identifies this date so that it is not in question between the parties. It is not unknown for an employer to choose to dismiss an employee just short of the employee gaining qualification through continuous service. If this is a matter of days, a document such as a contract of employment or the written statement of particulars would be indispensable in ensuring protection of the employee.

Other examples, such as the dates on which holidays may be taken, which statutory holidays are included in the calculation of the employee’s annual leave, issues relating to working hours and overtime pay, and the calculation of sick pay and incapacity are all of significance too. Line management may be far easier where these documents can be readily referred to, as can potential sanctions (disciplinary/dismissal/grievance) for their transgression.

These documents assist greatly in identifying, expressly, the terms and conditions of the working relationship and can assist in removing or resolving potential problems. That they are potentially ‘basic’ documents should not undermine their significance. When an individual seeks your advice in a professional capacity, these may be the first documents you will wish to review and on which many important decisions can be based.

On-the-spot question

Being implied, do you think that many individuals would appreciate the extent of these terms and further, given their significance, would it not be appropriate for these to be expressly stated in the contract?

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Answer

It is quite clear that many individuals will have little knowledge of employment terms in contracts. It is not uncommon for an individual to refer to his or her written contract or the statement of written particulars as being the source of their obligations at work. This is a mistake. Implied terms will clearly follow the contractual form of business efficacy (The Moorcock) or that the term is so obvious that it goes without saying (Shirlaw v Southern Foundaries). Terms may also be implied which are common in a relevant industry or geographical area, and some terms are implied through statute (e.g. the equality clause (s. 66) in the Equality Act 2010).

Implied terms such as fidelity, mobility, obedience, illegality, cooperation, a duty to adapt, are all imposed on the employee. Duties of payment of wages, work, safety, and mutual trust and confidence are imposed on the employer (trust and confidence is a duty shared between the parties). It is fair to comment that implied terms can impose obligations on employees which they may not, ordinarily, have considered incorporated into the agreement. On closer inspection, many of these terms simply reflect the nature of the agreement. Employment is not a commercial agreement but rather it involves individuals working cooperatively for the best interests of the individual and the business. Insofar as both parties act fairly and reasonably with each other, these implied terms should not cause undue hardship to either.

Implied terms will, evidently, substantially affect the contract but the rationale for implied terms is that to attempt to include all terms expressly would be impractical in most situations and therefore such terms should be viewed in light of the ‘relational’ nature of the contract of employment and in maintaining goodwill between the parties. To conclude, if a term is of sufficient importance, the parties should express it in the contract and not leave the courts to determine if it is, or should be, implied into it.

Chapter 4

On-the-spot question

Given its importance, why do you think the tribunals have been given so much discretion in deciding the employment status of an individual?

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Answer

The nature of employment status as an academic exercise and question for courts and tribunals to muse over, is interesting and engaging. Problems emerge when employment status is considered by an employer in relation to effective business planning, and it is significant when considering it from an individual's perspective, as employment status is merely the gateway to some status-related protection. For example, the rights to claim a remedy when an individual has been unfairly dismissed or made redundant is limited to those people with ‘employee’ employment status. Therefore the employment status is not a question that will be answered by a tribunal in the abstract. The right to which the individual is claiming must be dependent upon the employment status and there must be a disagreement between the employer and the individual as to the employment status.

A statutory definition exists but it is so broad as to be in all respects meaningless. It is arguable whether parliament had this intention, but the result is that the tests and an application for employment status has been left to the tribunals on the basis of the mix of law and of the facts of the particular case being heard.

Tribunals have the ability to question the parties, to look in depth at the relationship between individuals, not to be restricted in terms of the written contractual nature of the relationship, but rather to consider what happens in practice, and they are not restricted in relation to the weighting and significance they give to each factor. There is a human element to this assessment and, given this discretion, there will inevitably be inconsistent results and seemingly unfair decisions. However, the greater the restriction you place on tribunals, the more likely that employers will utilise draughtsman and the legislation to remove rights from individuals.

Remember, since 2013 there has been legislative action to enable employers to engage individuals as ‘employee shareholders’ if they wish specifically to pay individuals to waive important protected rights such as unfair dismissal and redundancy. Those employers who choose not to exercise this option, face the possibility of an adverse tribunal decision.

On-the-spot question

Imagine that a surgeon negligently removed the wrong fingers from a patient undergoing an operation. When the patient attempted to claim compensation due to the surgeon’s negligence, would the surgeon be an employee (and so the patient can sue the hospital who employed him/her) or do you think a surgeon would be an independent contractor (and so any claim would have to be made against him/her personally)? How would you justify your answer?

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Answer

This scenario is based on the Cassidy case where a surgeon negligently removed fingers from a patient and, in relation to the patient’s claim for damages, the employer attempted to identify the surgeon as a contractor rather than an employee and thereby escape any vicarious liability. This was one of the cases that identified the modern interpretation of the control test used in determining employment status. The individual who hired and controlled the surgeon may very well have acted in a management capacity and very likely he or she was not capable of directing the surgeon in his or her duties. The control test, as classically applied, would not have been helpful or realistic here.

Cassidy was one of the cases that demonstrated the modern thinking of the control test. It was not a necessary requirement for an employer to be able to control the actions of an employee. Indeed, it may very well be the case that modern employers hire teams of expert individuals to assist in day-to-day functions and operational matters. The simple fact that the employer was not sufficiently skilled to necessarily direct the surgeon in how to wield the scalpel, did not mean that control was not present. The employer would direct the surgeon as to when he or she was working, which operations would be undertaken, and in what order the operations would be completed. This involved the evolution of the control test to what is now understood as the ‘right to control’. The employer, exercising his or her right to direct where and when work is to be completed, but not necessarily how, is the modern interpretation of the test.

This test is justified because of the increasingly skilled workforce that is present in the economy and a necessary evolution of working practices and managerial responsibilities. Control, as a test of employment status, continues to be essential (as evidenced in Montgomery v Johnson Underwood) but can no longer be used in isolation. Technology alone has enabled skilled workers to operate almost independently of an employer, and it is perhaps one of the key aims of higher education to produce graduates who can work alone and under their own initiative. The ‘how’ to do the job is no longer appropriate for a test of employment status. Rather the ‘right to control’ test looks at the issues of an employer’s right to control ‘where’ and ‘when’ work is completed. As ever, the test continues to be applied on the basis that the greater the control exercised by the employer, the more likely the individual is to be held an employee. Without clear evidence of control by the employer, the individual is more likely to be held as an independent contractor.

On-the-spot question

Do you feel confident in explaining how and why the ‘control’ test became the ‘right to control’ test?

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Answer

It is important to recognise from the outset that questions of employment status began with employment relationships between masters and servants. Given this relationship, the master would require the servant to perform some action, and the servant would have no option but to agree. To disagree with the master would generally result in the servant being sanctioned (such as being dismissed) and the servant would likely lose his or her accommodation, have to seek alternative employment and, with no real system of national insurance or social security, face all of the associated problems that derived from the breakdown of the master and servant relationship. Clearly, the master would have complete control over the servant’s activities.

Further, when the master and servant relationship was prevalent, the servant was usually an uneducated and unskilled worker. Therefore the only contribution that could be made by the servant was his or her labour. The master would have directed the servant very closely as to the tasks to be completed and overseen the exercise of these until their completion.

Therefore, one of the first tests established to identify an individual as an employee was in relation to the degree of control exercised by the employer. Employers and employees are the closest modern day equivalent of the master and servant relationship. At the beginning of the last century when the control test was being developed, individuals were becoming skilled and the nature of employment was developing radically with technological changes. Individuals were being educated, developing transferable skills, and being taught how to think, act and work independently. These were skills essential to the development of the economy and industry. Further, think about how people work in the modern era. We have mobile phones, tablet computers, laptop computers, cloud-based storage, networked drives and so on – each of which make us more productive, able to work in ‘virtual’ teams, but without the obvious direct control of an employer.

The result is that many individuals who may still operate as employees, are not subject to the direct control that was endemic in the original control test. The modern interpretation of the control test is the employer's ability to control not how a skilled individual will perform the job, but rather when the individual will perform the job, in what order he or she will undertake each job, and where the jobs will be completed. As such, the modern interpretation of the control test is the degree to which the employer has the right to control the activities of the individual. The greater the control exercised by the employer, the more likely the individual is to be held as an employee. The lesser the control exercisable by the employer, the more likely the individual will be held as an independent contractor.

Chapter 5

On-the-spot question

Why is the use of positive action permitted, in an attempt to combat anti-discrimination? How does the distinction between positive action and positive discrimination relate to the theories of equality of outcome v equality of opportunity?

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Answer

Positive action occurs (for example) where an employer, faced with two equally qualified candidates for a job, one a man, the other a woman, and where there is an underrepresentation of women in the workplace, chooses as a matter of policy to employ the woman. Positive discrimination, however, is based on a policy established at the outset, whereby an employer seeks to appoint a woman without considering male applicants. Positive discrimination has generally been outlawed (some exceptions do exist) because it is a mechanism which replaces one form of discrimination for another.

The system operated in the UK to, in the main, combat discrimination against women is that of positive action, and this encapsulates an 'equality of opportunity' approach. Equality of opportunity establishes a system whereby men and women may apply for the same job, and each has an equal opportunity to be successful in being appointed. This is seemingly the most fair and equitable mechanism, although it does disregard the historical disadvantage that women have faced in the workplace through stereotyping and discrimination by senior figures in industry (who are often men). It is still evident, despite the raft of anti-discrimination legislation both domestically and from the European Union, that women face discrimination on the basis of their sex. Further, it is true that preventing discrimination may not be possible through the introduction of legislation, although recent changes, such as men and women being able to share parental leave and pay, may help to alleviate some of the stereotypes that have led to the disadvantage of women.

It can only be hoped that a more enlightened approach will filter down throughout organisations and businesses as women obtain senior positions in industry.

On-the-spot question

What are the potential difficulties for an employer who operates toilet facilities for employees, and who employs a person born a man who is living permanently as a woman, but who has not undergone a medical process, and who wishes to use toilets designated for women? Consider Goodwin v UK [2002] IRLR 664 and the Gender Recognition Act 2004 in your answer.

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Answer

The Equality Act 2010 identifies protected characteristics and prohibited conduct which, when satisfied, gives rise to legal protection/action. A person who has undergone gender reassignment satisfies the requirement of possessing a protected characteristic, and treating the person less favourably on the basis of this characteristic is an action of direct discrimination. Prior to the 2004 Act, it was required of an individual to have undergone, or be undergoing medical treatment for them to gain protection for gender reassignment. This was subsequently changed and protection is now provided to a person who has not sought medical intervention but who is living permanently as a person of the opposite sex. Cross-dressers, however, are excluded from protection.

An employer may not justify direct discrimination, and there is a further issue regarding harassment which would need to be considered. Harassment can include a one-off action, if deemed sufficiently serious, and may also involve verbal acts.

An employer does have to respect the right of the individual to reassign his/her gender, but discrimination is possible where legitimate aims are required (such as where insufficient toilet facilities are available or where individuals may feel uncomfortable about using toilets alongside a person living permanently as someone of the opposite sex) and the employer’s actions are a proportionate response to this. Insofar as the employer has been reasonable and proportionate in their response to a request to use the toilet facilities (as in the scenario posed in the question), it may be legitimate for an employer to refuse to allow the person to use toilets designated for members of the opposite sex – all employees have to be considered and the employer’s legitimate aims will be assessed to determine whether discriminatory action has occurred.

Chapter 6

On-the-spot question

Do you feel that the system of regulation of the minimum wage is sufficient to ensure compliance? What barriers are in place to adversely affect its usefulness?

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Answer

Payment of the national minimum wage is a requirement of law to all those individuals with the employment status ‘Worker’ and applies regardless of the size of the employer, whether the worker is employed on a full or part-time basis, or whether he or she is paid on commission or a salary. Restrictions are imposed on employers with regards to payment, and rules are established, for example, where a maximum of 10 per cent of the worker’s gross pay may be deducted to reflect cash shortages or stock deficiencies for those individuals employed in the retail sector.

An employer is required to maintain records of payments made to workers, including details of the hours worked and to have these available for inspection to Her Majesty's Revenue and Customs (HMRC) Department. Further, it is a criminal offence for an employer to falsify such records.

Workers may bring an action for breach of the Minimum Wage Act against their employer to the employment tribunal. Further, the worker may also claim if he or she has suffered any detrimental treatment (such as a dismissal) for seeking to enforce his or her rights. Where the worker has established a prima facie case that he or she has been paid less than the minimum wage, the obligation falls to the employer, through use of employment records, to defend themselves and demonstrate that the claim by the worker is unfounded/incorrect.

Beyond the right of the individual worker to seek to enforce rights regarding the minimum wage, HMRC possesses the power, through a compliance officer, to issue a fine of up to £5,000 for breach of the law, and the serving of an enforcement notice for the owed wages and dates by which compliance must be complete.

Ultimately, the law exists to enable affected workers to enforce their rights. However, despite laws that prevent victimisation of an individual who seeks to enforce his or her rights at work, many workers will not seek to challenge an employer’s payment for fear of the potentially negative consequences. Also, bonuses paid by the employer, tips received through service, and any performance-related pay awards may all be included in the calculation of the national minimum wage payment. This may affect the pay received by an individual worker, and makes specific calculation and enforcement more problematic.

One final issue to be raised in relation to the national minimum wage is that this is a ‘national’ wage without the application of regional variations. Regional variation in the minimum wage would clearly create its own problems, including unfairness and enforcement difficulties, but wages paid to workers in the north of England, where the cost of living is lower then those living in the south, may be perceived to have an advantage and may lesson the effectiveness of the policy that was introduced in the1998 Act.

On-the-spot question

Given that equal pay legislation has been in force for nearly 40 years, what are the reasons for the continued disparity in pay between men and women?

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Answer

Equal pay between men and women has been problematic from the first legislation on the matter. The Equal Pay Act 1970 required that men and women were paid equally on the basis of two ‘heads’ of claim – that the woman was performing ‘like work’ with the male comparator, or that the employer had conducted a job evaluation study that deemed the work undertaken by the claimant and the comparator as ‘rated as equivalent’. In the 1970s in the United Kingdom there existed (unofficial) segregation of jobs along gender lines. Men were expected to perform certain tasks, such as factory work, and women, employed by the same employer, would traditionally work in the secretarial pool. Consequently, men and women were not performing ‘like work’ and if the employer did not undertake a job evaluation study, which employers could not be compelled to do, the work undertaken by both was not ‘rated as equivalent’.

It was not until 1983, following action by the EC Commission, that the UK law was changed to conform with the EC Directive on equal pay, to include a third head of complaint – ‘work of equal value’. This third ‘head’ made it much easier for a woman (for example)  working as a secretary to compare her job with that of a man working in the factory of the same employer’s business. However, it is important to recognise that even when establishing a prima facie case of unequal pay, the employer may raise the defence of material factors. These are factors, other than the sex of the claimant and comparator, which have led to the difference in pay. Market forces, geographical variations, etc. have been used as material factors.

It should also not be forgotten that an equal pay claim takes place while the claimant is employed. For those in large organisations, the claimant may never see, or have dealings with, their actual employer (the person who pays their wages). Those individuals who work for small and medium-sized enterprises may have direct dealings with their employer and this could make it a very awkward situation, as claiming equal pay will result in tribunal action. This can create disharmony in the workplace, and while contrary to anti-discrimination laws regarding victimisation, numerous research reports identify individuals who have claimed equal pay against their employers and have suffered a detriment following the hearing outcome. Many individuals would prefer to keep their job than seek better pay.

Finally, the choice of comparator can be difficult as pay transparency may be illusionary, and equal pay, as a cause of action and as a remedy, provides just that – equal pay with the comparator. Where the wrong comparator is chosen, the claimant, if successful, will only receive equal pay with that individual – not fair pay. It has recently been announced that women are expected to receive equal pay with men in 2063! There is still much work and education to be done in this area.

Chapter 7

On-the-spot question

Why did the Court not consider the issue of lawful and reasonable orders, and the fact that undertaking the work would have extended Pepper’s working hours when providing its judgment?

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Answer

The obligation imposed on employees to follow the lawful and reasonable orders of an employer is a term implied in the employment contract. Its existence is based on the employer having control over the employee and being able to ask the employee to undertake orders which a reasonable and diligent employee should follow. The managerial prerogative enables an employer to make requests of employees and to direct them as to the work to be undertaken and in which order they should carry out tasks. There are protections for employees who are requested to undertake work that amounts to an unlawful order and who refuse to comply.

Asking an employee to undertake work which is an extension of their existing duties or to work overtime when required, is subject to the concept of reasonableness. An employer who was acting unreasonably in this request could expect the employee to lawfully refuse – examples here may include asking an employee to work overtime where the employee has pre-existing childcare responsibilities. The employee, in this scenario, would be quite entitled to lawfully refuse what is essentially an unreasonable order.

However, the employer has every right to:

• ask an employee to undertake work that they are employed to perform;
• challenge an employee regarding the quality or quantity of work performed;
• require the employee to cooperate in completing tasks which are essential or desirable for the employer.

The employer has every right to make these requests and to expect them to be carried out, unless the employee has a reasonable response as to why he or she cannot comply. Where an employer requests that an employee performs duties such as overtime work, this does not remove the employer's obligation to provide payment for this work; employers will often consider this act of goodwill by the employee to be rewarded through time off in lieu, and it is a situation that ensures the effective running of the organisation.

Always remember that employment relationships are based on a notion of a relational contract and therefore the parties must work cooperatively, and with mutual trust and respect, to achieve the goals of the organisation.

Chapter 8

On-the-spot question

Does an employer require actual proof of an employee’s wrongdoing before deciding to dismiss? What is the level of proof required to satisfy the tribunal that the employer’s actions were reasonable?

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Answer

The employment relationship is based on a system of trust and confidence. Employers provide employees and other workers with access to customers, cash, clients and suppliers, and they are often privy to sensitive information regarding personal and personnel matters. Based on the employer giving the employee access to such fundamental aspects of the organisation, it is imperative that the employer has full and complete trust in the employee. Where an employer does not have this trust, the employment relationship is almost certainly doomed to failure.

It is necessary at this stage to distinguish between the remedies provided, and rules underpinning claims of wrongful dismissal and unfair dismissal. Wrongful dismissal is a damages action for breach of contract and the fairness of the decision of the employer when he or she chooses to dismiss the individual is assessed on the basis of the information held at the time of choosing to dismiss, although material discovered after the dismissal, but before the case is heard, can retrospectively make an otherwise wrongful dismissal a lawful dismissal.

On the other hand, the issue of fairness in a claim of unfair dismissal, is based entirely on the information held by the employer at the time of choosing to dismiss (materials discovered after the decision to dismiss are not admissible – but may affect the level of compensation awarded). Importantly, following BHS v Burchell, there is no requirement for the employer to have proof of some kind of misconduct, for example theft, but rather the employer has to hold an honest and genuine belief that the employee was guilty of such (mis)conduct. The employer must also, to justify this genuine belief, have reasonable grounds upon which to hold this opinion, and in so doing, the employer must have carried out a reasonable investigation into the facts. However, the employer is not undertaking a criminal investigation, nor do they necessarily have the resources to conduct such an investigation. If the issue of trust and confidence between the parties, means that the employer no longer trusts the employee because of the suspicion of theft, the employer, having followed the Burchell principles, is entitled to dismiss the employee.

On-the-spot question

The government removed almost all access to legal aid in employment law from 1 April 2013 to reduce costs. How have the cost savings improved the provision of justice through employment tribunals where the parties are unrepresented, and what are the case management problems faced by the employment judge in such circumstances?

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Answer

At the time of writing it is difficult to fully assess the implications of the government's actions in employment law and access to justice following the austerity measures introduced in 2013. What is certain to happen is that access to tribunal cases will be adversely affected due to the imposition of costs and the reduction in legal aid. One of the reasons why this has not received the media coverage that may have been expected is simply because the legal aid cuts affect employees and individuals, not employers. Those cuts to legal aid that applied to the provision of criminal law were much more broadly publicised and criticised, and received commentary in the media as well as among judicial and academic communities.

It is apparent from numerous pieces of research that individuals who represent themselves at tribunal claims do so to their own disadvantage. Some people represent themselves because they feel empowered to do so and are in the best position to advocate on their own case. However, most people attend tribunals unrepresented because they lack the funds to secure legal representation, and the non-legal representation previously available through citizens advice bureau, local law centres and so on has also been affected by the cuts in funding and are no longer accessible. It is also worthy of comment that employment tribunals operate on a very procedure-based undertaking. Employment laws are predominantly governed by statute and codes of practice about which the uninitiated individual is unlikely to be aware. Given the strict criteria applied for the presentation of claims and discovery of documents, it is not unsurprising that many employers who attend tribunal legally represented will succeed in their claim. While the tribunal will assist (as far as it can) in helping an unrepresented claimant to present his or her claim, the tribunal’s employment judge is not there to represent the claimant.

It has been argued that the consequence of removing legal aid and representation is that while initial cost savings to the Treasury will be demonstrated, the indirect costs to the system via claimants rambling through irrelevant material, the time taken to adduce evidence which may be lacking or poorly prepared, will almost certainly increase the time tribunals have to take to settle claims. These figures, though, do not appear as readily on government budget statements and consequently may be an acceptable or ‘hidden’ cost about which the public will have little knowledge.

On-the-spot question

An employer has discovered stock irregularities and identifies  three employees with access to the stockroom from where the missing goods were kept. What action is available to the employer in light of this problem?

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Answer

This question is based on the concept of gross misconduct and the requirements on an employer who wishes to dismiss. Where an employer considers stock irregularities to be indicative of theft, the employer has an obligation to follow the procedures established by ACAS before choosing to take any discipline/dismissal action. What would be required before any decision to dismiss takes place is that the employer would have to conduct a reasonable investigation to gather materials in order to hold/maintain the reasonable belief or reasonable suspicion of misconduct, to justify action in accordance with the Burchell principles. Burchell established the precedent that enabled an employer to dismiss on the suspicion, but not requiring proof, of misconduct.

The question here relates to the potential misconduct of a group of employees rather than the suspicion of misconduct of one. The employer would be expected to follow the ACAS code in relation to holding an investigation, interviewing those involved in accordance with the Employment Relations Act 1999 ss.10–13, interviewing any other individuals who may be material witnesses, identifying as far as possible whether the stock irregularities could have been the result of accounting errors, and identifying those individuals who could possibly have been involved in the (potential) misconduct.

Where the employer has identified those individuals who could have been involved in the misconduct, and they are able to eliminate others as part of the investigation, and where the only logical explanation for the irregularities could be the actions of the individuals identified, the employer, as part of these enquiries, could expect the employees to provide whatever information was held by them. Where none of the employees provide information regarding the culprit, and a reasonable investigation has been conducted, the employer is entitled to dismiss all three employees in accordance with Parr v Whitbread [1990].  Where an employer wishes to dismiss a group of employees for misconduct, the rules established by the EAT are:

1. a dismissal for such an offence must have been justified (such as gross misconduct);
2. the employer must have conducted a reasonable investigation and followed the correct procedure (such as established by ACAS);
3. the employer must reasonably believe that the offence could have been committed by more than one person;
4. the employer must have reasonably identified those individuals who could have committed the offence;
5. following a reasonable investigation, the employer is unable to identify the culprit.

Chapter 9

On-the-spot question

What features would establish a fair selection policy? Explain with whom an employer should consult to ensure fairness and identify the legal and business consequences when this is not undertaken.

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Answer

Dismissal by means of redundancy is a potentially fair reason to dismiss under the Employment Rights Act 1996 s.98. The employer is required to ensure that the selection procedure for redundancy is not unfair and hence the affected employee will be able to seek a remedy under unfair dismissal. Where a business is going to cease trading completely and hence all employees are to be dismissed, it is quite often the case that no selection criteria will be necessary. Insofar as the employees qualify for protection and redundancy payments, they will all be selected. On the contrary, where only a proportion of employees are to be selected, or only a proportion of the business is to close, a fair selection policy is essential. This is not only a legal requirement but it is necessary to maintain good industrial relations between the employer and remaining staff.

The selection procedure adopted will usually be agreed between the employer and the trade union or employees’ representative unit. This agreement will establish a matrix/scoring system based on as objective criteria as possible. This will assist in removing bias, and the involvement of the trade union seeks to add an element of objectivity and transparency to proceedings. The criteria can include elements such as qualifications, length of service, employment history, responsibility and disciplinary record. Each employee who is in the ‘pool’ of individuals who may be subject to redundancy is scored. Those with the lowest scores will be selected.

It is important that this transparent system is effectively communicated and that the employees have an opportunity to appeal against their scores. Redundancy is often an unpleasant process, and therefore it is vital that it is handled correctly and sensitively, and that information is communicated throughout the process to enable those who are affected to have the negative effects minimised as far as possible.

On-the-spot question

Could the sale of shares provide a loophole through which the parent company may simply make employees redundant and avoid TUPE protection? Consider the protection available through the courts in determining whether a transfer falls under TUPE protection.

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Answer

TUPE applies where a business (undertaking) is transferred from one employer (the transferor) to another (transferee). This requires an ‘organised grouping’ to be transferred rather than the sale of assets, or equipment. A problem exists, in relation to the present question, where the transfer takes place on the sale of shares. This has been a technique used to circumvent TUPE obligations. The general rule of law is that the transfer of sales does not constitute a ‘transfer’ for the purposes of the regulations. Given that shares can be held by a person, and following the Salomon case, corporations are identified as possessing a legal personality separate from its members, a corporation as an artificial person may hold shares. As such, where does the transfer of shares from one company to another become a simple transfer of a shareholding, and when does it become a legal transfer which would come under the remit of TUPE? The Court of Appeal in Millam provided guidance, and where the two companies involved were held to be integrated to such an extent that the transfer of shares was not restricted to shares but rather was a transfer of a business (given the close relationship between the two businesses, common administration of wages and pension schemes, shared board meetings etc.), it was held that the transfer of shares actually, and in practical terms, constituted a legal transfer of the undertaking.

The cautionary tale for purchasers is that share sales may potentially invoke TUPE particularly where the parent company takes over control of the acquired company's business. Integration is a key element here, and consequently where the transfer of shares leads to no change in the identity of an employer, no TUPE will be effective. Transferees should maintain a clear demarcation between them and the transferred company to avoid potential problems due to the non-vertical integration of the business.

On-the-spot question

Given this new development, and where, as is likely to be the case with larger employers who may have redundancies in several locations (possibly in a piecemeal fashion), how easy will it be for the employer to identify when the obligation for consultation applies?

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Answer

USDAW v WW Realisation Ltd [2013] established an onus on employers to consider the qualification for protection in accordance with TULRCA 1992 s.188, which provided employees with the right to be consulted prior to any decision to make redundancies. Insofar as the employer did not have a ‘special circumstances’ defence, enabling the obligation to be circumvented, employers must now consider that the requirement to consult takes effect where collective redundancies apply to 20 or more employees across all establishments. This was brought into effect through the EAT using a mechanism of indirect effect/statutory interpretation, through which the domestic Act had to be read in conformity with the EU Directive.

At the time of writing the case is being appealed and will soon be heard by the Court of Appeal. However, employers facing situations involving collective redundancies would be sensible to adopt the approach of ensuring conformity with the law in consulting where more than 20 employees are to be (collectively) made redundant. The ‘at one establishment’ wording of s.188 has been disregarded by the EAT, and regardless of the decision of the Court of Appeal, it is likely that the statute will have to be amended to give effect to this interpretation of the Directive. This does pose significant obligations on employers faced with a redundancy situation, and the consultation and potential penalties for failure in this regard will have to be factored in to any decision being made. Further, as the secretary of state is required to compensate affected employees where the employer fails to adhere to the requirements and is wound up insolvent, the government may have greater motivation to ensure that the law is correctly applied and the statute is amended to reflect this requirement.

Chapter 10

On-the-spot question

Compare the rights of individuals in the United Kingdom to participate in strike action compared with the rights given to similar workers in countries including France and Italy. Why do you think the UK is so restrictive and do you believe this approach benefits workers, employers, and/or the economy?

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Answer

Workers in the UK do not possess a right to strike, rather there exist a series of immunities and protections against dismissal for strike action which conform with statutory requirements relating to lawful industrial action. Individuals who are participating in lawful industrial action are protected against dismissal, but industrial action in the UK is very heavily regulated and there are a great many protections for employers where an individual and/or trade union is involved in action which has not complied with the statute and/or relevant codes of conduct.

This makes individuals involved in such action vulnerable, and there is no requirement on the employer to accept industrial action whether that is a full (collective) cessation or withdrawal of labour (a strike) or action short of the withdrawal of labour. An employer may withhold pay, and employers may seek compensation against individual strikers and trade unions for various torts and possibly for breach of contract.

This situation can be compared and contrasted with France where individuals do have a right to strike, a right first provided in 1864. There is no formal period/limitation of strike action, individuals do not have to be part of a trade union to take this action and they are protected from any penalty that the employer may seek to impose (differences do exist between public and private sector workers in respect of the exercise of these rights). Therefore individuals in France may seek to protect their rights at work in a much more militant manner than is available to similarly placed workers in the UK.

In the UK there has to be a balancing act between the rights of individuals to force employers to negotiate on employment matters, and a right of an employer to run the business as they see fit and proper. Individuals at work in the UK are generally in a much weaker position in relation to negotiation regarding terms and conditions of employment, and the one power they possess is to act collectively to force the employer to negotiate. Employers therefore must act reasonably when individuals are involved in lawful industrial action, and seek to negotiate a settlement on the terms and conditions in dispute with the employees or their representatives. Arguments abound on both sides around the efficacy of the current system, but it does appear to provide protections for both parties.

On-the-spot question

Given the tests identified above, do you think it would be particularly difficult for the claimant employer to obtain an interim injunction? Further, what are the potential problems faced by trade unions and individuals when their powers to take industrial action are inhibited in this way? (See The National Union of Rail, Maritime & Transport Workers v Serco Limited (& others) [2011] EWCA Civ 226).

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Answer

An injunction is an equitable remedy available at the discretion of the courts where the court deems that damages would not be adequate in compensating the injured party. An interim injunction is a temporary measure preventing action pending a full legal hearing, on the basis that the damage to an individual (such as an employer) would be far greater if the action was permitted to proceed, than a subsequent claim of damages would provide if the defendant was held to have acted unlawfully.

Therefore, where a trade union proposes to take industrial action affecting an employer, the employer is entitled see a copy of the ballot paper, to be informed of the procedures used to conduct the lawful ballot, and the employer is to be provided with details regarding when strike action will be called. The key issue here is the information included on the ballot, the conduct of the ballot, and actions taken on the basis of the results of the ballot. Given that the trade union has immunity from liability for various torts on the basis of the ‘golden formula’ where it is involved in lawful industrial action, such immunities are lost where the industrial action is taken on the basis of a ballot which is not in accordance with the legislation. This exposes the trade union to potentially huge financial liability and would lead many trade unions to err on the side of caution if there was a possibility of the ballot being incorrect.

In the case mentioned here, the trade unions had balloted members on strike action and the affected employer sought injunctions to prevent the proposed industrial action, on the basis that the ballots had been inadequately conducted and there were claims regarding discrepancies of those eligible to vote. The High Court granted the injunctions. It appears that a court would grant an injunction to an employer for a seemingly minor breach of procedural rules when the issue is to do with industrial action. This seems to expose trade unions to an unreasonable risk of potential liability, and may now be seen as a weapon held by the employer when they seek to challenge the validity of ‘lawful’ industrial action. The decision has made the employer's position more powerful when controlling industrial action.