British labour law

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Strikers gathering in Tyldesley in the 1926 General Strike in the U.K.
Strikers gathering in Tyldesley in the 1926 General Strike in the U.K.

British labour law is that body of law which regulates the rights, restrictions obligations of trade unions, workers and employers in Great Britain. During much of the nineteenth century the employment contract was based on the Master and Servant Act of 1823, designed to discipline employees and repress the 'combination' of workers in Trade unions.

Employment law in the United Kingdom has developed rapidly over the past forty years, due to a historically strong Trades Union movement and (since 1973) to the United Kingdom's membership of the European Union. In its current form, it is largely a creature of Statute, (Acts of the Parliament of the United Kingdom) rather than Common Law. Leading Employment Law Statutes include the Employment Rights Act 1996, the Employment Act 2002 and various legislative provisions outlawing discrimination on the grounds of sex, race, disability, sexual orientation, religion and, from 2006, age.

Unusually for UK legislation, the operation of the Employment Law system is broadly similar across the whole of the UK, although there are some differences in the common law between England & Wales and Scotland and, in addition, Northern Ireland has extra anti-discrimination legislation dealing with discrimination on the grounds of religion, community affiliation or political affiliation, which is quite distinct from the laws on religious discrimination in Great Britain.

Contents

[edit] Individual labour law

[edit] Contract of employment

See also: Employment contract

[edit] Wages

Main articles: National Minimum Wage Act 1998 and Tax credit

The National Minimum Wage Act 1998 was introduced after the 1997 election of the new Labour government, and currently stands at £5.52 per hour for adult workers. Though there are exceptions and considerable detail, this was the first legislative measure to set a simple floor for hourly pay nationwide. The Act established the Low Pay Commission to review and monitor the act and conditions of workers in low pay sectors. Responsibility for the enforcement of the minimum wage relies both on a policy of publicisation and Inland Revenue inspectors. Tax credits were another flagship policy of the government, designed to both combat poverty and 'incentivise' people to stay in work rather than rely on benefits. It is effectively a relief from income tax, where workers can show that they fall within a specific social class, either as a low paid worker, in a family, or supporting children.

[edit] Hours

"It's impossible to establish universal uniformity of hours without seriously injuring workers' interests!"
"It's impossible to establish universal uniformity of hours without seriously injuring workers' interests!"
See also: Working time and Work-life balance

[edit] Wrongful dismissal

Main article: Wrongful dismissal in United Kingdom

[edit] Unfair dismissal

Main article: Unfair dismissal

Under United Kingdom law, specifically section 95(1) of the Employment Rights Act 1996,[1] three events can constitute "Dismissal". These events are where:-

  • The employer terminates the employee's employment contract with or without notice;
  • a time-limited contract expires and is not renewed
  • The employer's conduct (e.g. where the employer fundamentally breaches the employee's employment contract) allows the employee to terminate the contract without notice. This is popularly known as "Constructive Dismissal".

Dismissal can be "fair" or "unfair". An employee who has been unfairly dismissed has a right to statutory compensation and further compensation for financial loss sustained in consequence of the dismissal. Such questions are dealt with by employment tribunals.

Only those employees who have a year's continuity of service or who are dismissed for an automatically unfair reason may bring a claim for unfair dismissal.

For a dismissal to be "fair", an employer must give at least one potentially fair reason for the dismissal. Reasons recognised as being fair are stated in s.98(2) Employment Rights Act 1996:

  • relates to the capability or qualifications of the employee for performing work of the kind which he was employed by the employer to do,
  • relates to the conduct of the employee,
  • is retirement of the employee,
  • is that the employee was redundant,
  • Some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held,
  • is that the employee could not continue to work in the position which he held without contravention (either on his part or on that of his employer) of a duty or restriction imposed by or under an enactment.

The claimant might dispute that the real reason was one of these and may, in particular, seek to argue that the reason related to a protected right. If they were to show that the reason did relate to a statutory protected right, rather than a potentially fair reason above, the dismissal would be automatically unfair. For instance, if an employee resigns due to not being paid their wages for a third week running, they may be able to succeed with a claim for automatically unfair constructive dismissal even without a year's service. A claimant dismissed in her first week of employment on grounds of pregnancy will almost certainly receive a substantial award. Where the respondent can show that such a potentially fair reason for dismissal did exist, however, the tribunal must then decide whether their action in dismissing fell within the range of responses that a reasonable employer might adopt. This is different from any opinion the tribunal might itself have about the fairness of a dismissal. There is no burden of proof on the question of fairness, it being a neutral question for the tribunal.

The employer must also follow the Statutory Dismissal Procedure (albeit with exceptions) which follows the standard three stage process i.e.:

  • Give a statement of grounds for action and invitation to meeting
  • Hold the meeting, confirm the decision in writing, note the right of appeal
  • If appealed, repeat step 2.

Failure to follow this process will result in an "automatically unfair dismissal". An Employment Tribunal will be required to make an award to the employee and increase this by a minimum of ten to fifty percent - irrespective of the "moral" arguments of their case. A dismissal for a pregnancy related reason is also an automatically unfair dismissal.

[edit] Anti-discrimination

Main article: Employment discrimination law in the United Kingdom

British anti-discrimination law does not form anything like a coherent code, and it lacks consistency.[2] It is made up of various pieces of legislation which sometimes cover employment issues only, and sometimes are part of a larger equality framework (for instance in education or public authority benefits). Recently the government passed the Equality Act 2006, but despite its title it did not attempt to codify, standardise or simplify the complex and Byzantine provisions of anti-discrimination law: this task has been left to the ongoing Discrimination Law Review."[3] The main outcome of the Act was the establishment of a new Equality and Human Rights Commission, subsuming specialist bodies from before. Its role is in research, promotion, raising awareness and enforcement of equality standards. For lawyers, the most important work of predecessors has been strategic litigation[4] (advising and funding cases which could significantly advance the law) and developing codes of best practice for employers to use. Around 20,000 discrimination cases are brought each year to UK tribunals.

Sex Discrimination Act 1975
Race Relations Act 1976
  • Employment Equality (Religion or Belief) Regulations 2003, SI 2003/1660 (in effect from 2 December 2003)
Disability Discrimination Act 1995
  • Disability Discrimination (Meaning of Disability) Regulations 1996, (SI 1996/1455) esp. rr.3-5
  • Guidance on Matters to be Taken into Account in Determining Questions Relating to the Definition of Disability from the Department for Work and Pensions website, esp Part II, para A1; "a substantial effect [under s.1(1) DDA 1995] is one which is more than "minor" or "trivial", and provides that tribunals ought to have regard, in deciding whether an impairment has such an effect to" things like time for relevant activities, the way they are done, impairments' cumulative effects and the effects of behaviour and environment. c.f.,
  • Goodwin v. Patent Office [1999] ICR 302, on a paranoid schizonphrenic
  • Vicary v. British Telecommunications plc [1999] IRLR 680, per Morison J
Employment Equality (Age) Regulations 2006
  • Employment Equality (Age) Regulations 2006, SI 2006/1031

[edit] Collective labour law

See also: Labour law

[edit] Trade unions

See also: Trade unions in the United Kingdom

[edit] Strikes

See also: Strike action and Picketing

[edit] Business restructuring

[edit] Workplace involvement

  • Works Councils
  • Information and consultation

[edit] Co-determination

See also: Codetermination and Industrial democracy

[edit] International labour law

See also: World Trade Organisation

[edit] European Union and Convention

Main articles: European Union law and ECHR

[edit] International Labour Organisation

Main article: International Labour Organisation

[edit] Labour law claims

[edit] Internal employer process

Recent legislation (particularly the Employment Act 2002) has stressed the importance of employees and employers resolving their differences between them prior to starting costly legal disputes. All employees have the right to raise formal grievances against their employer. If they do so, the employer should arrange for a meeting between the parties to discuss how to resolve their differences. If the employee remains dissatisfied, they can appeal the outcome of the first hearing. A failure on the employee's part to follow this procedure may preclude a claim for constructive dismissal, and a failure on the employer's part may lead to an increase in the compensation payable to the employee if he successfully pursues an employment tribunal claim. For more information on these rules.[6]

[edit] Employment tribunals

After the employer's own processes, such as disciplinary hearings and internal appeals, have been exhausted, employment law cases usually start by the aggrieved employee presenting a complaint to an Employment Tribunal (ET). These (as Industrial Tribunals) were set up under the 1964 Industrial Training Act, although they now have a substantially greater role. They have sometimes been referred to as industrial juries.

A full ET panel consists of a Chairman (whether a man or a woman, and who is an experienced solicitor or barrister with at least seven years post-qualification experience) and two "wing members" who are lay persons with skills and experience useful to the Tribunal in making a decision. One wing member will have a background representing employees (typically as a Trade Union officer) and the other will have a background in business (most often as a Personnel manager.) All members have equal voting rights, although if there is a two-person Tribunal (which the parties must agree to) it must include a Chairman and the Chairman has a second or casting vote if the Tribunal disagrees on a Judgment. Employment Tribunals are governed by Rules of Procedure, the current version are the Employment Tribunals (Rules of Procedure) Regulations 2004.[7]

Preliminary hearings to clarify issues in the case are a frequent part of the Tribunal process: these are typically dealt with by a Chairman sitting alone. Northern Ireland offers a Fair Employment Tribunal and an Industrial Tribunal. These are administered by OITFET - the Office of the Industrial Tribunal and the Fair Employment Tribunal.

[edit] Tribunal process

An Employment Tribunal will hear specific complaints from an aggrieved party being deprived of their rights, including (but not limited to) unfair dismissal, discrimination and unlawful deduction from wages. Almost all complaints are made by employees or workers, or former employees or workers. The website of the Employment Tribunals carries a jurisdiction list, explaining what complaints or references can be heard.

The process is almost always started when a Claim Form is presented to the Employment Tribunal. The Employment Tribunal will, if it accepts the Claim Form, then send it to the respondent (usually the former employer) and the respondent must submit a response form within twenty-eight days of the Claim Form being sent to it, or else the Tribunal may enter a default Judgment, and the respondent may not take part in proceedings. Any preliminary issues are dealt with at a case management conference or a pre-hearing review, a period of time is allowed for ACAS (GB) or the LRA (NI) to explore settlement options, although in cases involving discrimination, there is no limit on the involvement of conciliators. The Employment Tribunal may send out Orders to the parties which typically involve, in England and Wales, the exchange of documents, the production of an agreed bundle of documents and the exchange witness statements The order of a hearing will usually depend upon which party has to face the burden of proof. In complaints of Unfair Dismissal, if the employer admits the dismissal and the employee has more than one year's service at the time of dismissal, then the employer has to show that the dismissal was for a fair reason. The employer will therefore open the proceedings and give evidence first. In a discrimination claim, if the discrimination is not admitted, then the employee or worker will have to prove that discrimination occurs and will therefore open the case with evidence. Employment Tribunals are, however, entitled to be flexible and can vary this practice. If there is a combination of a dismissal and discrimination, the employer will usually open proceedings. Cases not resolved in their allocated time may be carried over to later date(s) for further consideration of the merits and (if necessary) a separate remedy hearing to discuss the award only. A summary judgment is given at the conclusion of the hearing, with the parties given a further 14 days to request (unless they ask on the day) 'extended' written reasons behind the judgement. In Scotland, it is customary for all decisions to be reserved and sent to the parties in writing.

[edit] Complaints to tribunal and time limits

A complaint of unfair dismissal can only be made where there has been a dismissal, so that there is no general right to complain of unfair treatment. Sometimes, the parties may disagree if an employee has been dismissed or has resigned. An employee may, however, complain at any time that they consider a statutory 'employment protection' right has been infringed. Where this takes place in connection with a dismissal an employee may combine this with their complaint against the dismissal.

Except where no qualifying time limit applies (as in the case of 'statutory rights') an employee needs to have worked for their employer for a least a year in order to make a complaint of unfair dismissal to an employment tribunal. This year does, however, include the statutory minimum period of notice that an employee is entitled to under the Employment Rights Act 1996, which in the case of an employee who has worked for more than one month but less than two years, is one week, so if an employee is dismissed within a week of completing a year's employment, the minimum notice is added, and the employee is carried "past the post" by the Employment Tribunal adding a notional week of service, unless the employer is entitled to dismiss without notice in response to a repudiatory breach of contract by the employee. A claimant may raise a complaint of discrimination without claiming dismissal or whilst also claiming dismissal but without one year of service. Claimants with less than one year's service may find their unfair dismissal claim is brought to a pre-hearing review where they are asked to explain why they feel they can bring a claim without a year's service, i.e. dismissal due to a public interest disclosure or for being a trade union member. Most tribunal offices however write to the claimant upon receipt of their claim form telling them that they have 14 days to show why their claim should be heard, otherwise the chairman will strike out the claim.

In certain circumstances, an employer's conduct could be such that an employee is entitled to resign in response and to regard that as an unfair "constructive" dismissal. Failure by an employer to extend a fixed term contract under the same terms as before can also be an instance where a claim for unfair dismissal may be made.

[edit] Preacceptance protocols

A complaint of unfair dismissal must be made to an employment tribunal within 3 months of the effective date of termination of the employment, unless it is not reasonably practicable to present the complaint. This time limit is strictly enforced, and even a day's delay means that the Employment Tribunal has no jurisdiction to hear the complaint. If the claim is of constructive dismissal, the complainant must first raise a grievance in writing with the employer before submitting a complaint.

If the substance of the complaint has been raised in writing with the employer either before or within 4 months of termination, then a claimant has 6 months from the effective date of termination to submit a complaint of Unfair Dismissal to an Employment Tribunal. If the substance of the complaint has not been raised either before or within 4 months of termination, the ET has no jurisdiction to hear a complaint of Unfair Dismissal. If a grievance is submitted by the end of the fourth month from termination, the claimant has a further two months within which to submit a complaint to an ET. If making a complaint of an express unfair dismissal, i.e. not a "forced resignation" the employee is not required to raise a grievance.

Most solicitors within the UK will submit all complaints on the claim form (ET1) within the three months from the effective date of termination (EDT) "to protect their client's position", with some of the claims being rejected and subjected to the preacceptance protocol. If the former employee has not raised a grievance, then the sending of the Claim Form to the employer can count as a grievance. The ET should reject the Claim Form and return it to the claimant. The claimant (or the claimant's advisers) then must wait 28 days and then simply resubmit the same claim with the grievance information filled in, which allows the tribunal to proceed to accept the preaccepted claims. Claim forms which are rejected entirely and subject to preacceptance in whole, are not notified to the respondent at all, as preacceptance is an administrative decision. Only if part of the claim is accepted with the rest subject to preacceptance, is the claim form served on the respondent with a blank response form which must be submitted to the ET within 28 days.

If a claimant has not submitted a complaint with the 3 month period, the tribunal will likely invite the claimant to write to the chair of the tribunal explaining why they feel the claim should be accepted out of time, within 14 days of the tribunal writing to the claimant. Those tribunals that do not pick this up will invite the respondent to address this in the response form (ET3) and a pre-hearing review will most likely be arranged to discuss the same.

The pre-acceptance process introduced by the Employment Act 2002 has been heavily criticised as complex and unwieldy. The Department of Trade and Industry has issued a consultation paper seeking views on a repeal of the statutory dispute resolution procedures, and is currently considering the responses submitted.

[edit] Tribunal awards

If a claimant is successful in a claim for unfair dismissal then they can be given a "compensatory award". There is no statutory restriction on what may be awarded under this heading, except that it must be "just and equitable in all the circumstances". In the main a compensatory award reflects past loss of earnings, together with a sum for future loss of earnings. A notional sum is often awarded for "loss of statutory rights" (For example: The need to work a further 12 months to re-acquire the right to complain of unfair dismissal) . The compensatory award is limited by a statutory cap (from 1/2/2005 this was £56,800). This "cap" is increased annually in line with inflation (from 1/2/2006 it was £58,400 and from 1/2/2007 it is £60,600). The statutory cap does not apply to claims for discrimination, nor does it apply to unlawful deductions from wages.

Where the unfairness in a dismissal is procedural only, a respondent may be able to claim that the employee's compensation should be limited to the period the respondent would have needed to dismiss the employee fairly in any event - as when making assessments in selecting particular employees for redundancy, for instance. This is known as a "Polkey" reduction. An award may also be reduced because of contributory fault on behalf of a claimant, i.e. the claimant's conduct broke down the employment relationship to some degree or disrupted the grievance or disciplinary proceedings. In some cases this may be as much as 100%, so that an employee might take home nothing. An employee is entitled to a declaration that s/he has been unfairly dismissed, and this can be some solace if compensation is low. Where, however, there has been a failure to comply with the statutory dismissal and disciplinary (or grievance) procedures (as set out in the Employment Act 2002), and the dismissal is "automatically" unfair, the Employment Tribunal will increase the award made by between 10% and 50%. (There is currently a review underway to determine whether or not to revoke the statutory procedures and/or the impact of failing to comply with them).

Compensation for discrimination claims is not subject to statutory limits however and, in the case of highly paid employees, can be substantial. Compensation is awarded in discrimination cases under a distinct head known as "Injury to feelings." A number of leading cases, principally the "Vento" case, provide guidance to the Tribunal on how to determine the value of an injury to feelings award. There are three bands: the lower band (£500-£5000), the middle band (£5,000-£15,000) and the upper band (£15,000-£25,000). Occasionally, the value of a case can substantially exceed these guidelines, for example the case of Sergeant Gurpal Verdi, where he successfully pursued the Metroploitan Police for a sum in excess of £200,000. It must be recognised that these were extraordinary circumstances, however. Again, a failure by the employer to comply with the statutory grievance procedure will result in an uplift to the award of between 10% and 50%, whilst a failure by the employee will result in a corresponding reduction.

In addition, the tribunal is unable to award more than £25,000 in respect of a claim for breach of contract, as the law imposes a cap on the amount of the compensation payable. Claimants with large contractual claims should therefore carefully consider whether it would be more appropriate to issue proceedings in the High Court or County Court.

[edit] Recoupment

Some awards are subject to the Recoupment Regulations, which allows the Department for Work and Pensions (DWP) to recoup (recover) any income support or job seekers allowance paid to the claimant during the time after the EDT and before the tribunal hearing. The DWP should issue a Recoupment Notice detailing how much is to be repaid by the respondent to the DWP, with the balance due to the claimant. This can only be applied if there is a Tribunal Judgment, so it gives the parties reason to settle before a hearing. If the employee has had a large amount of benefits, the employer will have to pay that to the DWP and the employee will get nothing. Sometimes the parties agree to split the difference in a settlement, saving the employer money and giving the employee money which otherwise would be paid to the DWP.

[edit] Legal costs

Whilst the tribunal has the power to order a party to proceedings to pay the costs of the other side, in practice this is not regularly done. It is perceived as being contrary to public policy to create an environment in which claimants hesitate to issue a claim for fear of financial penalties.

This has a huge impact on the conduct of tribunal cases. If a party is legally represented, their costs of fighting the case from start to finish would be in the region of £5,000-£6,000 for even a relatively simple unfair dismissal claim. This means that many cases with little or no merit are settled for small sums because to fight and win is more expensive than to settle. Conversely, legally represented claimants often settle for less than they would be entitled to in order to avoid their costs.

[edit] ACAS and LRA settlements

See also: Acas

Given the Tribunal's costs regime, only about a third of cases issued in the ET ever reach a full hearing: most are either withdrawn or settled. Crucial to this process are ACAS officers, who are routinely assigned to each new claim. They act as "middlemen," passing offers of settlement between the parties on a "without prejudice" (off the record) basis.

Settlements agreed out of the employment tribunal hearing via ACAS in the UK or the LRA in NI are legally binding once verbally agreed. ACAS settlements are effected on form COT3 whilst LRA settlements are usually effected on form CO3 or CO3(C). Settlements that are not honoured are enforceable in the local county court or sheriff's office with the defendant liable also for the claimant's legal fees (usually £30[citation needed]).

[edit] Reviews and appeals

Either party can ask an employment tribunal to review its own decision and, independently, may appeal the decision to a higher court, the Employment Appeal Tribunal (EAT) on one of three grounds (1) an error in law, (2) a finding of fact not supported by evidence, or (3) a finding of perversity. Strict time limits apply in both cases.

The decisions of the EAT are treated as binding precedents by employment tribunals. The EAT is staffed by Judges and lay members, who come from both sides of industry as in the Employment Tribunals. The composition of the EAT will mirror the composition of the Employment Tribunal that took the decision appealed against, although the EAT can have four lay members in exceptional cases. The Judges are usually English and Welsh Circuit Judges or High Court Judges, including a President, who is a High Court Judge sitting permanently in the EAT, and at least one Scottish Judge of the Court of Session. There is one EAT for Great Britain, which leads to English Judges sitting in Scotland, a different jurisdiction, and vice versa.

An EAT decision may be appealed to the Court of Appeal (in England and Wales) or the Inner House of the Court of Session (in Scotland), and after that to the House of Lords. At any stage in the process of hearing a claim or appeals therefrom, a question on the interpretation of European law may be referred to the European Court of Justice.

[edit] See also

[edit] Notes

  1. ^ The Employment Rights Act 1996.
  2. ^ Collins et al (2005) 218-9
  3. ^ O’Cinneide, “The Commission for Equality and Human Rights: A New Institution for New and Uncertain Times” (2007) Industrial Law Journal 141
  4. ^ This has been in decline recently; in 2005 the Commission for Racial Equality only funded three cases, CRE, Annual Report 2005 (London: CRE, 2006) whereas up to 1984 it was funding one fifth of all claims.
  5. ^ The ECtHR's press release
  6. ^ see statutory dispute resolution procedure
  7. ^ Employment Tribunals (Rules of Procedure) Regulations 2004

[edit] Further reading

  • Hugh Collins, Keith Ewing, Aileen McColgan, Labour Law, Text, Cases and Materials (2005) Hart Publishing ISBN-10: 1841133620
  • Simon Deakin, Gillian Morris, Labour Law (2004) Hart Publishing
  • Lord Wedderburn, The Worker and the Law (1986) Sweet and Maxwell ISBN-10: 0421370602

[edit] External links

  • Weaver v NATFHE In the Weaver v NATFHE race discrimination case, an Industrial Tribunal decided that a trade union’s principal obligation in race harassment cases is to protect the tenure of the accused employee. A member of a trade union making a complaint of workplace harassment against a fellow employee was not entitled to union advice and assistance, irrespective of the merit of the case, because the employee complained against could lose his job. The Employment Appeal Tribunal upheld the decision and extended the decision to cover complaints of sexist harassment. Also known as the Bournville College Racial Harassment Issue.
  • [1] DTi Employment Legislation - PL712 - Meaning of dismissal
  • [2] DTi Employment Legislation - PL712 - Making a complaint
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