United Kingdom labour law

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In the UK, the total working population is 32 million people, there is 7.7% unemployment, and 73.4% without union membership. The median income is £25,498, and the average working week is 41.4 hours.

United Kingdom labour law involves the legal relationship between workers, employers and trade unions. People at work in the UK benefit from a minimum charter of employment rights.[1] This includes the right to a minimum wage of £6.08 under the National Minimum Wage Act 1998, 28 paid holidays, and no longer working hours than one consents to under the Working Time Regulations 1998, the right to leave for child care, and the right to request flexible working patterns under the Employment Rights Act 1996. The Equality Act 2010 ensures people are judged by the content of their character, and not regulated characteristics such as race, gender, sexuality, beliefs, disabilities or age. The Employment Rights Act 1996 adds that, unless the employee repudiates the relationship, before a dismissal every employer must give reasonable notice after one month of work, backed by a sufficiently fair reason after one year of work, and with a redundancy payment after two years. If a company is taken over the Transfer of Undertakings (Protection of Employment) Regulations 2006 state that employees' terms cannot be worsened, including to the point of dismissal, without a good economic, technical or organisational reason.

Beyond individual rights, workers have the ability to participate in decisions about how their enterprise is managed through a growing set of statutory rights and the traditional models of collective bargaining. Gradually, the number of "John Lewis" style participatory institutions at work have grown, often mirroring European standards. Workers have the right to codetermine how their occupational pensions are managed under the Pensions Act 2004, and how health and safety policies in the workplace are formulated under the Health and Safety at Work Act 1974. In larger firms with over 50 staff, workers must be informed and consulted about major economic developments, particularly about business difficulties. This is happens through a steadily increasing number of works councils, which usually must be requested by staff. The UK has not yet implemented earlier proposals, or followed the majority practice in the EU to require that employees have a vote for members' of their company's board of directors. Collective bargaining between trade unions and company management remains the UK's primary participatory model. Collective agreements are backed up by the threat of a strike which is lawful if "in contemplation or furtherance of a trade dispute". Since the early 1980s, industrial action has steadily decreased, as has membership of trade unions. The Trade Union and Labour Relations (Consolidation) Act 1992 sets out rules for the constitution of trade unions, members' rights, the conditions to be fulfilled before strike action may be taken and the legal status of collective agreements.Contents [hide]

1 History

2 Employment rights and duties

2.1 Scope of protection

2.2 Contract of employment

2.3 Health and safety

2.4 Wages and working time

2.5 Child care and time off

2.6 Occupational pensions

2.7 Income tax and insurance

2.8 Civil liberties at work

3 Workplace participation

3.1 Trade unions

3.2 Participation

3.3 Information and consultation

3.4 Collective bargaining

3.5 Industrial action

4 Equality

4.1 Discrimination

4.2 Justification

4.3 Disability and positive action

4.4 Atypical work

4.5 Free movement and immigration

5 Job security

5.1 Wrongful dismissal

5.2 Unfair dismissal

5.3 Redundancy

5.4 Business transfers and insolvency

5.5 Unemployment

6 Enforcement and tribunals

7 International labour law

8 See also

9 Notes

10 References

11 External links

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History

Main article: History of labour law in the United Kingdom

Wat Tyler, leader of the Peasants' Revolt is killed in front of King Richard II.

"It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms. The masters, being fewer in number, can combine much more easily; and the law, besides, authorizes, or at least does not prohibit their combinations, while it prohibits those of the workmen. We have no acts of parliament against combining to lower the price of work; but many against combining to raise it. In all such disputes the masters can hold out much longer. A landlord, a farmer, a master manufacturer, a merchant, though they did not employ a single workman, could generally live a year or two upon the stocks which they have already acquired. Many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment. In the long run the workman may be as necessary to his master as his master is to him; but the necessity is not so immediate."

A Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776) Book I, ch 8

Labour law in its modern form is primarily a creation of the last three decades of the 20th century. However, as a system of regulating the employment relationship, labour law has existed since people worked. In feudal England, the first significant labour laws followed the Black Death. Given the shortage of workers and consequent price rises the Ordinance of Labourers 1349 and the Statute of Labourers 1351 attempted to suppress sources of wage inflation by banning workers organisation, creating offences for any able-bodied person that did not work, and fixing wages at pre-plague levels. Ultimately this led to the Peasants' Revolt of 1381, which was in turn suppressed and followed up with the Statute of Cambridge 1388, which banned workers from moving around the country. Yet conditions were improving as serfdom was breaking down. One sign was the beginning of the more enlightened Truck Acts, dating from 1464, that required that workers be paid in cash and not kind. In 1772 slavery was declared to be illegal in R v Knowles, ex parte Somersett,[2] and the subsequent Slave Trade Act 1807 and Slavery Abolition Act 1833 enforced prohibition throughout the British Empire.[3] The turn into the nineteenth century coincided with the start of the massive boom in production. Gradually people's relationship to their employers moved from one of status - formal subordination and deference - to contract whereby people were formally free to choose their work.[4] However, freedom of contract did not, as the economist Adam Smith observed, change a worker's factual dependency on employers.

Men leaving the pit, before the start of the Great War. The average life expectancy of a Liverpool mineworker was 30 years in 1900.

As its height, the businesses and corporations of Britain's industrial revolution organised half the world's production across a third of the globe's surface and a quarter of its population. Joint Stock Companies, building railways, canals and factories, manufacturing household goods, connecting telegraphs, distributing coal, formed the backbone of the laissez faire model of commerce. Industrialisation also meant greater urbanisation, and inevitably miserable conditions in the factories. The Factory Acts dating from 1803 required minimum standards on hours and conditions of working children. But people were also attempting to organise more formally. Initially, trade unions were suppressed, particularly following the French Revolution of 1787 under the Combination Act 1799. The Master and Servant Act 1823 and subsequent updates stipulated that all workmen were subject to criminal penalties for disobedience, and calling for strikes was punished as an "aggravated" breach of contract. But then the position was slowly liberalised and through the Trade Union Act 1871 and the Conspiracy, and Protection of Property Act 1875 trade unions were legitimised.[5] Toward the turn of the century, in Mogul Steamship Co Ltd v McGregor, Gow & Co,[6] the House of Lords emphasised that businesses should be free to organise into trade associations in the same way that employees organised into unions. However, with growing unrest and industrial action the House of Lords changed its mind. At the turn of the century he notorious judgment of Taff Vale Railway Co v Amalgamated Society of Railway Servants,[7] made unions liable in economic tort for the costs of industrial action. Although a combination of employers in a company could dismiss employees without notice, a combination of employees in a trade union were punished for withdrawing their labour. The case led trade unions to form a Labour Representation Committee, which then became the UK Labour Party, to lobby for the reversal of the law. After the United Kingdom general election, 1906 a coalition government composed of the new Labour Party and the Liberals, among whom David Lloyd George and Winston Churchill were rising stars, quickly passed the Trade Disputes Act 1906. This laid down the essential principle of collective labour law that any strike "in contemplation or furtherance of a trade dispute" is immune from civil law sanctions. Accompanying this, the government embarked on widespread social reform. The Old Age Pensions Act 1908 provided pensions for retirees. The Trade Boards Act 1909 created industrial panels to fix minimum wages. And the National Insurance Act 1911 levied a fee to insure people got benefits in the event of unemployment.

The Versailles Treaty that established the International Labour Organisation in 1919.

During World War One the brutality of the Western Front demanded the participation of every available person and resource. As women took over traditional "men's jobs" the Suffragette movement gained momentum. Before the war's conclusion, the Representation of the People Act 1918 gave universal suffrage to men over age 21 and women over 28. A new beginning was promised by the victors to their people. The Versailles Treaty created the International Labour Organisation to draw up common standards between countries, for as it said, "peace can be established only if it is based on social justice", and echoed the US Clayton Act 1914 in pronouncing that "labour should not be regarded merely as a commodity or an article of commerce".[8] But the international system remained disjointed as the United States Congress withheld its approval to join the League of Nations. Within the UK the postwar settlement was to make a home fit for heroes. Whitley Councils extended the Trade Boards Act 1909 system to Joint Industrial Councils that encouraged (non legally binding) fair wage agreements,[9] while the Ministry of Labour actively organised and advised the growth of trade unions.[10] This was based on a theory of collective bargaining, agreement or action, advocated by Sidney Webb and Beatrice Webb in Industrial Democracy to remedy the inequality of bargaining power of workers.[11] Without legal force behind collective agreements, the law remained in a state of collective laissez faire, encouraging voluntarism for agreement and dispute settlement between industrial partners. The 1920s and 1930s were economically volatile. In 1926 a General Strike against coal miners' pay cuts paralysed the country, though was broken by Winston Churchill, by then the Chancellor of the Exchequer. The Labour Party had formed Parliamentary majorities in 1924 and 1929, but achieved little in the way of reform, particularly after the onset of the Great Depression.

By the Second World War and the Labour government of Clement Attlee, trade union membership was well established and collective agreements covered over 80 per cent of the workforce. With the British Empire in rapid dissolution, immigration from Commonwealth countries, and record levels of female workplace participation the character of Britain's workforce was changing fast. Though the common law was sometimes comparatively progressive,[12] sometimes not,[13] the first statutes to prohibit discrimination focused on gender and race emerged in the 1960s as the Civil Rights Act was passed in the United States. Discrimination in employment (as in consumer or public service access) was formally prohibited on grounds of race in 1965,[14] gender in 1975, disability in 1995, sexual orientation and religion in 2003 and age in 2006.[15] A complicated and inconsistent jamboree of Acts and statutory instruments was placed into a comprehensive code in the Equality Act 2010. Much discrimination law is now applicable throughout the European Union, to which the UK acceded in 1972. Although labour laws in the early European Treaties and case law were scant,[16] the Social Chapter of the Maastricht Treaty brought employment rights squarely into the EU's jurisprudence. Meanwhile, starting from the Contracts of Employment Act 1963, workers gained a growing list of minimum statutory rights, such as the right to reasonable notice before a fair dismissal and a redundancy payment.[17] Labour governments through the 1960s and 1970s were troubled by reform of the unwieldy trade union system. Despite producing reports such as In Place of Strife and the Report of the committee of inquiry on industrial democracy[18] which would have made unions accountable to their members created more direct workplace participation, reform did not take place.

The UK miners' strike (1984–1985) was a bitter confrontation between the Thatcher government and coal mine workers.

From 1979, a new Conservative government took a strongly sceptical policy to all forms of labour law and regulation. During the 1980s ten major Acts gradually reduced the autonomy of trade unions and the legality of industrial action.[19] Reforms to the internal structure of unions mandated that representatives be elected and a ballot is taken before a strike, that no worker could strike in sympathetic secondary action with workers with a different employer, and that employers could not run a closed shop system of requiring all workers to join the recognised union. The wage councils were dismantled. A public campaign against the merits of unions paralleled the decline of membership and collective agreement coverage to under 40 per cent. In addition, the government opted out of the EU Social Chapter in the Maastricht Treaty. In 1997 the new Labour government brought the UK into the EU's Social Chapter, which has served as the source for most reform in UK law since that time. Domestic led reform was minimal. The National Minimum Wage Act 1998 established a country-wide minimum wage, but did not attempt to reinvigorate the Wage Board system. The Employment Relations Act 1999 introduced a 60 page procedure requiring employers to compulsorily recognise and bargain with a union holding support among workers, though union membership remained at a level steadily declining below 30 per cent.

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Employment rights and duties

All UK workers enjoy a minimal charter of employment rights,[20] but compared to the EU average have longer working hours, more unequal pay, less time off for child care, and are less likely to have an occupational pension.

See also: European labour law, German labour law, French labour law, Australian labour law, Canadian labour law, Indian labour law, and US labor law

UK labour law's primary concern, particularly under the Employment Rights Act 1996, is to ensure that every working person has a minimum charter of rights in their workplace.[21] Traditionally it draws a divide between self employed people, who are free to contract for any terms they wish, and employees, whose employers are responsible for complying with labour laws. UK courts and statutes, however, use a number of different terms for different rights, including "worker", "employee", "jobholder", "apprentice" or someone with an "employment relation". A "worker" is entitled to a minimum wage of £5.92 per hour, 28 statutory minimum days of holiday[22] and a formal right to opt out of working over 48 hours a week, enrolment in a pension plan, not to mention the right to equal treatment and anti-discrimination that also apply to consumers and public services.[23] An "employee" has all those rights, and also a safe system of work, the right to a written contract of employment, time off for pregnancy or child care, reasonable notice before a fair dismissal and a redundancy payment, and the duty to contribute to the National Insurance fund and pay income tax.[24] The scope of the terms "worker", "employee", and others, are more or less left to the courts to construe according to the context of its use in a statute.[25] English courts view an employment contract as involving a relation of mutual trust and confidence,[26] which allows them to develop and enlarge the remedies available for workers and employers alike when one side acts out of bad faith.

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Scope of protection[show]

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Workplace protection cases

See also: Worker, Employee, and Inequality of bargaining power

As yet, the UK has not consolidated a single statutory definition of the people to whom employment rights and duties apply. Statute and case law, both domestic and European, use 2 main definitions (employee and worker), and approximately 3 other minor types (jobholder, apprentice, and someone with an employment relation). The EU does have one consolidated definition of a ‘worker’, which is someone who has a contract for work in return for a wage, and also stands as the more vulnerable party to the contract.[27] This reflects the kernel of classical labour law theory, that an employment contract is one infused with “inequality of bargaining power”,[28] and stands as a justification for mandating additional terms to what might otherwise be agreed under a system of total freedom of contract.

Sidney and Beatrice Webb, in their book Industrial Democracy argued that because workers' inequality of bargaining power meant they could not contract for it themselves, law should create a "national minimum" of workplace rights, with collective labour law to secure a living wage.

In the UK an ‘employee’ has all available rights (all the rights of a ‘worker’ but also child care, retirement and job security rights). The meaning is explicitly left to the common law under the main statute, the Employment Rights Act 1996 section 230, and has developed according to the classical 19th century contrast between a contract ‘of service’ and one ‘for services’. The government may also pass secondary legislation to include specific groups of people into the ‘employee’ category.[29] While the classical test was that an employee was subject to a sufficient degree of ‘control’,[30] new forms of work where people were had greater autonomy outside the factory to choose how to do their jobs, meant that, particularly from the mid-20th century,[31] additional tests of employment were developed. Multiple factors, including how much one could said to be ‘integrated’ into the business,[32] or whether one metaphorically wore the ‘badge’ of the organisation, were looked at, with a focus, it was said on ‘economic reality’ and form over substance. Multiple relevant factors would include how much the employee was ‘controlled’, if they owned their tools, if they had the chance of profit and bore the risk of loss.[33] But in the late 1970s and 1980s, some courts began to speak of a new test of ‘mutuality of obligation’. One view of this was merely that workers exchanged work for a wage.[34] Another view stated that the employment relationship had to be one where there was an ongoing obligation to offer and accept work.[35] This led to cases where employers, typically of people on low wages and little legal understanding, pleaded that they had only hired a person on a casual basis and thus should not be entitled to the major job security rights. However the leading case, Autoclenz Ltd v Belcher decided by a unanimous Supreme Court in 2011, brought the definition of an employment contract in line with that in used in the EU. Confirming that employment contracts are one of a specific type, and separate from commercial agreements,[36] Lord Clarke held that an exchange of work for a wage was essential, that what the private "true" intentions of the parties wanted was not as important as the reality, and that bargains took place in the context of an unequal bargaining relation. As he put it,

... the relative bargaining power of the parties must be taken into account in deciding whether the terms of any written agreement in truth represent what was agreed and the true agreement will often have to be gleaned from all the circumstances of the case, of which the written agreement is only a part. This may be described as a purposive approach to the problem. If so, I am content with that description.

This meant that a group of car valeters, although described in their contracts as being self employed, with a right to substitute another person to do their work, and professed to have no obligation to undertake work, were entitled to a minimum wage and paid leave. The contract terms could be disregarded because they did not represent the reality of the situation.[37] In addition, a ‘worker’ is defined in ERA 1996 section 230 as someone with a contract of employment or who personally performs work and is not a client or a customer. This concept has greater scope, and protects more people, than does the term ‘employee’. This class of person is entitled to a safe system of work, a minimum wage and limits on working time, as well as discrimination and trade union rights, but not job security, child care and retirement rights. This concept thus reaches up to protect people who are quasi-self employed professionals, albeit not so vulnerable, such as a home cleaner, or music teacher who visits student homes, or a taxi cab driver wearing a firm’s logo.

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Contract of employment[show]

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Employment contract cases

See also: Employment contract in English law, English contract law, and Employment contract

Once a person's work contract is categorised, the courts have specific rules for determining, beyond the statutory minimum charter of rights, what are its terms and conditions. Analogous rules for incorporation of terms, and implication terms exist as in the ordinary law of contract, however in Gisda Cyf v Barratt, Lord Kerr emphasised that this process of construction is one that must be “intellectually segregated” from the general law of contract, because of the relation of dependency an employee has.[38] In this case, Ms Barratt was told her employment was terminated in a letter that she opened 3 days after its arrival. When, 3 months and 2 days after arrival, she lodged an unfair dismissal claim, the employer argued it was time barred on the ground that in ordinary contract law one is bound by a notice when a reasonable person would have read a message. The Supreme Court held that Ms Barratt was in time for a claim because she was only bound by the notice when she actually read it. The applicable in employment was different, given the purpose of employment law to protect the employee. From formation to termination, employment contracts are to be construed in the context of statutory protection of dependent workers.

Every employee is entitled to a written statement of their employment contract,[39] which will usually incorporate the workplace collective agreement, and must follow, or be better than the minimum statutory rights.

The terms of employment are all those things promised to an employee when work begins, so long as they do not contravene statutory minimum rights. In addition, terms can be incorporated by reasonable notice, for instance by referring to a staff handbook in a written employment agreement,[40] or even in a document in a filing cabinet next to the staff handbook.[41] While without express wording they are presumed not binding between the union and employer,[42] a collective agreement may give rise to individual rights. The test applied by the courts is to ask loosely whether its terms are ‘apt’ for incorporation, and not statements of ‘policy’ or ‘aspiration’. Where the collective agreement’s words are clear, a "last in first out" rule was held to potentially qualify, but another clause purporting to censure compulsory redundancies was held to sound like it was binding ‘in honour’ only.[43]

In addition to statutory rights, expressly agreed terms and incorporated terms, the contractual hallmark of the employment relation is the series of standardised implied terms (or terms implied in law) that accompany it. In addition to individualised implied terms that the courts construe to reflect the reasonable expectations of the parties,[44] the courts have long held that employees are owed additional obligations, such as a safe system of work[45] and payment of wages even when the employer has no work to offer.[46] Reflecting more recent priorities, employers have also been recognised to have a duty to inform their employees of their workplace pension rights,[47] although they have stopped short of requiring employers to give advice on qualifying for workplace disability benefits.[48] The key implied term, however, is the duty of good faith, or “mutual trust and confidence”. This is a flexible concept that is applied in a broad variety of circumstances leading to remedies in damages or an injunction, such as to require employers do not act in an authoritarian manner,[49] call employees names behind their back,[50] treat workers unequally when upgrading pay,[51] run the company as a front for international crime,[52] or exercise discretion to award a bonus capriciously.[53] There is tension among judges about the extent to which the core implied term of mutual trust and confidence can be 'contracted out of', with the House of Lords having held that the parties are "free" to do so, while others approach the question as a matter of construction of the agreement which is within exclusive judicial competence to define.[54]

The second, and older hallmark of the employment contract is that employees are bound to follow their employers’ instructions while at work, so long as that does not contravene statute or their agreed terms. Every employment relation leaves the employer with a residue of discretion, historically expressed as the ‘master-servant’ relationship. Today, in practice, this leaves the employer with the ability to vary the terms of work in accordance with business need.[55] The courts have allowed this to continue, so long as it does not contradict a contract’s express terms, which always require an employee’s consent,[56] or renegotiation of a collective agreement.[57] However, it has also been held that employers may insert ‘flexibility clauses’ allowing them to reserve the right to vary any contract term.[58] The limits of the courts’ tolerance of such practices are evident if they touch procedures for accessing justice,[59] or potentially if they would contravene the duty of mutual trust and confidence.

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Health and safety[show]

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Health and safety sources

Main articles: Occupational safety and health, Health and Safety at Work etc. Act 1974, and English tort law, Insurance in the United Kingdom, and National Health Service

One of the principle terms that accompanies the employment relationship is that the employer will provide a "safe system of work". As the industrial revolution developed, accidents from a hazardous working environment were a front line target for labour legislation, as a series of Factories Acts, from 1802, required minimum standards in workplace cleanliness, ventilation, fencing machinery, not to mention restrictions on child labour and limits to the working day. These Acts typically targeted particular kinds of workplaces, such as mines, or textile mills, before the more generalised approach took hold now seen in the Factories Act 1961. That applies to any workplace where an article is made or changed, or animals are kept and slaughtered.[60] The Employer's Liability (Defective Equipment) Act 1969 made employers automatically liable for equipment with defects supplied by third parties. Because isolated employees lack the technical skill, time, training to litigate, such regulation's primary line of enforcement was through inspectors or agencies before matters went to court. Today the Health and Safety at Work etc. Act 1974, enforced by the Health and Safety Executive, is the main law. The HSE can delegate enforcement to local authorities, whose inspectors have the power to investigate and require changes to workplace systems. In addition, HSWA 1974 section 2 foresees that employees will set up their own workplace committees, elected by the employees and with the power to codetermine health and safety matters with management. Spelling out the general duties found in HSWA 1974, are a set of health and safety regulations, which must also stay in line with the European-wide harmonised requirements of the Health and Safety Directive.[61]

19th century regulation limited child labour and working time in factories and mines, but employers were not always liable for accidents until 1937.

While the modern scheme of legislation and regulation engenders a comprehensive approach to enforcement and worker participation for health and safety matters, the common law remains relevant for getting civil law compensation, and some limits on an employers' duties. Although the legislative provisions are not automatic, breach of a statutory duty is evidence that a civil law duty has been breached. Injured employees can generally claim for loss of income, and relatives or dependents recover small sums to reflect distress.[62] In principle, employers are vicariously liable for all actions of people acting for them in the "course of employment" whenever their actions have a "close connection" to the job, and even if it breaks an employer's rules.[63] Only if an employee is on a "frolic of his own", and the employer cannot be said to have placed him in a position to cause harm, will the employer have a defence. Under the Employers’ Liability (Compulsory Insurance) Act 1969, employers must take out insurance for all injury costs, and insurance companies are precluded by law and practice from suing their employees to recover costs unless there is fraud.[64] However, until the mid 20th century there were a series of major limitations. First, until 1937, if an employee was injured by a co-worker, the doctrine of common employment, the employer could only be liable if it was shown they were personally liable by carelessness in selecting staff.[65] The House of Lords changed this in Wilsons & Clyde Coal Co Ltd v English,[66] holding an employer had a non-delegable duty of care for all employees. Lord Wright held there were "fundamental obligations of a contract of employment... for which employers are absolutely responsible". The second old restriction was that, until 1891, volenti non fit injuria meant workers were assumed to voluntarily accept the dangers of their work by agreeing to their contracts of employment.[67] Only if an employee callously ignores clear directions of the employer will he be taken to have voluntarily assumed the risk, like in ICI Ltd v Shatwell[68] where an experience quarry shotfirer said he "could not be bothered" to wait 10 minutes before setting of a detonation, and blew up his brother. Third, even if a worker was slightly at fault, until 1945 such contributory negligence precluded the whole of the claim. Now the court will only reduce damages by the amount the employee contributed to their own injury.[69] The fourth defence available to employers, which still exists, is ex turpi causa non oritur actio, that if the employee was engaged in any illegal activity they may not claim compensation for injuries. In Hewison v Meridian Shipping Services Pte Ltd[70] Mr Hewison concealed his epilepsy so that he could work offshore was technically guilty of illegally attempting to gain a pecuniary advantage by deception under the Theft Act 1968 section 16. After being struck in the head by a defective gangplank he suffered worse fits than before, but the Court of Appeal, by a majority, held his illegal act precluded any compensation.

The common law of tort also remains particularly relevant for the type of liability an employer has where there is scientific uncertainty about the cause of an injury. In asbestos disease cases, a worker may have been employed with at a number of jobs where he was exposed to asbestos, but his injury cannot with certainty be traced to any one. Although he may be able to sue all of them, a number may have already gone insolvent. In Fairchild v Glenhaven Funeral Services Ltd[71] the House of Lords held that if any employer had materially increase the risk of harm to the worker, they could would be jointly and severally liable and could be sued for the full sum, leaving it up to them to seek contribution from others and thus the risk of other businesses' insolvency. For a brief period, in Barker v Corus[72] the House of Lords then decided that employers would only be liable on a proportionate basis, thus throwing the risk of employers' insolvency back onto workers. Immediately Parliament passed the Compensation Act 2006 section 3 to reverse the decision on its facts. It has also been held in Chandler v Cape plc,[73] in 2011, that even though a subsidiary company is the direct employer of a worker, a parent company will owe a duty of care. Thus shareholders may not be able to hide behind the corporate veil to escape their obligations for the health and safety of the workforce.

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Wages and working time

See also: Wage regulation, Working time in the United Kingdom, National Minimum Wage Act 1998, Tax credit, Working time, and Work-life balance[show]

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Sources on wages

Economic theory suggests an excessive minimum wage may raise unemployment as it fixes a price above demand for labour, although a reasonable minimum wage enhances growth because when poorer workers have more to spend it stimulates effective aggregate demand for goods and services.

Since 1998, the United Kingdom has fixed a national minimum wage,[74] and sets outer limits on working time for virtually all workers. Direct wage and working time regulation is a comparatively recent phenomenon, as it was traditionally left to collective bargaining to achieve "a fair day's wage for a fair day's work". The Truck Acts were the earliest wage regulations, requiring workment to be paid in money, and not kind. Now, the Employment Rights Act 1996 section 13 stipulates that employers can only dock employees’ wages (e.g. for missing stock) if the employee consented to deductions in writing. This, however, does not cover industrial action,[75] so following ancient common law on part performance of work, employees who refused to 3 out of 37 hours a week in minor workplace disobendience, had their pay cut for the full 37.[76] From the Trade Boards Act 1909,[77] the UK had set minimum wages according to the specific needs of different sectors of work. But this system was eroded through the 1980s and eventually repealed in 1993.[78] To bring the United Kingdom back into compliance with basic standards in international law,[79] the National Minimum Wage Act 1998 was introduced. The minimum wage takes effect in every worker's contract. Workers do not need to show "mutuality of obligation" or any other requirement except that they personally perform work for a wage and is not a client.[80] One curious exclusion, however, is a pupil barrister who in Edmonds v Lawson QC[81] was held to not be "working" but be "conscientious in receiving instruction". The minimum wage rate is reset annually after guidance from the Low Pay Commission, and on 1 October 2011 it stood at £6.08 for over 21 year olds, £4.98 for 18-20 year olds, £3.68 for under 18 year olds finished with compulsory education and £2.60 for under 19 year olds or first year apprentices.[82] The National Minimum Wage Regulations 1999[83] spell out the details of how the minimum wage should be calculated. Total pay received is divided by the hours actually worked over an average "pay reference period" of one month.[84] This definition has given rise to litigation in cases where a worker can stay at home but must answer phone calls, is allowed to rest or sleep during shifts, or must make herself available "on call" over a long period. Generally speaking, it is irrelevant whether one is at home or not. If a worker is given sleeping facilities and is not awake, the minimum wage need not be paid.[85] And if a worker is "on call", then this time still counts at work if the worker is bound to stay within the vicinity of the workplace.[86] However, an exception in regulation 28 allows an employer to agree with a worker what the hours worked actually are, if they would ordinarily be unmeasured. In Walton v Independent Living Organisation Ltd[87] a worker who cared for a young epileptic lady had to be on call 24 hours a day, 3 days a week, but could do her own activities outside tasks such as going shopping, making meals and cleaning. Her company made an agreement with her that her tasks took 6 hours and 50 minutes a day, which resulted in her £31.40 allowance meeting the minimum wage. Certain deductions may be made including £4.51 per day for any accommodation the employer provides, though extra bills, such as for electricity, should not ordinarily be charged.[88] The minimum wage can be enforced individually through an ERA 1996 section 13 claim for a shortfall of wages in a Tribunal.[89] A worker may not be subjected to any detriment for enquiring, or requesting records or complaining about it.[90] However, because many workers will not understand how to do this, or have the resources, a primary enforcement mechanism is through inspections and compliance notices issued by Her Majesty's Revenue and Customs.[91] A remedy of up to 80 times the minimum wage is available to the worker and HMRC can enforce a penalty of twice the minimum wage per worker per day.[92][show]

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Sources on working time

May Day, a traditional Spring fair synonymous with International Workers' Day, has been a bank holiday since 1978, is one of 8 public holidays, and 28 days of total holiday every UK worker has under the Working Time Directive.

The Working Time Regulations 1998 set limits on working time, and implement the basic requirements of the Working Time Directive.[93] Its most concrete measure is, again following basic rights in international law,[94] mandating a minimum period of 28 days, or four full weeks, in paid holidays for all workers each year (though this includes public holidays).[95] There is no qualifying period for this, or any other working time right,[96] because beyond the importance of the law in seeking to strike a balance between work and life, sufficient periods of rest and leisure are seen as a critical element of workers health and safety.[97] Nor is it possible for an employer to give a worker "rolled up holiday pay", for instance an additional 12.5% in a wage bill, in lieu of taking actual holidays. The employer must make sure the worker does in fact take paid holidays, and if the worker has not done so and the job terminates, the employer must give an additional payment for the unused holiday entitlement.[98] Where a person works at night, she may only do 8 hours in any 24 hour period on average, or simply 8 hours at most is dangerous.[99] Moreover every worker must receive at least 11 consecutive hours of rest in a 24 hour period, and in every day workers must have at least a 20 minute break in any 6 hour period.[100] The most controversial and widely known provisions in the working time laws, however, concern the maximum working week. Under the Directive, this is 48 hours. Although people in the United Kingdom work the longest hours on average in Europe, and among the longest in the world, highest work related stress and absentee rates, successive UK governments have remained sceptical about the maximum working week's merit. The maximum does not apply to anyone who is self-employed or who can set their own hours of work, as it is aimed to protect workers who possess less bargaining power and autonomy over the way they do their jobs.[101] Nevertheless, all UK workers may "opt out" of the 48 hour week by individually signing an opt out form.[102] Theoretically a worker may always change her mind after having opted out, without suffering any detriment.[103] If the employer has not got the worker to opt out, then the 48 hour week is not a rigid maximum, but is taken as an average over 17 weeks.[104] The same rules have developed as for the minimum wage, regarding "on call" time, so that people with jobs involving long periods where they must make themselves available, but not necessarily be active, are regarded as working if they are bound to remain awake and close to their workplace.[105] This created a significant problem for junior doctors, where the culture has typically been in all European countries that very long hours are expected. The European Court of Justice's decision in Landeshauptstadt Kiel v Jaegar[106] that junior doctors' on call time was working time led a number of countries to exercise the same "opt out" derogation as the UK, albeit limited to medical practice. The Health and Safety Executive is the UK body charged with enforcing the working time laws, though it has purposively taken a "light touch" approach to enforcement.

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Child care and time off

Main article: Child care in the United Kingdom[show]

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Sources on child care

Rights to leave from work to care for children have important consequences for career advancement and gender equality. The major right, which goes beyond the minimum set by the Pregnant Workers Directive,[107] is a mix of paid and unpaid maternity leave. A contract of employment can always be and often is more generous. Otherwise, the minimum right to paid maternity leave arises for women employees after 26 weeks work, though the right to unpaid leave has no qualifying period.[108] Under the Maternity and Parental Leave, etc Regulations 1999[109] mothers must take compulsory leave at the time of child birth for two weeks. After that comes a right to 6 weeks' leave paid at 90 per cent of ordinary salary. Then is 20 weeks leave paid at a rate set by statute, which was £123.06 per week in 2010. This has to be at least the same level as statutory sick pay.[110] Then she may take additional but unpaid maternity leave for another 26 weeks.[111] She must tell the employer 15 weeks before the date of the expected birth, in writing if the employer requests it. Except insofar as they administer the payments, employers do not bear most costs of maternity leave as they are reimbursed by the government according to their size and national insurance contributions.[112] Along with different forms of leave, mothers have the right to not suffer any professional detriment or dismissal while they are absent, and should be able to return to the same job after 26 weeks, or another suitable job after 52 weeks.[113]

UK employers are reimbursed by the government when employees take paid leave for child care.[114]

For fathers, the position is less generous. To redress the balance between how much of child raising each partner bears, under the Additional Paternity Leave Regulations 2010[115] it will be possible for a women to transfer up to 26 weeks of her leave entitlements to her male partner. Otherwise the Paternity and Adoption Leave Regulations 2002 state that a man is entitled to a minimum of just 2 weeks off, at the statutory rate of pay.[116] Both parents may also benefit from "parental leave" provisions in the MPLR 1999, passed after the Parental Leave Directive.[117] Until a child turns 5, or a disabled child turns 18, parents can take up to 13 weeks unpaid leave.[118] Unless there is another collective agreement in place, employees should give 21 days notice, no more than 4 weeks in a year, at least 1 week at a time, and the employer can postpone the leave for 6 months if business would be unduly disrupted.[119] Otherwise similar provisions apply on employees not suffering detriment or dismissal and having a right to their previous jobs back.[120] "Emergency leave" is, under ERA 1996 section 57A, available for employees to deal with birth or a child's issues at school, as well as other emergencies such as dependents' illness or death, so long as the employee informs the employer as soon as reasonably practicable. In Qua v John Ford Morrison Solicitors[121] Cox J emphasised that there is no requirement to deliver daily updates.

Beyond the period around child birth, after EA 2002, employees gained the right to request flexible working patterns for the purpose of caring for a child under the age of 6, or a disabled child under age 18. The right to make the request is contained in ERA 1996 section 80F, and despite the fact that employers may decline the request, statistics show that under the obligation to consider, employers grant requests in 80 per cent of cases. An employee must make the request in writing, the employer must reply in writing, and can only decline the request on the basis of a correct fact assessment,[122] and within 8 grounds listed in section 80G, which generally concern business and organisational necessity. In Commotion Ltd v Rutty[123] a toy warehouse assistant was refused a reduction to part time work because, according to the manager, everyone needed to work full time to maintain "team spirit". The Employment Appeal Tribunal ruled that because "team spirit" was not one of the legitimate grounds for refusal, Mrs Rutty should get compensation, which is set at a maximum of 8 weeks' pay.[124]

Instituto nazionale della providenza social v Bruno [2010] IRLR 890, part time workers and occupational pensions

Apprenticeships, Skills, Children and Learning Act 2009 (c 22)

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Occupational pensions[show]

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Sources on pensions

Main article: Pensions in the United Kingdom

Occupational pension schemes are one of the three pillars of pension provision in the UK, in addition to the state pension administered by the government based on National Insurance contributions, and private, or "personal pensions" which individuals may arrange for themselves.[125] After the Pensions Act 2008, and due to begin in October 2012, every "jobholder" (defined as a worker, age 16 to 75, with wages between £5,035 and £33,540[126]) must be automatically enrolled by the employer in an occupational pension scheme, unless they choose to opt out.[127] In order to reduce the administrative complexity, a new non-departmental trust fund called the National Employment Savings Trust is established as a cheaper public competitor, able to take advantage of significant economies of scale, compared to existing fund manager options on the private pension market.[128] Employers will be required to set aside their jobholders' wages at an agreed percentage, and negotiate how much they will give in contributions, if anything. Outside this "public option", it has typically been up to the employer often in negotiation with the trade union, to establish a trust fund for pension schemes, however there has not yet been any legal duty on employers to do so, leaving most people with nothing but the state pension.[129] However, when there is a pension in place as a result of a term in the jobholder's employment contract, the employer is under a duty to inform their staff about how to make the best of their pension rights.[130] Moreover, workers must be treated equally, on grounds of gender or otherwise, in their pension entitlements.[131] Where occupational pensions exist, the employer typically acts as a trustee and creates a board of trustees, or contracts with a trust corporation, to oversee the management of the workforce's pension savings. Following the Goode Report of 1993 on pensions, it has been a requirement that the pension trust members have the right to "codetermine" the pension management by having a vote to elect a minimum of one third of the trustees, or corporation directors, either directly or through their trade union.[132] Often member nominated trustees are one half of the scheme, and the Secretary of State has the power by regulation, as yet unused, to increase the minimum up to one half.[133] Trustees are charged with the duty to manage the fund in the best interests of the beneficiaries, in a way that reflects their preferences,[134] by investing the savings in company shares, bonds, real estate or other financial products.

Every jobholder will from 2012 be automatically enrolled in an occupational pension, and can codetermine how their retirement savings are invested and their voice in company shares is used.[135]

While there are minimum standards for worker participation in the management of any occupational pension, the terms of people's pensions may be very different particularly regarding who bears the risk of workers having a long life after retirement. Increasingly, "defined benefit" plans (or "final salary" schemes) where the employer pays a fixed sum however long the former worker lives and thus averages out the risk between different workers, have been scrapped. The contrasting system is a "defined contribution" plan, where individual workers simply retire with a pension that is as much as the contributions they made, meaning that if they live longer than they plan, they run the risk of being left with only the state pension. Some schemes combine elements of each. The rate of decline in defined benefit plans has been rate consistent with the decline in trade union membership, and increasing mobility of the labour market. Defined benefit plans also attract more regulation, as many employers have not necessarily actually kept aside money from "contributions" shown workers' pay slips, since the employer simply pays the final salary out when the time comes. This problem, revealed in early 1990s scandals like the Robert Maxwell scandal, led to the introduction of requirements for minimum funding, and also taking out insurance in the event that a company goes insolvent, and the pension fund is in deficit.[136] This system is overseen by the Pensions Regulator,[137] which also takes general complaints about the activities of trustees or management. In addition, there exists a Pensions Ombudsman who may hear complaints and take informal action against employers who fall short of their statutory duties.[138]

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Income tax and insurance

See also: Taxation in the United Kingdom, National Insurance, and Tax credit

UK tax history and Taxation in medieval England

Income Tax Act 1803 to fund the Napoleonic Wars, repealed and then reintroduced by Robert Peel in the Income Tax Act 1842

National Insurance Fund, whereby people pay for their (1) state pensions (2) unemployment insurance (3) redundancy protection (4) contributions to health care.

Beveridge Report

IR35, disguised employment

Income Tax (Earnings and Pensions) Act 2003 and Social Security Contributions (Intermediaries) Regulations 2000, SI 2000/727

Income Tax Act 2007, mostly replacing Income and Corporation Taxes Act 1988

Income Tax (Earnings and Pensions) Act 2003

Income Tax (Trading and Other Income) Act 2005

Tax return (United Kingdom) include the P35 form filled out by employers for the employees' tax. In the PAYE series, a P60 form from employers proving tax was paid at the end of the year, P45 a form when employment ceases recording tax up to the end of employment. P11D is a form for employers to disclose expenses and benefits given to employees earning over £8500 that do not go through the payroll. Each person has an individual Tax code (PAYE). Similar abbreviations for forms are used for self-assessment and tax credits, eg S100 and TC600.

Finance Act 2010 section 2 and Schedule 1, introducing the temporary bank payroll tax

Working tax credit and Child tax credit, to be replaced by the Universal credit in 2016

Child benefit, a weekly payment of over £20 a week for the first child, and over £13 a week for each additional child. Introduced by the Family Allowances Act 1945, followed by the Family Allowances and National Insurance Act 1952 and the Family Allowances Act and National Insurance Act 1956

Pension tax simplification in 2004, simplified the taxes applied to pensions. It abandoned the retirement annuity plan that had existed from the Income and Corporation Taxes Act 1970 s 226 contracts and ICTA 1988 s 620

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Civil liberties at work

See also: Civil liberties in the United Kingdom

Common law and mutual trust and confidence

Human Rights Act 1998 ss 3-6

ECHR article 8, right to privacy

Halford v United Kingdom [1997] IRLR 471

Smith and Grady v United Kingdom [1999] IRLR 734

Kara v United Kingdom (1998) No. 36528/97 ECHR

ECHR article 10, right to freedom of expression

Pay v United Kingdom [2008] ECHR 1007, [2009] IRLR 139

Glasenapp v Germany (1987) 9 EHRR 25

Vogt v Germany (1996) 21 EHRR 205

Ahmed v United Kingdom (1998) EHRR 29

Grigoriades v Greece (1997) 27 EHRR 464

ECHR article 6, right to a fair trial

R (Wright) v Secretary of State for Health [2009] UKHL 3, [2009] 2 WLR 267

ECHR Prot 1, art 1, right to property

Nerva v United Kingdom [1996] IRLR 461; (2003) 36 EHRR 4, [2002] IRLR 815

The right with the greatest direct impact for labour law is the right to freedom of association under ECHR article 11.

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Workplace participation

One of the earliest episodes of strike action, the Peasants' Revolt of 1381 was met with strict regulation of medieval workers' wages.

See also: UK company law and Labour law

While an enforceable charter of employment rights guarantee a minimum of workplace decency, like a minimum wage, the most important right to achieve conditions beyond the minimum, like a living wage, is the right to participate in a firm's management. Increasingly the UK is legalising and codifying its systems of collective labour relations, with rights to information, consultation (on redundancies, business restructuring and management generally) and participation (so far, in pension management and health and safety committees) in workplace and company affairs. Trade unions, organised largely by contract, have the aim of improving their members' terms and conditions.[139] They must follow a democratic internal structure, and members cannot be excluded without good reason or discriminated against by their employers. Although information, consultation and participation rights are not bound to a trade union, especially where none exists in the workplace, unions often organise the workforce's collective voice. Where statutory rights to participation and consultation run out, collective bargaining by unions is the most potent form of influence workers can have against their employers, as a counterweight in companies to the interests of directors and shareholders. Since 1999, unions can follow a complex statutory procedure which will eventually mandate that employers recognise and bargain with them. Collective agreements will typically set a transparent scale of pay and working hours, or terms like pensions, training and workplace facilities, with a system to update terms and conditions as the business environment changes. The ability to bargain rests on the final resort of industrial action. Just as management, typically with the objective of increasing profits, has the power to make workers redundant,[140] so an official trade union is protected by law in its ability to call a strike. Industrial action must always be "in contemplation or furtherance of a trade dispute".[141] Since the 1980s, there have also been strict requirements to ballot the workforce and warn the employer before, to not call sympathy strikes, and to take only passive action in picketing or protests.

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Trade unions[show]

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Sources on trade unions

See also: Trade unions in the United Kingdom and Voluntary association

Much like corporations,[142] until the Combination Act 1825 trade unions were regarded as criminal, or at best as quasi-legal organisations, subjected to the restraint of trade doctrine, until the Trade Union Act 1871. This Act abolished common law restrictions, but took an abstentionist stance to unions internal affairs. The structure of the unions were based in contract and the rights of members depended on being able to show some proprietary interest to be specifically enforced.[143] This meant that the express terms of the union rule book can, like any contract, be supplemented with implied terms by the courts as strictly necessary to reflect the reasonable expectations of the parties,[144] for instance, by implying the Electoral Reform Society's guidance to say what happens in a tie break situation during an election when the union rules are silent.[145] If there are irregular occurrences in the affairs of the union, for instance if negligence or mismanagement is alleged and a majority could vote on the issue to forgive them, then members have no individual rights to contest executive decision making.[146] However, if a union's leadership acts ultra vires, beyond its powers set out in the union constitution, if the alleged wrongdoers are in control, if a special supra-majority procedure is flouted, or a member's personal right is broken, the members may bring a derivative claim in court to sue or restrain the executive members. So in Edwards v Halliwell[147] a decision of the executive committee of the National Union of Vehicle Builders to increase membership fees, which were set in the constitution and required a ⅔ majority vote, was able to be restrained by a claim from individual members because this touched both a personal right under the constitution and flouted a special procedure. The principle that the common law enforced a union's own rules, and that unions were free to arrange their affairs is reflected in the ILO Freedom of Association Convention, and article 11 of the European Convention on Human Rights, subject to the requirement that regulations "necessary in a democratic society" may be imposed. Unions must have an executive body and that executive must, under TULRCA 1992 sections 46 to 56, be elected at least every five years, directly in a secret, equal postal vote of union members, and if irregularities are alleged, complaints can be taken up by the Trades Union Certification Officer.

The ETUC, headed by Wanja Lundby-Wedin until May 2011, is the union federation for 37 European countries, the counterpart for the TUC of the UK and the ITUC internationally.

Members rights against the union: exclusion, disputes and political donations

Bridlington Principles and TUC, Disputes Principles and Procedures (2000)

ASLEF v United Kingdom [2007] ECHR 184

Esterman v NALGO [1974] ICR 625

Members rights to not suffer detriment from the employer

Gayle v Sandwell and West Birmingham Hospitals NHS Trust [2011] EWCA Civ 924, Mummery LJ, a tribunal had not erred in finding that a worker given a final written warning which was not for the sole purpose of a penalty for trade union activities, was not a detriment under TULRCA 1992 s 146.

Members rights to time off for recognised union duties

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Participation[show]

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Workplace participation sources

See also: Codetermination, UK company law, and Works council

Direct participation rights in UK companies operate on a limited legal scope. In 19 out of 27 EU member states employees have participation rights, including the election of members of the boards of directors, and binding votes on decisions about individual employment rights, like dismissals, working time and social facilities or accommodation.[148] At board level, UK company law allows for any desired measure of employee participation, including alongside shareholders in the general meeting and on the board of directors. Although shareholders typically are the only ones with votes in the company's general meeting to elect the board of directors, the Companies Act 2006 section 168 defines only "members" as those with participation rights. Under section 112 a "member" is anybody who initially subscribes their name to the company memorandum, or is later entered on the members' register, and is not required to have contributed money as opposed to, for instance, work. Moreover under the European Company Statute, businesses that reincorporate as a Societas Europaea may opt to follow the Directive for employee involvement.[149] An SE may have a two-tiered board, as in German companies, where shareholders and employees elect a supervisory board that in turn appoints a management board responsible for day to day running of the company. Or an SE can have a one tiered board, as every UK company, and employees and shareholders may elect board members in the desired proportion.[150] An "SE" can have no fewer employee participation rights than what existed before, but for a UK company, there is likely to have been no participation in any case. In the 1977 Report of the committee of inquiry on industrial democracy[151] the Government proposed, in line with the new German Codetermination Act 1976, and mirroring an EU Draft Fifth Company Law Directive, that the board of directors should have an equal number of representatives elected by employees as there were for shareholders. But reform stalled, and was abandoned after the 1979 election.[152] Despite successful businesses like the John Lewis Partnership and Waitrose that are wholly managed and owned by the workforce, voluntary granting of participation is rare. Many businesses run employee share schemes, particularly for highly paid employees, however such shares seldom compose more than a small percentage of capital in the company, and these investments entail heavy risks for workers, given the lack of diversification.

There are, however, direct participation rights in two key areas of workplace issues, albeit not dismissals or working time. First, the Health and Safety at Work Act 1974 section 2 requires that workers set up health and safety committees, which codetermine the workplace policy on health and safety issues. Second, the Pensions Act 2004 sections 241-243 state employees must be able to elect a minimum of one third of the management of their occupational schemes, as "member nominated trustees". This gives employees the ability, in principle to have a voice on how their pension money is invested in company shares, and also how the voting power attached to company shares is used. Outside these areas, however, participation at work is limited to information, consultation, collective bargaining and industrial action.

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Information and consultation[show]

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Information and consultation sources

Formal, and individual information and consultation rights have been a recent development, mostly deriving from EU law. Domestically, the Companies Act 2006 requires in section 419 that companies issue an annual report, which must include details of how, under section 172, the business has fulfilled its duties to have regard to employees, people working down supply chains, the community, environment and long term performance. Such information can often be cursory, but may be useful for employees, and unions, in the use of their participation rights, or during collective bargaining. Consultation can sometimes encourage a change in employers' policy, even if employees' views are ultimately often ignored.

Under the Information and Consultation of Employees Regulations 2004,[153] companies with more than fifty employees must inform their workforce about major economic issues in their enterprise, and should consult about major changes, particularly redundancies.

European Works Council Directive 2009/38/EC

S Laulom, 'The Flawed Revision of the European Works Council Directive (2010) 39(2) Industrial Law Journal 202-208.

Stewart v Moray Council [2006] IRLR 592.

Boulting v Association of Cinematograph, Television and Allied Technicians [1963] 2 QB 606

Joint Industrial Council

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Collective bargaining

Otto Kahn-Freund (1990-1979) was a Berlin Labour Court judge who fled the Nazi regime in 1933, shaped collective bargaining for the mid-20th century, as a model of "collective laissez-faire".

ECHR article 11, freedom of association

R (NUJ) v CAC [2005] IRLR 28 (CA)

R (Kwik-Fit) v CAC [2002] EWCA Civ 512

Fullerton Petitioner [2001] IRLR 572

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Industrial action

See also: Industrial action in the United Kingdom, Strike action, and Picketing (protest)

Economic torts

Trade Disputes Act 1906

Right to strike

TULRCA 1992 s 244, meaning of trade dispute

Secondary action

Picketing

Balloting

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Equality

Main article: UK employment equality law

The US civil rights movement, which led to the Civil Rights Act 1964 was the first modern equality law for the workplace, from which the Equality Act 2010 takes inspiration.

The principle that people should be judged according to the content of their character, and not another irrelevant status, is fundamental to UK and EU law. The Equality Act 2010 reaches beyond employment, into access to private and public services, but in the field of work it largely reflects three major EU Equality Directives and case law,[154] which like former UK legislation were particularly inspired by the US Civil Rights Act 1964. As it stands, the UK requires equal treatment based on ten major grounds. Beyond the absolute prohibition of discrimination against trade union members,[155] the EA 2010 combats discrimination based on gender (including pregnancy), race, sexuality (including marital status), belief, disability and age.[156] This is supplemented by milder regulation in statutory instruments of discrimination against people in atypical work, who are often minorities, with part time, fixed term or agency work status.[157] This ‘negative’ and fixed definition of equality stipulates which characteristics are generally to be disregarded in employment. It does not set out what positive characteristics are relevant, like unfair dismissal rules, or catch 'any other status', like the European Convention.[158] Unequal treatment on other grounds (eg one's football team) will only be unlawful if one can claim unfair dismissal. A worker has generally to show that they were treated directly less favourably than another person who does not have their trait (eg sexuality or race), or that actions an employer applies to everyone have an indirectly disparate impact on people with their trait. Workers are also entitled to not suffer harassment at work, and if they bring a claim they should not be victimised, or suffer any other disadvantage for trying. Direct discrimination can be justified if the employer shows a status is a "genuine occupational requirement". Indirect discrimination can be justified if there is “objective justification” for the rule, generally based on business necessity. Age discrimination is seen as a special case, so it may always be objectively justified. Equal pay between men and women has also, historically, been treated separately in law and follows differently worded legal requirements. The law on disability goes further than other categories by placing positive duties on employers to make reasonable adjustments to help disabled people. While UK and EU law presently only allow promotion of underrepresented groups if a candidate is equally qualified, there is an ongoing debate whether more “positive action” measures should be implemented, particularly to tackle the gender pay gap. If discrimination is proven, it counts as automatically unfair conduct in a tribunal hearing, and entitles a worker to quit and or claim damages.

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Discrimination[show]

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Direct discrimination cases

See also: Workplace bullying and Harassment in the United Kingdom

UK and EU law divide discrimination into direct and indirect forms. Direct discrimination means treating a person of a protected trait less favourably than a comparable person who does not share that trait.[159] This is an objective test, so that it is irrelevant what motive the employer had. Even if it was “positive” discrimination, in the sense that the purpose was to help an underprivileged group, this is still unlawful.[160] The claimant's trait merely has to be the reason for the unfavourable treatment.[161] An appropriate comparator is one who is the same in all respects except for the relevant trait, which is claimed as the ground for discrimination. For instance in Shamoon v Chief Constable of the Royal Ulster Constabulary[162] a chief inspector claimed that she was dismissed because the police force was sexist, and pointed to male chief inspectors who had not been treated unfavourably. The House of Lords overturned a Tribunal finding of sex discrimination because Ms Shamoon had had complaints made about her appraisal duties, and her chosen comparators had none.[163] Generally there is, however, no need to point to an actual comparator, so a claimant can allege they were treated less favourably than a hypothetical person who does not share their trait would have been. The burden of proof is explicitly regulated so that claimants merely need to show a set of facts from which a reasonable tribunal could conclude there was discrimination, and need not show an intention to discriminate.[164] Because the law aims to eliminate the mindset and culture of discrimination, it is irrelevant whether the person who was targeted was themselves a person with a protected characteristic, so that people who associate with or are perceived to possess a protected characteristic are protected too. In Coleman v Attridge Law a lady with a disabled child was abused by her employer for taking time off to care for the child. Even though Ms Coleman was not disabled, she could claim disability discrimination.[165] And in English v Sanderson Blinds Ltd, a man who was from Brighton and went to boarding school was teased for being gay. Even though he was married with children, he successfully claimed discrimination because of sexuality.[166] An instruction by an employer to discriminate against customers or anyone else also violates the law.[167]

Under the Equality Act 2006, the Equality and Human Rights Commission, with offices near City Hall, London, promotes equality by intervening in discrimination cases, providing guidance and making investigations into workplace practices.[show]

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Harassment cases

[show]

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Victimisation cases

Originally a sub-category of direct discrimination, harassment is now an independent tort which requires no comparator. The Protection from Harassment Act 1997, and now the Equality Act 2010 sections 26 and 40, define harassment as where a person's dignity is violated, or the person is subject to an intimidating, hostile, degrading, humiliating or offensive environment. An employer will be liable for its own conduct, but also conduct of employees, or customers if this happens on 2 or more occasions and the employer could be reasonably expected to have intervened. In a straightforwardly unpleasant case, Majrowski v Guy's and St Thomas’s NHS Trust[168] a gay man was ostracised and bossed about by his supervisor from the very start of his work as a clinical audit co-ordinator. The House of Lords held the laws create a statutory tort, for which (unless a statute says otherwise) an employer is automatically vicariously liable. Under the Equality Act 2010 section 27, an employer must also ensure that once a complaint is brought by a worker, even if it proves ultimately to be unfounded, that worker should not be victimised. This means the worker should not be subject to anything that a reasonable person would perceive as deterimental. In St Helen’s MBC v Derbyshire[169] the House of Lords held a council victimised female staff who were pursuing an equal pay claim when it sent letters warning (without much factual basis) that if the claim went ahead, the council would be forced to cut school dinners and make redundancies. A reasonable person would have regarded this as a detriment. By contrast, in Chief Constable of West Yorkshire Police v Khan,[170] where a sergeant with a pending race discrimination claim was denied a reference by the employer that he was suing, it was held this could not be considered victimisation because the Constabulary was only seeking to protect its legitimate interests and not prejudice its own future case in the discrimination hearings.[show]

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Indirect discrimination cases

"Indirect" discrimination means an employer, without an objective justification, applies a neutral rule to all employees, but it puts one group at a particular disadvantage.[171] The particular disadvantage must be related to the claimant's protected characteristic specifically, and not to a non-essential feature of it. In Ladele v Islington LBC a woman who refused to register gay civil partners, because she said her Christianity made her conclude homosexuality was wrong, was dismissed for not carrying out her duties. And in Eweida v British Airways plc a lady who wished to wear a cross claimed that BA's instruction to remove it was indirectly discriminatory against Christians. Both claims failed because it was held that neither antipathy towards homosexuals, nor crucifix jewellery are essential parts of the Christian religion.[172] The question of particular disadvantage also typically relies on evidence of statistical impact between groups. For instance in Bilka-Kaufhaus GmbH v Weber von Hartz[173] an employer set up pensions only for full time workers, and not for part time workers. But 72 per cent of part time workers were women. So Frau Weber von Hartz was able to show that this rule put her, and women generally, at a particular disadvantage, and it was up to the employer to show there was an objective justification. Statistics might be presented in a misleading way (eg a measure could affect twice as many women as men, but that is only because there is 2 women and 1 man affected in a workforce of 100). Accordingly the correct approach is to show how many people in the affected workforce group are put at an advantage, and then if there is a statistically significant number of people with a protected characteristic who are not advantaged, there must be an objective justification for the practice. In R (Seymour-Smith) v Secretary of State for Employment[174] the UK government's former rules on unfair dismissal were alleged to be discriminatory. Between 1985 and 1999, the government had made the law so that people had to work for 2 years before they qualified for unfair dismissal (as opposed to 1 year presently), and this meant that there was a 4 to 8 per cent disparity between the number of men and women who qualified on dismissal for a tribunal claim. Following ECJ guidance, the House of Lords held by a majority that this was a large enough disparity in coverage, which required justification by the government.

TFEU art 157, equal pay and types of comparator

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Justification[show]

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Sources on justifying discrimination

Harassment and victimisation cannot be justified, but in principle there are exceptions or justifications for all forms of direct and indirect discrimination. Apart from direct age discrimination which can also be objectively justified, the general rule for direct discrimination, elaborated in EA 2010 Schedule 9,[175] is that an employer may be exempt if it can show that having a worker fit a particular description is a "genuine occupational requirement", so that the otherwise discriminatory practice pursues a legitimate aim and is applied proportionately. The test is stringent, so in Etam plc v Rowan[176] it was held that when a man was turned down for a job at a woman's clothing store, the excuse that a man should not operate women's change rooms was rejected. The shift allocation could have been changed around easily. Controversially, the European Court of Justice has repeatedly said that it is within a member state's margin of discretion to say being male is a genuine occupational requirement for work in the military.[177] This was even so, in Sirdar v The Army Board & Secretary of State for Defence[178] for a lady who applied to work as a chef in the Royal Marines, because the policy on "interoperability" meant every member had to be capable of combat.[179] Cases involving religion are subject to a special provision, so that if a job's functions require adherence to an organisation's ethos, the organisation has an exemption from direct discrimination. In an action for judicial review of the legislation,[180] Richards J rejected that a faith school would be exempt in any way, rather than an actual religious establishment like a church. Even there, it was rejected that a gay person could be dismissed from a job as a cleaner or bookshop worker, if that was incompatible with the religious "ethos", because the ethos would not be a genuine requirement to carry out the job.

Indirect discrimination, after a neutral practice puts a member of a group at a particular disadvantage, is not made out if there is an "objective justification". In most cases, this will be a justification based on business necessity.[181] The ECJ, mostly in cases concerning sex discrimination under TFEU art 157, has held that an employer must show a "real need" for the practice that has disparate impact that is "unrelated" to the protected characteristic,[182] should not involve "generalisations" rather than reasons specific to the workers in question,[183] and budgetary considerations alone are not to be considered an "aim".[184] Many of these judgments concerned employers who paid part time staff fewer benefits than full time staff, and given the particular disadvantage this caused women it was hard to justify. In equal pay claims based on gender, instead of "objective justification", the old terminology still used is that there must be a "genuine material factor", found in EA 2010 section 69. Despite different headings, the same underlying concepts are present as for objective justification, with the need to show a "legitimate aim" and that action is "proportionate" to such an aim. In Clay Cross (Quarry Services) Ltd v Fletcher[185] Lord Denning MR held that an employer could not justify paying a young man a higher wage than an older lady (who in fact trained him) on the basis that this was what the employer had to pay given the state of the job market. However, in Rainey v Greater Glasgow Health Board[186] the House of Lords held that women NHS prosthetists who were paid 40% less than men prosthetists in contracted through private practices had no claim, as it was shown necessary to attract their services. This was an organisational necessity.[187] In Enderby v Frenchay Health Authority[188] the ECJ held that although a speech therapist being paid less than male counterparts could not be justified only on the ground that this resulted from different collective agreements, if a disparity came from market forces, this was an objective justification. It has, however, been emphasised that the legislation's purpose is to achieve equal pay, and not fair wages. So in Strathclyde RC v Wallace[189] the House of Lords held that women teachers who had to fill in for an absent male head master were not entitled to be paid the same during that time. This was a different job. It has also been asserted that collective agreements designed to incrementally make a transition to equal pay between jobs rated as equivalent cannot be justified,[190] and can even result in liability for the union that concluded them.[191]

Unlike other protected characteristics, under EA 2010 section 13(2), direct age discrimination is open to justification on the same principles, on the basis that everyone will go through the ageing process.[192] This has meant, primarily, that older workers can reach a compulsory retirement age set either by the workplace or the government, on the basis that it is a legitimate way of sharing work between generations.[193]

Sunday working, or time off for prayer

Qualifications, experience, administration and/or market necessity?

[edit]

Disability and positive action[show]

v · d · e

Disability cases

See also: Disability and Affirmative action

According to Chacón Navas v Eurest Colectividades SA[194] disabilities involve an impairment "which hinders the participation of the person concerned in professional life". Because treating disabled people equally based on ability to perform tasks could easily result in persistence of exclusion from the workforce, employers are bound to do as much as reasonably possible to ensure participation is not hindered in practice. Under the Equality Act 2010 sections 20 to 22, employers have to make "reasonable adjustments", for example in changing a workplace practice if it would create a disadvantage, changing physical features of a workplace, or providing auxiliary aids to work. More detailed examples are found in Schedule 8, and provided in guidance by the Equality and Human Rights Commission. In the leading case, Archibald v Fife Council,[195] it was held that the council had a duty to exempt a lady from competitive interviews for a new job. Mrs Archibald, previously a road sweeper, had lost the ability to walk after complications in surgery. Despite over 100 applications for grades just above a manual worker, in her submission, the employers were not looking past her history as a sweeper. The House of Lords held it could be appropriate, before such an ordeal, for a worker to fill an existing vacancy without a standard interview procedure. By contrast, in O’Hanlon v Revenue and Customs Commissioners[196] the Court of Appeal rejected that it would be a reasonable adjustment, as Ms O'Hanlon was requesting after falling into clinical depression, for an employer to increase sick pay to full pay, after the expiry of a six month period that applied to everyone else. A reasonable adjustment should not be a disproportionate burden, with regard to an employer's resources, and fairness among staff.

Lawful positive action in the UK includes setting quotas for people in representative positions, and in some EU member states is being used to mandate quotas for women on company boards of directors.[show]

v · d · e

Positive action cases

For characteristics other than disability, "hard" positive discrimination, such as preference in contract terms, hiring and firing based on gender, race, sexuality, belief or age, or setting quotas for underrepresented groups in jobs, is unlawful throughout the European Union. The EU allows only for "soft" positive action, in contrast to the United States, where "affirmative action", although contested,[197] operates in many workplaces. In the case of hiring candidates for work, employers may select someone from an under-represented group, but only if that person has qualifications equal to competitors, with full consideration of the candidate's individual qualities.[198] In Marschall v Land Nordrhein Westfalen[199] a male teacher failed to get a promotion, and a woman did. He complained that the school's policy, to promote women "unless reasons specific to an individual candidate tilt the balance in his favour", was unlawful. The ECJ held the school would not be acting unlawfully if it did in fact follow its policy. By contrast in Abrahamsson and Anderson v Fogelqvist[200] Göteborg University's policy was to hire a woman candidate unless "the difference between the candidates’ qualification is so great that such application would give rise to a breach of the requirement of objectivity". A male candidate, who was not hired over two less qualified women, was successful in claiming discrimination. In addition, according to Re Badeck’s application[201] legitimate positive action measures include quotas in temporary positions, in training, guaranteeing interviews to people with sufficient qualifications and quotas in representative, administrative or supervisory bodies. This approach, developed initially in ECJ case law, is now reflected in the Treaty on the Functioning of the European Union article 157(4) and was put into UK law in the Equality Act 2010 sections 157-158.

[edit]

Atypical work

Main articles: UK part-time work, UK fixed-term work, and UK agency work[show]

v · d · e

Sources on atypical work

Outside the Equality Act 2010, and the EU Directives that target discrimination based on a fixed status, the law has a series of measures, albeit weaker, to counteract discrimination against people who hold non-permanent contracts. An important reason for the trio of the Part-time Workers Directive,[202] the Fixed-Term Work Directive[203] and the Temporary and Agency Work Directive[204] is that people doing such work often fall into the same groups as those seeking protection under the EA 2010. Each are implemented by domestic legislation, but have come under criticism for their restrictive nature. The Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000[205] state that part time workers cannot, without objective justification, be treated less favourably than a comparable full time worker. Accordingly not just indirect discrimination, but also direct discrimination can be objectively justified, as it can for age. However, unlike the general scheme of the EA 2010, a worker cannot compare themselves to a hypothetical full time worker. While the law is generally effective at preventing people in the same workplace from being treated differently, part time workers across the UK economy remain underpaid compared to full time workers as a whole, because workplaces tend to be structurally segregated, often where women are working as part timers.[206] One of the first leading cases, Matthews v Kent and Medway Fire Authority,[207] surprisingly involved male firefighters. Under regulation 2, a comparator must be under the "same type of contract" and doing "broadly similar work". It was held that even though part time firefighters did not do administrative work, their contracts were still broadly similar. The Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002[208] formulate the test for a comparator in a similar way, except that they purport (unlike the Directive appears to suggest) to cover "employees" and not the broader group of "workers".[209] In addition to a ban on less favourable treatment, without objective justification,[210] regulation 8 stipulates that if an employee has a succession of fixed term contracts lasting over 8 years, they are to be treated as having a permanent contract.[211]

The deaths of 21 immigrant cockle pickers at Morecambe Bay led to re-legislation to require employment agencies to be licensed, in the Gangmasters (Licensing) Act 2004.

The Agency Workers Regulations 2010 provide people protection against less favourable treatment when they arrive at work through an employment agency. Here the regulation is again more limited, as agency workers are explicitly entitled merely to equal treatment in "basic working conditions", which is defined as their pay and their working time. However, an agency worker may, unlike part timers or fixed term employees, appeal to a hypothetical comparator. One consequence in the UK, however, is that this legislation left uncertain the position of agency workers protection by the job security, child care and other rights for employees in ERA 1996.[212] While the dominant view is that an agency worker will always qualify as an employee when they work for a wage and are the more vulnerable party to the contract, the English Court of Appeal has issued conflicting judgments on whether an agency worker should have an unfair dismissal claim against the end-employer, the agency, or both or neither.[213] Reflecting their vulnerable position, the regulation of agency work goes beyond discrimination, to place a set of duties on employment agents' operations and conduct. Found in the Employment Agencies Act 1973 and the Conduct of Employment Agencies and Employment Businesses Regulations 2003[214] agencies are generally prohibited from charging fees to prospective workers. Various other duties include being honest in their job advertising, keeping all information on jobseekers confidential and complying with all employment laws. Originally agencies had to have licenses, and under the oversight of the Employment Agency Standards Inspectorate, risked losing their licenses if found to be acting in violation of the law. The Deregulation and Contracting Out Act 1994 removed the licensing requirement, but was partially reinstated for agencies in agricultural, shellfish and packing sectors through the Gangmasters (Licensing) Act 2004. In response to the 2004 Morecambe Bay cockling disaster this established another specific regulator, the Gangmasters Licensing Authority, to enforce employment law in those areas.

[edit]

Free movement and immigration

Main article: Freedom of movement for workers

Treaty on the Functioning of the European Union

Immigration to the United Kingdom since 1922

British nationality law

Commonwealth Immigrants Act 1962

Commonwealth Immigrants Act 1968

Immigration Act 1971

Immigration Rules

Indefinite leave to remain

Leave to enter

UK Border Agency

Immigration to Europe

Illegal immigration to the United Kingdom

[edit]

Job security

Main articles: Reasonable notice, Unfair dismissal, Wrongful dismissal, and Layoff, and Job security

Unemployed men at a union building during the first global Great Depression, July 1930. A country comparative database on the world's dismissal regulations is found at www.ilo.org.

Originating with the Contracts of Employment Act 1963, the Redundancy Payments Act 1965 and the Industrial Relations Act 1971 UK workers have three principal job security rights, now consolidated in the Employment Rights Act 1996, sections 86, 94 and 135. These statutory provisions override the old common law position that a dismissal would only be wrongful if it contravened the contract's express or implied terms. First, after one month's work an employee must have one week's notice before dismissal. Second, after one year's work, the dismissal must be for a good business reason. If an Employment Tribunal is not convinced the dismissal is justified on grounds of an employee's capability, conduct, redundancy or another good reason, the dismissal will be "unfair" and the employee will be awarded damages. A court may order that an employee should get her job back, but this is rare. Third, after two years' work and if dismissed, an employee is entitled to a redundancy payment, which like the notice period increases according to the number of years worked. Contracts typically go beyond this bare minimum, but cannot go below. The UK has not yet ratified the ILO Termination of Employment Convention[215] and compared to its European and Commonwealth counterparts, jobs in the UK are relatively insecure, particularly since workers have little formal mechanism, excluding pressure through collective bargaining, to challenge a management's decision about dismissals before they take place. When collective redundancies are proposed, however, EU law has introduced a requirement that employers consult on changes.[216] EU law also introduced a rule that if a business is transferred, for instance, during a merger or acquisition, employees may not have their terms worsened or lose their jobs without a good economic, technical or organisational reason. If employees do lose their work, they may fall back on a minimal system of state insurance, funded primarily through income tax or National Insurance, to collect a "jobseekers allowance", and may make use of public employment agencies to find employment again.

[edit]

Wrongful dismissal[show]

v · d · e

Wrongful dismissal cases

Main article: Wrongful dismissal

Wrongful dismissal refers to a termination of employment which contravenes a contract's terms, whether expressly agreed or implied by the courts. This depends on construction of the contract, read in the context of the statutory charter of rights for employees in the ERA 1996.[217] In the old common law cases, the only term implied by the courts regarding termination was that employers had to give reasonable notice, and what was "reasonable" essentially depended on the professional status of the employee. In Creen v Wright[218] Lord Coleridge CJ held that a master mariner was entitled to a month's notice, though lower class workers could probably expect much less, "respectable" employees could expect more, and the period between wage payments would be a guide.[219] Now the ERA 1996 section 86 prescribes that an employee should receive one week's notice before dismissal after one month's work, two weeks notice after two years' work, and so forth up to twelve weeks for twelve years. The employer can give payment of the weeks' wages instead of giving notice. Another important express term that may be broken could be the proper disciplinary procedure for disputes at work. If a contractual disciplinary procedure is not followed, the employee may claim damages for the time it would have taken and the potential that she would still be employed.[220]

Harold Macmillan's Conservative government introduced the first modern labour law to mandate individual rights for everyone at work, the Contracts of Employment Act 1963. It introduced reasonable notice before dismissal based on how long one had been employed.

The requirements of notice and any disciplinary procedure do not apply if the employee was the one to have repudiated the contract, either expressly, or by conduct. As in the general law of contract, if an employee's conduct is so seriously bad that it manifests to the reasonable person an intention to not be bound, then the employer may dismiss the employee without notice. But if the employer is not justified in making a summary dismissal, the employee has a claim under ERA 1996 section 13 for a shortfall in wages. The same principle, that a serious breach of contract gives the other side the option to terminate,[221] also works in favour of employees. In Wilson v Racher[222] a gardener was bullied by his employer, the heir of Tolethorpe Hall, and gave him a rude telling off for not picking up some string on the lawn. Mr Wilson, the gardener, told Mr Racher "get stuffed, go and shit yourself". The Court of Appeal held that the employer's attitude meant this breakdown in trust and confidence was his own doing, and because labour law no longer saw employment as a "czar-serf" relationship, Mr Wilson was in the right and was wrongfully dismissed. The remedy for breach of contract, following a long tradition that specific performance should not result in draconian consequences or binding hostile parties to continue working together,[223] is typically monetary compensation to put the claimant in the same position as if the contract had been properly performed.

The primary implied term that may be broken is mutual trust and confidence. In Johnson v Unisys Ltd[224] the House of Lords held by 4 to 1 that damages for breach of mutual trust and confidence at the point of dismissal should not exceed the statutory limit on unfair dismissal claims, because otherwise the statutory limits (£63,500 in 2010) would be undermined. This meant a computer worker who became psychiatrically ill following a wrongful dismissal procedure could not claim the £400,000 at which damages could otherwise be quantified. However, if the breach occurs while the employment relationship subsists, that limit is inapplicable. So in Eastwood v Magnox Electric plc,[225] a school teacher who also suffered psychiatric injury, but as a result of harassment and victimisation while he still worked, could claim for a full measure of damages for the breach of mutual trust and confidence. In any event the limit is merely implied and depends on construction of the contract, so that it may be opted out of by express words providing for a higher sum, for example, by expressly providing for a disciplinary procedure.[226] A notable absence of an implied term at common law historically (ie before the development of mutual trust and confidence[227]) was that an employer would have to give any good reasons for a dismissal.[228] This was recommended to be changed in the Donovan Report 1968, and it launched the present system of unfair dismissal.

[edit]

Unfair dismissal[show]

v · d · e

Unfair dismissal cases

Main article: Unfair dismissal

In contrast to "wrongful" dismissal, which is an action for unjustified breach of the terms of an employment contract, "unfair" dismissal is a claim based in the Employment Rights Act 1996 sections 94 to 134A that governs the reasons for which a contract is terminated. The Industrial Relations Act 1971, following the Donovan Report 1968, set up its structure.[229] Under ERA 1996 section 94 any employee who is employed for over one year[230] may claim for an Employment Tribunal (composed of a judge, an employer and an employee representative) to review the decision of their dismissal, and get a remedy if the dismissal was not "fair" within the meaning of the Act. An employee is only "dismissed" if the employer has decided to end the work relationship, or if they have constructively dismissed the employee through a serious breach of mutual trust and confidence. In Kwik-Fit (GB) Ltd v Lineham[231] Mr Lineham used the toilet at work after drinking at the pub, and in response to the manager rebuking him in front of other staff, he threw down his keys and drove off. He claimed he was dismissed, and the Tribunal agreed that at no time had Mr Lineham resigned. By contrast in Western Excavating (ECC) Ltd v Sharp[232] Mr Sharp walked off because the company welfare officer refused to let him collect holiday pay immediately. Although Mr Sharp was in financial difficulty, this was due to his absences, and so he was not justified in leaving, and not constructively dismissed.[233] An employee is also not dismissed if the relationship is frustrated. In Notcutt v Universal Equipment Co (London) Ltd[234] a man's heart attack meant he could no longer work. The employer paid no wages during the ordinary notice period, but was successful in arguing that the contract was impossible to perform and therefore void. This doctrine, applicable as a default rule in general contract law, is controversial since unlike commercial parties it will be rare that an employee has the foresight or ability to contract around the rule.[235]

Once it is established that a dismissal took place, the employer must show that their reason for dismissing the employee was "fair". Dismissal on grounds of union membership,[236] or any protected characteristic in the Equality Act 2010, will be automatically unfair. Otherwise the employer has the opportunity to show the dismissal is fair if it falls within five main categories listed in ERA 1996 section 98.[237] The dismissal must have been because of the employee's capability or qualifications, conduct, because the employee was redundant, because continued employment would contravene a law, or "some other substantial reason". If the employer has an argument based on one of these categories, then the Tribunal evaluates whether the employer's actual decision fell within a "reasonable range of responses", ie that a reasonable employer could have acted the same way.[238] Thus the review standard lies in between an outright perversity, or "Wednesbury unreasonableness" test and a forthright reasonable person test. It gives employers considerable latitude in the way they manage their workforce, as the Tribunal's job is not to substitute what it believes would have been fair, but only to intervene if a decision was arbitrary, harsh or contrary to acceptable business practice.[239] There is also considerable room for Tribunals to assess the facts and come to their own conclusions, which can only be appealed on legal grounds, and not on their judgment of good workplace relations. For example, in a conduct case, HSBC Bank plc v Madden,[240] the Court of Appeal held that it was acceptable for a Tribunal to have decided that dismissing an employee for potential involvement in theft of credit cards was fair, even though an actual police investigation turned up no evidence.[241] By contrast in Bowater v Northwest London Hospitals NHS Trust[242] an employer argued a nurse who, while physically restraining a naked patient, said "It's been a few months since I have been in this position with a man underneath me" was lewd and deserved dismissal for her misconduct. The Tribunal said the dismissal was unfair and the Court of Appeal held the Tribunal had competently exercised its discretion in granting the unfair dismissal claim.

ACAS, headquartered at Euston Tower, issues a binding Code of Practice on how to handle workplace disputes and potential dismissals.

Partly because the courts take a deferential approach to the employer's substantive reasons for dismissal, they emphasise the importance of employers having a fair process. The Advisory, Conciliation and Arbitration Service Code of Practice (2009) explains that good industry practice for disciplinaries requires, among other things, written warnings, a fair hearing by people who have no reason to side against the employee, or with any manager involved in the dispute, and an the opportunity for union representation. Often a company handbook will include its own system, which if not followed will likely mean the dismissal was unfair.[243] Nevertheless, in Polkey v AE Dayton Services Ltd[244] the House of Lords held that, in a case where a van driver was told he was redundant on the spot, if an employer can show the dismissal would be made regardless of whether a procedure was followed, damages can be reduced to zero. In the Employment Act 2002 Parliament made an abortive attempt to instil some kind of mandatory minimum procedure for everybody, but after complaints from unions and employers alike that it was merely encouraging a "tick-box" culture, it was repealed in the Employment Act 2008.[245] Now if the ACAS Code is not followed, and this is unreasonable, an unfair dismissal award can be increased by 25 per cent.[246] Generally, under ERA 1996 sections 119 and 227, the principles for a "basic" unfair dismissal award is that, with a cap of £350 per week and a maximum of 20 weeks, an employee should receive 1 week's pay for each year employed if aged between 22 and 40, 1½ weeks if over 40 and ½ a week if under 22. By ERA 1996 section 123 the employee may also be entitled to a discretionary "compensatory" award, which should take into account the actual losses of the employee as just and equitable, based on loss of immediate and future wages, the manner of the dismissal and loss of future unfair dismissal protection and redundancy rights.[247] This is capped, but usually increased in line with RPI inflation, and in 2010 stood at £63,500. Much lower, the median award for unfair dismissal, without any element of discrimination, was £4903 in 2009-2010.[248]

[edit]

Redundancy[show]

v · d · e

Redundancy cases

See also: Unfair dismissal and Layoff

An economic dismissal because of redundancy is a "fair" reason, but one that triggers a minimum statutory right to a redundancy payment. Under ERA 1996 section 162, a redundant employee who has been employed for over two years is entitled to one week's wages per year worked if aged between 22 and 40, one and a half weeks' pay if over 40 and half a week's pay if under 22. The upper limit is £240 per week. The meaning of redundancy under ERA 1996 section 139 is that diminished demand for the employee's labour was the reason for the dismissal.[249] In situations where employees have lost their jobs, this may be straightforward. In cases where an employer uses its discretion practically to worsen the employees' position the answer may depend on the employees' contracts. In Lesney Products & Co v Nolan[250] a toy company stopped giving its workers overtime. Some refused to work further, they were dismissed, and they claimed they were redundant. Lord Denning MR held they were not, because "nothing should be done to impair the ability of employers to reorganise their work force and their times and conditions of work so as to improve efficiency." Other courts have suggested the contract terms are irrelevant, and that the test should be purely based on the economic reality of diminished demand.[251] If an employee is not dismissed for redundancy it may be that the dismissal falls within the "fair" ground of "some other substantial reason". In Hollister v National Farmers’ Union[252] a farmer's refusal to accept decreased pension entitlements, after a consultation process, was a "substantial" reason for dismissal. Provided employers give proper notice and have the right to terminate the contract by consent, it is possible to worsen terms without the employee being able to claim redundancy.

Employees of over 2 years who are made redundant must receive a severance payment to cushion them in the search for their next job.

When compulsory redundancies are unavoidable and the employer must select among a group of workers, the procedure the employer follows must be procedurally fair, or the workforce will have an unfair dismissal claim. In Williams v Compair Maxam Ltd[253] Browne-Wilkinson J held that, in response to managers who had selected workers to lose their jobs based on personal preference, the proper steps should be to (1) give all warning possible (2) consult the union (3) agree objective criteria (4) follow those criteria, and (5) always check there if there is alternative employment rather than dismissal. Under ERA 1996 section 141 an employee should accept a reasonable offer for redeployment, and will lose entitlement to redundancy if she declines it. The Collective Redundancies Directive,[254] implemented in TULRCA 1992 section 188 also requires collective consultation with the union or other elected workforce representatives. If the employer fails to consult in good time it will be liable to pay a protective award to its staff.

Jones v Associated Tunnelling Co Ltd [1981] IRLR 477 (EAT)

United States of America v Nolan [2011] IRLR 84

[edit]

Business transfers and insolvency

See also: Mergers and acquisitions in United Kingdom law and UK insolvency law[show]

v · d · e

Business transfer sources

Another context in which the common law left workers particularly vulnerable was where the business for which they worked was transferred between one person and another. In Nokes v Doncaster Amalgamated Collieries Ltd[255] it was held (albeit to protect the worker from draconian sanctions in the arcane Employers and Workmen Act 1875) that an employment contract could not transfer without the consent of the parties involved. Consequently, in a situation where company A sold its assets (including contracts) to company B, the employment relationship would sever and the only claim a worker would have for dismissal would be against company A. Particularly from the 1950s, the view was increasingly accepted across Europe that workers have something more than a personal right, and akin to a property right in their jobs.[256] Just as the transfer of a freehold property between two landlords would not mean that a tenant could be evicted,[257] the first Business Transfers Directive, passed in 1978 and updated in 2001 (often still referred to as the "Acquired Rights Directive"), required that a business transferee would have to provide a good economic, technical or organisational reason if they were either to not retain all previous employees, or wanted to make detrimental variations to their workers' contracts. This means that the new employer who is a transferee of a business through an asset sale is in no better position than would be a new owner who gained control of a business by buying out a company's shares: contractual variations require the employees' consent and dismissal rights remain as if it were the old employer. As implemented by the Transfer of Undertakings (Protection of Employment) Regulations 2006, a clear example where employees contracts transfer was in Litster v Forth Dry Dock.[258] The House of Lords held that a purposive interpretation is to be given to the legislation so that where 12 dockworkers were sacked an hour before a business sale, their contracts remained in effect if the employees would still be there in absence of an unfair dismissal. This does not, however, mean that employees unfairly dismissed before a sale have a right to their jobs back, because national law's normal remedy remains with a preference for damages over specific performance.[259] The same principle goes for any variation that works to the detriment of the employee. So the transferee employer may not (without a good business reason) for example, try to impose a single new gardening clause[260] or withdraw tenure, or the employee will have a claim for constructive dismissal.[261]

An acute question for the TUPE Regulations, particularly in the years when the Conservative government was implementing a policy of shrinking the size of the public sector, was the extent they applied to jobs being outsourced, typically by a public body, like a local council, or changed between businesses in a competitive tender process for public procurement. On this point a series of ECJ decisions came to the view that there could be a relevant transfer, covered by the Directive, even where there was no contractual link between a transferor and a transferee business,[262] so long as the business entity retained its "identity". In turn the "identity" of a business would be determined by the degree to which the business' factors of production remained the same before and after a sale.[263] It could be that no employees were hired after an asset sale, but the sacked employees would still have a claim because all their old workplace and capital equipment was being used by the new employer. It is also relevant to what extent a business is capital or labour intensive. So in Oy Liikenne Ab v Liskojärvi[264] the ECJ held that it was unlikely that 45 Helsinki bus drivers' contracts were transferred, between the company that lost the contract and the new bus company that won it, even though 33 drivers were rehired, because "bus transport cannot be regarded as an activity based essentially on manpower". On the other hand, employees stand to benefit where a new employer offers old staff their jobs, the intention to rehire makes it more likely the court will deem there to be a transfer.[265][show]

v · d · e

Employees and insolvency

Often business transfers take place when a company has plunged into an insolvency procedure. If a company enters liquidation, which aims to wind down the business and sell off the assets, TUPER 2006 regulation 8(7) states that the rules on transfer will not apply.[266] The main objective, however, in an insolvency procedure particularly since the Cork Report and the Enterprise Act 2002, is to effect rescues through the system of company administration. An administrator's task under the Insolvency Act 1986 Schedule B1, paragraph 3, is either to rescue the company as a going concern, rescue the business typically by finding a suitable buyer and thus save jobs, or as a last resort put the company into liquidation. If employees are kept on after an administrator is appointed for more than 14 days, under paragraph 99 the administrator becomes responsible for adopting their contracts. The liability on contracts is limited to "wages and salaries".[267] This includes pay, holiday pay, sick pay and occupational pension contributions, but has been held to not include compensation for unfair dismissal cases,[268] wrongful dismissal,[269] or protective awards for failure to consult the workforce before redundancies.[270] If the business rescue does ultimately fail, then such money due employees achieves the status of "super priority" among different creditors' claims. The priority list in insolvency sees creditors with fixed security (typically banks) get paid first, preferential creditors third, unsecured creditors up to a limit of £600,000 third, floating charge holders (usually banks again) fourth, remaining debts to unsecured creditors (in the unlikely event that anything remains) fifth, "deferred debts" (typically to company insiders) sixth, and shareholders last.[271] Among the preferential creditors, the insolvency practitioners' fees together with adopted contracts attain super-priority. Otherwise, employees wages and pensions still have preferential status, but only up to an £800 limit, a figure which has remained unchanged since 1986.[272] Employees having priority among creditors, albeit not above fixed security holders, dates back to 1897,[273] and is justified on the ground that employees are particularly incapable, unlike banks, of diversifying their risk, and forms one of the requirements in the ILO Protection of Workers' Claims (Employer's Insolvency) Convention.[274] Often this limited preference is not enough, and can take a long time to realise. Reflecting the Insolvency Protection Directive[275] under ERA 1996 section 166 any employee[276] may lodge a claim with the National Insurance Fund for outstanding wages. Under ERA 1996 section 182 the amount claimable is the same as that for unfair dismissal (£350 in 2010) for a limit of 8 weeks. If an employee has been unpaid for a longer period, she may choose the most beneficial 8 weeks.[277] The Pensions Act 2004 governs a separate system for protecting pension claims, through the Pension Protection Fund. This aims to fully insure all pension claims.[278] Together with minimum redundancy payments, the guarantees of wages form a meagre cushion which requires more of a systematic supplementation when people remain unemployed.

[edit]

Unemployment

See also: Unemployment and Unemployment in the United Kingdom

An Inland Revenue stamp from 1912 commemorating unemployment insurance.

Unemployed men discuss the growing jobless rate in 1931.

Poor Law Amendment Act 1834 and Royal Commission into the Operation of the Poor Laws 1832

National Insurance Act 1911 and National Insurance

Karl Marx, Das Kapital (1867) and reserve army of labour

Unemployment Act 1934

Great Depression in the United Kingdom

White Paper, Employment Policy (May 1944) Cmd 6527

W Beveridge, Full Employment in a Free Society (1944)

A W Phillips (1958) 'The Relation between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861-1957, Economica

Supplementary Benefit, Statutory sick pay and Income Support

Jobseekers Act 1995 (c 18) and Jobseeker's Allowance and Jobcentre Plus

Jobseekers Act 1995 s 19, disparity in definitions on misconduct

New Deal (United Kingdom)

Youth unemployment in the United Kingdom

Employment Act of 1946 and the Humphrey–Hawkins Full Employment Act of 1978 in the United States, and full employment

Automatic stabilisers, effective aggregate demand, fiscal stimulus, natural rate of unemployment

Public employment agency

Employment Agencies Act 1973

Jobcentre Plus

Income Support, means tested benefit for people on low incomes

Severe Disablement Allowance replaced by Incapacity benefit in 2001, replaced by Employment and Support Allowance 2008

Housing Benefit

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Enforcement and tribunals

The Employment Appeal Tribunal at 58 Victoria Embankment.

Employment tribunal

Employment Appeal Tribunal

Industrial Tribunals

Employment Rights (Dispute Resolution) Act 1998

Employment Act 2002

ACAS

Health and Safety Executive

Employment Agency Standards Inspectorate

Gangmasters Licensing Authority

Inland Revenue

Equality and Human Rights Commission

Under the Equality Act 2006,[279] a new Equality and Human Rights Commission was established, 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[280] (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.

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International labour law

See also: International Labour Organisation, World Trade Organisation, and Private international law

Versailles Treaty 1919

Right to Organise and Collective Bargaining Convention, 1949

ILO on Hours of Work Industry Convention, No 1 (1919) this required an 8 hour day and a 48 hour working week, but Great Britain did not ratify it.

ILO 40 hour week Convention, No 51 (1936)

ILO Convention on Holidays with Pay, No 52 (1936)

GATT and World Trade Organisation

Labour Standards in the World Trade Organisation

Lawson v Serco Ltd [2006] UKHL 3, [2006] 1 All ER 823

Duncombe v Secretary of State for Children, Schools and Families [2011] UKSC 36