Pete, Mark and Pauline work for Walford Engineering Ltd, a firm manufacturing rides for fairs.

During the last two years, there have been periods of short-time working. Two years ago, there was an industrial dispute and all the workforce were put onto a four day week for the period of the dispute, which lasted from February to March. Six months later, another dispute occurred, which lasted for five months, from September to January, and, again, the workforce were put onto a four day week. In both cases, the two unions at the factory, the CMU and the SWU, agreed to the cuts. In September last year, the CMU agreed that, in the event of future disputes, it would accept a three day working week if it became ‘economically necessary’. This agreement was stated to be binding in honour only.

Last month, there was another dispute and the company put the workforce on a three day working week for a month. Both Pete, a member of the CMU, and Mark, a member of the SWU, are claiming four days’ pay.

Pauline works as a typist in the typing pool at the factory. She started work four weeks ago. Last week, she fell ill and will be off work for a total of three weeks. Her statutory statement says that she is entitled to sick pay after two weeks of illness but her contract, which was sent to her home during her illness, states that sick pay will be paid only after three weeks of illness. In addition, when she applied for her job, the advertisement said that the position was that of ‘personal assistant/typist’, however, the title of the job on her contract is ‘typist’. She feels that she would not have taken the job if she had known that it would only involve typing.

Advise Pete and Mark as to the likely success of their claims and Pauline in relation to her sick pay and the nature of her job.

Answer Plan

This question raises the issue of collective agreements and their enforceability at the individual level. It raises issues as to whether there is an implied term, irrespective of the collective bargain. To some extent, in relation to the first two parties, there needs to be some discussion in relation to implied duties. In addition, it addresses the problem of a conflict between the written terms of the contract and the statutory statement, and whether terms implied from sources outside the contract can modify the express terms within it.

The issues to be considered are:

• the implied term in relation to payment during lay-off;

• how far conduct on the part of the employee can vary contractual terms;

• the implication of collective agreements into individual contracts;

• the effect at the individual level of a collective agreement stated to be binding in honour only;

• which prevails when there is a conflict between the statutory statement and the written contractual terms;

• how far terms from documents such as advertisements can be implied into the contract.

Answer

Pete and Mark have in the past accepted a four day working week when there has been an industrial dispute. This is evidenced by the fact that they are both only suing for four days’ pay in relation to the last four week lay-off. Generally, at common law, there is an implied duty to pay wages but not to provide work (Collier v Sunday Referee Publishing Co Ltd (1940)). This, however, is only a general proposition.

In some cases, there is a duty to provide work where, for example, the employee needs to develop his skill or where the work must be done to earn the wage, as in the case of piece workers (Devonald v Rosser and Sons (1906)). The implied duty to pay may be ousted by an express term in the contract (Hulme v Ferranti Ltd (1918)) or the practice of the industry may imply a term that there is no pay during lay-off and this will oust the general duty (Puttick v John Wright and Sons (Blackwall) Ltd (1972)).

The first question to ask in relation to Pete and Mark is whether there is a duty to pay during lay-off. In the past, both have accepted a four day week when there has been an industrial dispute. Whereas the general duty is to pay, this does not apply when the failure to pay wages is outside the control of the employer. In Browning v Crumlin Valley Collieries (1926), Greer J held that the duty did not apply when the employer had to close down the colliery when a land fault necessitated urgent repairs. In the case of Walford Engineering, it appears that the industrial disputes render it impossible to provide work for five days. If such impossibility is proved and further work cannot be provided for the last working day of the week, then, under the authority of Browning, it would appear that there is no breach of contract on the part of the employer and Pete and Mark will be unsuccessful in their claims.

If, on the other hand, it is deemed that it is not impossible to provide five days’ work, the question to be asked is whether there is a term in their contracts that allows for layoffs without pay. In the past, both men have accepted a four day week during disputes. In addition, both of the unions also accepted the reduction in pay, although it does not appear that this was done by collective agreement, merely an acquiescence. Could it be argued that the past conduct of Pete and Mark has now implied a term into their individual contracts that there will be a shorter working week when there is a dispute? It appears that until the recent lay-off, there were only two occasions in the past when there was a four day working week, although it lasted in toto for five months. In implying terms into the employment, the courts do not tend to rely on the old contractual tests of business efficacy or obvious consensus, but rather what is a reasonable term in all the circumstances. In Courtaulds Northern Spinning Ltd v Sibson (1988), a mobility clause was implied into the employee’s contract because he had been mobile between two sites during the relationship. Slade J said, ‘The court merely has to be satisfied that the implied term is one which the parties would probably have agreed if they were being reasonable’. Thus, it may be argued that because of the acceptance of the four day week without protest in the past, this has now become an implied term in both the parties’ contracts. A further argument that the employer may put forward is that lay-off without pay has now become a custom. It is submitted, however, that to show that a practice has become a custom and implied into the contract, it must be certain, general and reasonable. Smith and Thomas (Smith and Wood’s Employment Law, 9th edn. (2008)) state that this can occur in one of three ways. Either the custom is so notorious that there is judicial notice of it, or it is so well established that the employee must have accepted employment subject to it (Sagar v Ridehalgh and Sons Ltd (1931)), or the practice grew up while the employee was employed and he impliedly accepted it, although du Parcq LJ said, in Marshall v English Electric Co Ltd (1945), that mere continuance at work may not be enough to signify acceptance as it may be caused by other factors, such as a fear of dismissal. This is reemphasised in Samways v Swan Hunter Shipbuilders Ltd (1975).

Given that the practice in the problem has only been happening over the past two years, it would appear that the only way it could have become a custom and thereby implied into Pete and Mark’s contracts, is the fact that it arose during their employment and they have accepted the deductions. Given Samways, however, it would be possible to argue that their acceptance of the shorter week was due to a fear of losing their jobs and not because they accepted that they were contractually bound to do so.

Even if there is a term in both of their contracts, previous deductions have been in relation to one day’s pay and the disputed deduction is in relation to two days’ pay. Pete’s union, the CMU, has agreed to a three day week where there is a dispute if this is ‘economically necessary’. The agreement is stated to be ‘binding in honour only’ but this will have no effect on the enforceability of the term if it has become a term of the individual’s contract.

Where there is no express incorporation of a collective agreement at the individual level, it is possible that the agreement may be impliedly incorporated. From Joel v Cammell Laird (1969), it appears that for implied incorporation into a union member’s contract, there must be knowledge of the agreement, conduct on the part of the employee that shows he accepts the agreement, and some indication of incorporation into his contract. Duke v Reliance Systems Ltd (1982) adds that the employee must have knowledge of the existence of the term, if not its content, and, in Jones v Associated Tunnelling Co Ltd (1981), the EAT held that the fact that an employee continues to work does not imply assent to a change in terms, particularly if the change does not have immediate effect. In relation to Pete, therefore, if he is aware of the agreement made by his union and of the existence of a term relating to unpaid lay-off, the term will be part of his contract. Unless he can show that the three day week was not economically necessary, he will be unable to sue for the loss of four days’ pay. Mark, on the other hand, is not a member of the CMU. Even if he has varied his contract so that theemployer is entitled to put him onto a four day week, by Miller v Hamworthy Engineering Ltd (1986), he is not bound by the negotiations of another union. As such, Walford Engineering is in breach of contract by deducting two days’ pay, and his claim will be successful. Henry v London General Transport Services Ltd (2001) can be distinguished in Mark’s case as he is a member of a union that has, in the past, negotiated with the employer and that, in the case of the three day week, has not done so. On these facts, it is unlikely that a tribunal will find that there is a custom that the CMU negotiates on behalf of all of the employees, including those who belong to a different union.

In Pauline’s case, there is a discrepancy between her statutory statement and her contract in relation to sick pay. Although all employees should receive a statutory statement of terms and conditions within eight weeks of starting their employment, the statement is not contractual but merely evidence of what the terms of the contract are.

Browne-Wilkinson J, in System Floors (UK) Ltd v Daniel (1981), said of the statement, ‘It provides very strong prima facie evidence of what were the terms of the contract between the parties, but does not constitute a written contract between the parties’. Such an interpretation, however, does not help Pauline. While in some cases the courts have accepted that the statement does comprise the contractual terms, this is usually where there is no further written document and where the employee has signed the statement itself and not merely a receipt (Gascol Conversions Ltd v Mercer (1974)). We have no evidence of whether Pauline signed the statement itself. If she did, it may be possible to argue that by sending different terms in a later document, the employer is attempting a unilateral variation and there is no conduct on the part of Pauline that shows acceptance of the change. If, on the other hand, she has signed nothing or merely a receipt acknowledging that she has received the statement, then, relying on the judgment of Browne-Wilkinson J above, her contractual terms will prevail and she will not be entitled to sick pay during her illness.

Pauline is employed as a typist according to her contract, but the advertisement for the job described the post as personal assistant/typist. The normal contractual rule is that an express term cannot be overridden by an implied term (Deeley v British Rail Engineering Ltd (1980)). In Johnstone v Bloomsbury Area Health Authority (1991), Stuart-Smith LJ stated that an express term relating to hours was subject to the implied duty to ensure the employee’s safety, although Browne-Wilkinson VC, in the same case, stated that the exercise by the employer of his right to ask for extra hours over and above the obligatory ones, was subject to the implied duty in relation to safety, so leaving the contractual principle intact. Whether Johnstone is seen as an attack on the normal contractual principle or not, it is unlikely in Pauline’s case that a court would allow the written express term to be overridden by a term implied from an advertisement (Deeley) and, as such, Pauline is employed as a typist only.

Good essays are the gateway to top marks. The Good, The Fair, and The Ugly shows you the style of essay which works well in exams, as well as the simple errors that can cost you essential marks. Written by our Q&A authors, each of these interactive essay-based tutorials highlights key themes and common errors and illustrates essays of specific standards:

Whilst marking criteria will vary, as a general guide, the Good answer will be based on a general mark of a first or upper second class; the Fair answer will be based on a lower second or third class and the Ugly answer would result in a fail.

Click on the glossary term to see the definition

Chapter 1

Employee

This is a term referring to a person who workers under a 'contract OF service' (it is defined in Employment Rights Act 1996 (ERA 1996) s 230) It applies to a person who agrees to perform work personally and they are subject to greater regulation by the employer than is applicable to an independent contractor. However, employees also have greater protection to employment rights than any other status of worker.

Employment Tribunal

The specialist forum for determining employment disputes. They hear complaints between the employer and worker on topics ranging from dismissals and redundancy to minimum wage claims and discrimination issues.

Express Term

These are terms expressed in words or writing that outline the parties' obligations. Typically in contracts of employment this will include pay; the details of hours; any restrictive covenant in the contract and so on.

Garden Leave

This is a more secure way of ensuring an employee does not leave the employment and work in competition against the employer. It incorporates a long period of notice and, whilst more expensive than a restraint of trade clause, it is more effective and more readily enforced by the courts (through injunctions).

Implied Term

These are of particular importance to contracts of employment as many significant obligations are included in implied terms, which, by their nature, are not spoken or written. They place obligations on the employer and employee, and one of the most important implied terms for both parties is that of mutual trust and confidence.

Independent Contractor

This is a term referring to a person who works under a 'contract FOR services.' Independent contractors have less access to employment rights (such as unfair dismissal and redundancy) although they benefit from being able to work for different employers; they have access to more favourable tax regulations; are not subject to the same level of implied terms and so on.

Mutual Trust and Confidence

One of the most important implied terms imposed on both the employer and employee. This requires the parties to treat each other with respect and not to take actions likely to destroy the working relationship.

Mutuality of Obligations

This is a key term for identifying 'employee' status. It requires an on-going relationship between the parties whereby the employee makes themselves available for work and the employer has a mutual obligation to provide work or pay.

Restraint of Trade Clause

A contractual clause that enables the employer to restrict an employee, having left their employment, from competing with the employer for a specific duration and a specific geographical / industrial area. It is incumbent on the employer to demonstrate the need to protect their 'legitimate proprietary interests' and that the clause is both reasonable between the parties and public policy. The courts require the employer to convince them of the necessity of the clause.

Worker

A term increasingly used to grant specific employment rights to 'workers' rather than the restrictive term 'employee.' It has been applied to rights including the Working Time Regulations 1998; the National Minimum Wage Act 1998; and the Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000.

Written Particulars

ERA 1996 s 1 outlines the information that an employee is entitled to receive within 8 weeks of commencing the employment. This includes information such as the parties' names and contact addresses; the responsibilities at work, holiday pay; notice periods and so on.

Chapter 2

Comparator

To claim under the sex and race discrimination laws the claimant has to compare themselves with another person (of the opposite sex) who is, for example, receiving higher pay under the Equal Pay Act 1970 (EPA 1970). In the EPA 1970 there has to be an actual comparator working for the employer, but under the Sex Discrimination Act 1975 and Race Relations Act 1976, a hypothetical comparator may be used.

Direct Effect

Legislation from the EC creates rights for individuals in the Member States that domestic courts must apply even in the absence of any national implementing legislation. The European Court of Justice had developed tests to establish if the relevant law has Direct Effect.

Dispute Resolution

As opposed to the traditional, adversarial, court-based mechanism to resolve disputes, alternative methods have been recommended through legislation and the courts. This has led to the statutory discipline / grievance procedures and an increasing reference to arbitration and conciliation through organisations such as ACAS.

European Community

The European Community (EC) is the international treaty that the United Kingdom joined in 1973. It has had significant implications for employment law (introducing the Working Time Regulations 1998; the protections for part-time workers; those on fixed-term contracts; and the discrimination laws - amongst many other initiatives). It also has led to several changes to domestic legislation through the rulings of the European Court of Justice. To understand employment law you must understand EC law.

Genuine Material Factor / Defence

An employer may demonstrate that unequal pay between men and women, which appears to demonstrate discrimination, is however for some other reason than sex. Equal pay is only applicable between men and women based on their sex, so if the employer can demonstrate that the difference in pay is due to, for example, market forces (Strathclyde Regional Council v Wallace (1998)) then this will nullify a claim. The reason must, however, be justified.

Heads of Claim

In order for a claim under the EPA 1970 to be made, the claimant must choose one of the 'heads' of claim - like work; work rated as equivalent; and work of equal value on which to base their action.

Pay

The term 'pay' has been widened following judgments from the European Court of Justice to include wages, and other benefits such as holiday pay, employer's contributions to the worker's pension; company car provisions; health benefits and so on. It now includes all contractual benefits.

Red-Circle

Where an employer has conducted a job evaluation scheme and under a regarding an employee or group of employees have been moved to a lower grade, this mechanism allows the employer to protect and maintain the affected employees' salary (Snoxell v Vauxhall Motors Ltd (1977)).

Chapter 3

Direct Discrimination

Direct discrimination cannot be justified by an employer, regardless of how 'pure' are their motives. It involves the claimant being treated less favourably on the basis of their sex, race or disability. This occurs before and during employment (such as at the advertisement and interview stages in employment).

Disability Discrimination

This is governed by the Disability Discrimination Act 1995 (as amended) and requires employers to make reasonable adjustments to prevent discrimination against their employees who are subject to a disability.

Genuine Occupational Qualifications

An available defence to a claim of sex or race discrimination where the requirements of the role necessitates one sex, or member of a race, than another.

Indirect Discrimination

Indirect discrimination can be justified by an employer. It involves conduct or practices that, on the surface, appear to be neutral but work in practice to be discriminatory to members of a particular sex or race. In terms of sex discrimination, there must be a provision, criterion or practice that puts the claimant at a particular disadvantage, and which the employer cannot demonstrate is proportionate to achieving a legitimate aim.

Race Discrimination

This is governed by the Race Relations Act 1976 (RRA 1976) which is essentially a copy of the Sex Discrimination Act 1975 (SDA 1975) (albeit in terms of discrimination based on race rather than sex). The claimant must demonstrate they were subjected to discrimination based on their race (either direct or indirect) and suffered a detriment as a result.

Sex Discrimination

This is governed by the SDA 1975 and prohibits discrimination (direct or indirect) and victimisation of the worker. It is applicable to both men and women, although the claim must consist of discrimination based on the claimant's sex.

Sexual Harassment

SDA 1975 s 4A defines harassment as engaging in unwanted verbal, non-verbal and physical conduct, of a sexual nature that adversely affects the claimant's dignity or creates a hostile, humiliating or offensive environment.

Vicarious Liability

The perpetrator of acts of discrimination, including harassment, will be held liable for their actions. It will also lead to the employer being held liable unless they can show that they took reasonable steps to prevent its occurrence. Vicarious liability requires that the worker has 'employee' status, and that the discriminatory act(s) occurred during the 'course of employment.'

Victimisation

This occurs where a person has claimed, intended to claim, or assisted a colleague with a claim under the discrimination laws, and they have suffered victimisation by the employer (such as treating them less favourably than they would treat others). SDA 1975 s 4 and RRA 1976 s 2 make such actions unlawful.

Chapter 4

Common Law

The common law governs wrongful dismissal, whereas unfair dismissal is governed by statute. The 'standard' rules of contract law apply to questions of the contract of employment.

Constructive Dismissal

An employer may fundamentally breach the contract of employment, but not dismiss the employee (an essential requirement for qualification to claim unfair dismissal). On the event of the breach, the employee may accept this repudiation, inform the employer of their reason for leaving, follow the necessary grievance procedure, and claim constructive dismissal (essentially an unfair dismissal claim).

Facts discovered after the dismissal

The employer need only have reasonable grounds of suspicion of an employeeÕs gross misconduct / negligence to have reason to dismiss. Between the dismissal and the case being heard at the tribunal the employer may have obtained firm evidence to support their previous suspicions. These are considered Ôafter discovered reasonsÕ and cannot make an unfair reason to dismiss fair, but will reduce the compensation awarded. Conversely, these reasons may be used in a wrongful dismissal claim to make an otherwise wrongful dismissal a fair dismissal.

Fixed-Term Contract

Contracts of employment may have a fixed duration. At common law a non-renewal will not amount to a dismissal, whereas under unfair dismissal legislation, non-renewal will amount to a dismissal, but this can be justified by the employer.

Frustration

Where the contract of employment becomes radically different from that agreed; or it subsequently becomes impossible to perform (and this is the fault of neither party) then the contract is brought to an end with no fault being attributed. An example of frustration may be where the employee becomes permanently ill and cannot continue with their job.

Gross Misconduct

This is a serious act of misconduct that would justify a summary dismissal such as fighting, theft and so on.

Gross Negligence

This is a serious act of negligence on the part of the worker that will justify a summary dismissal.

Resignation

This is where the worker provides notice of their intention to leave the employment. The requirement is that the worker adheres to the terms of the contract with regards to the notice period.

Specific Performance

An equitable remedy compelling compliance with the contract. This will not be awarded in contracts involving personal service (such as contracts of employment).

Summary Dismissal

This is a dismissal without notice (an immediate dismissal). The common law requires a notice period to be complied with unless the worker has committed a fundamental breach of the contract.

Wrongful Dismissal

A dismissal in breach of the contract will be considered a wrongful dismissal and will enable the worker to bring an action in damages for any losses incurred as a result of the breach.

Chapter 5

Automatically Unfair Reasons to Dismiss

Legislation including the Employment Rights Act 1996 (ERA 1996), Trade Union and Labour Relations (Consolidation) Act 1992, Rehabilitation of Offenders Act 1974, and Transfer of Undertakings (Protection of Employment) Regulations 2006 identify dismissals that will be considered 'automatically' unfair. As such, the requirement for one year's continuous service is not required. Examples include dismissals due to pregnancy, being a member of a trade union and so on.

Band of Reasonable Responses

When a tribunal considers whether an employer's response of dismissal is reasonable and fair they will follow the Employment Appeal Tribunal's judgment in Iceland Frozen Foods v Jones (1982) considering the employer's investigation; what was a reasonable band of responses; and whether the employer's action fell into this band.

Compensation

The compensatory element to an unfair dismissal claim involves a basic award, the compensatory award, and the additional award (where appropriate). Maximum awards (currently £60,600) exist to the tribunal's assessment of damages.

Disciplinary Procedures

Following the Employment Act 2002 the employer must follow the statutory dismissal procedures or the dismissal will be held, automatically, to be unfair. The three stages involve a letter informing the employee of the issue under dispute; a meeting; and the possibility of an appeal if the employee is dissatisfied with the outcome.

Effective Date of Termination

As a claim under unfair dismissal has to be lodged at the tribunal within three months of the effective date of termination (EDT) (and in redundancy claims it is six months), it is important that the EDT is correctly established. The ERA 1996 ss 97 and 145 identify how to determine from when the date takes effect.

Potentially Fair Reasons to Dismiss

ERA 1996 s 98 identifies six potentially fair reasons for an employer to dismiss an employee. These are conduct; capability / qualifications; redundancy; contravention of a statute; some other substantial reason; and retirement.

Re-engagement

If the previous job cannot be offered to the employee who has won an unfair dismissal claim (under reinstatement) because of, for example, redundancies, the tribunal can award re-engagement. This requires that the employee is given a job with the employer that is as close as possible to the role unfairly dismissed from in terms of seniority, pay, responsibility and so on.

Reinstatement

This is an award available to the tribunal following a finding of unfair dismissal. The employee will be asked if they wish to be reinstated to their previous position unless the option is untenable. The employer has no choice in the decision to make this award but can refuse. If so, the additional award reflects the employer's unreasonable refusal to comply.

Unfair Dismissal

The ERA 1996 provides that an employee who satisfies the qualification criteria may bring an action against the employer for reinstatement, re-engagement and compensation if they have been unfairly dismissed.

Chapter 6

Bumping

Where an employeeÕs job continues whilst there is a reduction elsewhere in the organization for the same number of persons to carry out the work.

Consultation

In the event of any planned redundancies or a transfer of the undertaking Trade Union and Labour Relations (Consolidation) Act 1992 and Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE 2006) require the employer to consult with the employees or their representatives. They must also consult over the reason for any redundancies being planned / made (UK Coal Mining Ltd v NUM (2007)).

Economic, Technical or Organisation Reason

Unilateral variation of an employee's contract is not permissible when there is a transfer of the undertaking under TUPE 2006. However, the law provides for an exception to this prohibition if there is an economic, technical or organisational (ETO) reason for the transfer. This further enables dismissals to be made on the transfer (which would otherwise be automatically unfair) for an ETO reason, but if the employer cannot establish an effective ETO defence, the dismissal will enable a redundancy claim (Gorictree Ltd v Jenkinson (1984)).

Redundancy

This is governed by the Employment Rights Act 1996 and includes situations where the employer is closing their business or where the employee becomes surplus to the business needs of the employer.

Reorganisation of the Business

An employer may wish to reorganise their business in light of changing needs; competition and so on. The law allows them to do so and even if there are substantial changes to the employee's terms and conditions of employment (such as changing the way the job is performed), if the job function remains the same then there will have been no redundancy (and hence no claim allowable from the employee). If the job itself has changed, then a redundancy claim may be made.

Transferee

The buyer (and new employer) who inherits the staff upon a transfer subject to TUPE.

Transferor

The seller (and former employer) from whom the staff are transferred in a transfer subject to TUPE.

Chapter 7

Economic Tort

Trade unions and those involved in actions against the employer (such as pickets) have been subject to prosecutions through the courts for instigating losses to businesses. Examples of economic torts applied against trade unions include inducement to breach contract; interference with contract; intimidation and so on.

Golden Formula

This is the 'formula' required to prevent trade unions or those involved in industrial action from being subject to legal action such as the tort of interference with contract. The protection exists where the person is acting 'in contemplation or furtherance of a trade dispute.'

Industrial Action

This is an all-encompassing term to refer to action by a workforce that is designed to interfere with an employers business. It includes action by workers including strikes; picketing; work-to-rule policies; overtime bans; and so on.

Injunction

This is a court order requiring or preventing an action. It can be used to prevent strike action that would adversely affect the employer's business.

Picketing

A picket is (generally) a non-violent protest at or near the employer's business which is designed to obtain support by dissuading others from crossing the picket line and hence to more effectively disrupt the business.

Private Nuisance

Some industrial action, such as picketing, may constitute a private nuisance that enables the affected party to claim for damages in tort against the tortfeasor. This may occur when picketing takes place on the employer's premises; when it blocks access routes to the employer's property; when the actions of the pickets exceed the bounds of peacefully obtaining or communicating information and so on.

Public Nuisance

When the behaviour of those taking part in industrial action obstructs the public in the exercise of their rights (such as passage along the highway), a claim may be made under public nuisance. Also, if certain criteria are met, an individual who suffers special damage over and above that suffered by the rest of the public may also make a claim.

Strike

This is a concerted action by the workforce to produce a stoppage in work. It requires ballots of members and for the action to be taken in 'good faith' to prevent legal action against the trade union organising the action.