Employment Law 2: Termination of the Contract, Discrimination and Tribunals 345
arises when the employer has a disabled applicant for a job and cannot justify not employing them. Thus the duty to make adjustments occurs on a case by case basis and adjustments may be different depending upon each applicant.
For example, a wheelchair bound applicant applies for a job which is based on the third floor of an office block which does not have a lift. The employer must consider the following points:
(a)Can a lift be installed and how much would it cost?
(b)Can the job be relocated (the whole section) to the ground floor?
(c)Is it possible for this disabled applicant to work on the ground floor while the rest of his/her work colleagues remain on the third floor?
For each of these questions the employer must look at whether or not they could be reasonably expected to go to the expense of making the adjustments. In other words, are the adjustments reasonable? If the employer is a small employer, then (a) will be unreasonable, but a larger organisation with greater resources and a greater chance of having more than one disabled applicant may need to seriously consider it. Alternative (b) is probably impracticable and (c) may also be, given the nature of the work. Thus you can see how difficult it will be to generalise on what are "reasonable adjustments".
The Act uses examples to illustrate that its requirements go beyond removing physical limitations on disabled workers; they involve helping disabled people by reallocating certain duties, altering work hours, allowing time for treatment and rehabilitation. In terms of recruitment, promotion, etc., test procedures must be adjusted to avoid discrimination.
The sanctions that may be used when organisations do not comply with the requirements of the Act include complaints being made to employment tribunals and the involvement of ACAS. The causes of disabled people facing discrimination will also be taken up by trade unions.
J. HEALTH AND SAFETY AT WORK ACT 1974
Terms of Reference
(Words in quotation marks are taken from the Act and guidance issued by the Health and Safety Commission.)
The terms of reference of the Act were as follows:
"Secure health, safety, and welfare of persons at work".
Thus the Act:
Brought health and safety under the same legislation for the first time
Covers all people at work except privately employed domestic workers, so it covers all employers, self-employed and employees
Covers employees who were previously unprotected by law – about five million in the medical, transport and education industries.
The health and safety of the general public, in relation to work activities, was also covered for the first time:
"Protect persons other than persons at work against risks to health and safety arising out of, or in connection with, activities of persons at work."
The Act is an "enabling" Act, consolidating all previous health and safety law. A Health and Safety Commission was set up with the prime function of reviewing, updating and improving such law by means of Regulations and Approved Codes of Practice (ACOPS).
346 Employment Law 2: Termination of the Contract, Discrimination and Tribunals
So, for example, the Control of Substances Hazardous to Health (COSHH) Regulations apply to the storage and utilisation of "highly inflammable or otherwise dangerous substances and generally prevent the unlawful acquisition, possession, and use of such substances". Control is required even if such substances are not being used in connection with work, and also applies to "emissions into the atmosphere of noxious or offensive substances". This includes
Control of all "airborne emissions"
Control of emissions which, although not injurious to health and safety, cause environmental pollution or nuisance.
Basic Duties of People at Work
(a)Employers
Employers have an overall duty at work to improve the health, safety and welfare of employees. More specific duties include the following:
Maintenance of "safe systems of work, plant, premises and working environment".
Safety systems for "utilisation, handling, storage and transport of articles and substances".
Provision of "information, training, supervision and instruction", ensuring health and safety.
Written statement of policy and administration of implementation of policy regarding health and safety to be communicated to employees.
To comply with rulings from the Secretary of State concerning the election of safety representatives to consult over health and safety matters and to consult with such representatives. To appoint a safety committee on request of such representatives and to enable review by such a committee of health and safety measures taken by the employer.
Not to expose the public to health and safety hazards and to adopt the best means to prevent harmful emissions.
To make available to the public, information about activities potentially harmful to health and safety.
(b)Self-employed People
These persons have a duty not to expose themselves or the public to health and safety hazards.
(c)Manufacturers, Suppliers, Importers
Duties are in relation to "articles" and "substances" to be used at work.
Ensure that "design and construction" of "articles" do not risk the health and safety of users.
Test and examine for such risks.
Make utilisation and safety information available to users.
Research into minimisation of such risks to users.
"Erection" and "installation" of "articles" to be safe to users.
Employment Law 2: Termination of the Contract, Discrimination and Tribunals 347
(d)Employees
Employees have a duty to:
Take care of their own health and safety, and that of others if their actions are likely to affect them
To "co-operate" with an employer concerning their duties
Not to "interfere" or impede health and safety provisions introduced by statute or by an employer.
The above is a summary of the responsibilities of employers and employees, forming the basis of the legal provisions in the health and safety area. The expectation was that such provisions would alleviate problems associated with the diversity and detail of legal requirements in the past.
Other Provisions
(a)Codes of Practice
The 1974 Act allows for Codes of Practice to support the regulations made under the Act. Basically, regulations are law, whereas Codes of Practice offer guidance on how the law is to be obeyed. In the case of Approved Codes of Practice, these, like the Highway Code, can be used in a court of law to show that the defendant has not obeyed a specific regulation. The onus is then on the defendant to show that he/she met the requirement in as good a way as that contained in the Approved Code. Most regulations now have attached Approved Codes of Practice and Guidance Notes, which, as their title suggests, offer guidance only.
(b)Improvement and Prohibition Notices
In addition to prosecuting in the courts for contraventions of the Act and associated regulations, Health and Safety Executive Inspectors, empowered under the Act, can issue Improvement and Prohibition Notices to prevent what they consider dangerous practices.
Improvement Notices give the employer a specific time in which the suggestions for improvement must be carried out.
Prohibition Notices prevent the work from continuing and are issued where the inspector feels there is risk of imminent danger.
Employers can appeal against notices to a tribunal but, in the case of Prohibition Notices, the work must stop until the tribunal has reached a decision.
The use of notices greatly increases the power of inspectors to prevent accidents occurring, rather than waiting for an accident to occur before taking an employer to court.
(c)Safety Committees and Representatives
The above is a very much shortened view of a complex set of regulations made before and after the 1974 Act, but which now fit under its general framework of duties that apply to all workplaces. The Safety Representatives and Safety Committee Regulations 1977, for example, allow trade union-appointed safety representatives legal rights. The Regulations, and supporting Code of Practice, set out the functions of such safety representatives. Apart from representing employees in consultations with the employer, their functions are to:
Examine potential hazards, dangerous occurrences, and causes of accidents at the workplace.
348Employment Law 2: Termination of the Contract, Discrimination and Tribunals
Investigate complaints by any employee relating to the employee's health, safety or welfare.
Make representations to the employer arising out of the above. (The Code recommends that these be made in writing where possible.)
Make representation to the employer on general matters.
Carry out inspections (normally every three months, and after giving the employer reasonable notice in writing).
Represent employees in consultations with Health and Safety Inspectors, or inspectors of any other enforcing authority.
Receive information from inspectors.
Attend meetings of safety committees in their capacity as safety representatives.
So that they can fulfil their duties, the employer shall allow safety representatives sufficient paid time off to perform these functions or to undergo reasonable training.
350 Principles of Consumer Credit
A. HIRE PURCHASE
Round about the turn of the century, a demand arose for the purchase of mainly consumer durables on credit. To get around the provisions of legislation which controlled moneylending, the practice of "hire purchase" came into being. Under this type of arrangement, goods are leased to the debtor for a fixed period, with an option to purchase at the end of the period. During the leasing period, the purchaser pays the capital cost of the goods plus interest. At the end, he/she has an option to purchase them outright for nominal consideration.
The purchaser is not obliged to exercise this option, and is free to return the goods at the end of the leasing period. For obvious reasons, the option is invariably exercised. But until it is so exercised, the debtor has no title to the goods: they are purely on lease to him, and he cannot lawfully dispose of them. For this reason, a hire purchase agreement is not a "bill of sale", so it does not have to be registered under the Bills of Sale Acts 1878 and 1882.
The system, like that of money-lending generally, was open to abuse, so Parliament stepped in to control the matter with the Hire Purchase Acts 1938, 1954 and 1964. These were consolidated and re-enacted by the Hire Purchase Act 1965, which was finally repealed on 19 May 1985. Such agreements are now covered by the Consumer Credit Act 1974.
B. CONSUMER CREDIT ACT 1974 (AS AMENDED BY THE CONSUMER CREDIT ACT 2006)
This Act is an extremely comprehensive and far-reaching statute which aims to control all forms of credit afforded to "consumers", under whatever guise it may appear. It applies to any transaction which involves the granting of credit of not more than £25,000 to an individual (including a partnership of up to three partners). Sums in excess of this, or any sums of credit to corporate bodies (e.g. companies), are not caught by the provisions of the Act.
Terminology
The Consumer Credit Act introduces a number of concepts which were quite new at the time of its passage in 1974; the definitions section (S.189(i)) contains no less than 117 definitions! The terminology used is not necessarily the ordinary everyday meaning of the relevant word. The most important definitions and concepts are:
(a)Debtor
The debtor is the person who receives credit – in effect, the customer. The debtor can be an individual, a partnership, or a club or other unincorporated association, but not a company. It is important to remember that a "consumer" transaction is not necessarily one which is of a private nature unconnected with business. The distinction is between whether the recipient of credit – the debtor – is, or is not, incorporated.
(b)Creditor
This is the person or organisation supplying the credit. The creditor can be an individual, a company or any other organisation. It is frequently a finance company, a bank or a shop.
(c)Supplier
This is the person who, or organisation which, supplies goods or services which are the subject matter of the credit.
©ABE and RRC
Principles of Consumer Credit 351
For example, if a washing machine is acquired on hire purchase, the shop supplying it is the "supplier", and the HP company is the "creditor". If a bank grants an overdraft, it is both the "supplier" (of a service, i.e. money) and the creditor.
(d)Owner and Hirer (or Debtor)
These definitions apply only to leasing or hiring agreements. The words have the obvious meaning. The "hirer" must be an individual, like a debtor. However, you should note carefully that there is an unfortunate conflict of definitions in respect of hire purchase transactions. In the Consumer Credit Act 1974 (the Act), a person acquiring goods on hire purchase is not referred to as "the hirer" – he/she is the "debtor" – whereas the actual goods which are the subject of a hire purchase transaction are referred to in the Act as being "hired". This must be distinguished from the Hire Purchase Act 1965, which did call the person acquiring goods on HP the "hirer". It would be helpful if the two Acts were consistent!
(e)Credit
Credit is defined (in S.9(1)) as a "cash loan or other financial accommodation". The concept is fundamental to the Act, but it is not as simple as the definition would imply. The essential thing is that payment for goods or services must be deferred. Whether payment is subsequently made in one lump sum or by instalments does not matter; it is still credit if, by agreement, repayment of the cash sum advanced or provided is deferred.
If, however, the actual payment for goods or services provided (as opposed to cash supplied so that goods or services may be acquired) is deferred, then that is not credit within the terms of the Act. For example, if a shop permits payment by monthly account, it is not providing "credit" – nor is British Telecom when it submits its account quarterly. Not even in a house building contract, where payment is due at stated stages of construction, is credit being given. But on the other hand, an overdraft facility granted by the bank, or a credit card transaction, or a loan to buy a car, or a hire purchase or similar agreement, all entail the granting of credit.
You should not carry the analysis too far, and it is not strictly true but, as a rule of thumb, we may say that if cash, or the facility to use cash, for a purchase of goods or services is given or granted, then credit is being supplied. If, on the other hand, payment for goods or services already supplied is deferred, then credit is not being granted – under the terms of the Act.
Various types of credit are defined:
Running-account Credit
This is where the agreement calls for the provision of credit (usually up to a set limit, but not necessarily) as and when the debtor requires it. A bank overdraft facility is a typical example, or the provision of a credit card (e.g. Mastercard which sets a fixed limit, and is a "running account" credit). Note that American Express (which is unlimited in amount) is a charge card.
Fixed Sum Credit
This occurs, as the words imply, where the credit given is a stated amount and is not a running account. A hire purchase transaction, or a loan from a finance company, money-lender or pawnbroker are all examples.
Restricted or Unrestricted Use Credits
These definitions are obvious.
352 Principles of Consumer Credit
(f)Agreements
Lastly, there are various types of agreement for the provision of credit which need definition.
Debtor–Creditor–Supplier Agreement
This is the typical hire purchase agreement, where there are three parties involved – the customer who acquires the goods, the shop which supplies them, and the finance company which provides the credit.
It also applies to credit card transactions.
Where there are only two parties involved, it is simply a Debtor–Creditor agreement, e.g. a bank loan.
Credit-token Agreement
These cover all forms of agreement involving the provision and use of credit cards, vouchers, coupons, trading stamps, and similar items. By far the commonest are the ordinary credit cards such as Mastercard, Barclaycard/Visa etc. The term also includes credit cards issued by shops for use only in that shop, bank cards, and similar cards.
Consumer Hire Agreement
The Act defines this as an agreement made by a person with an individual ("the hirer") for the bailment of goods to the hirer, being an agreement which:
(i)Is not a hire purchase agreement
(ii)Is capable of subsisting for more than three months
(iii)Does not require the hirer to make payments exceeding £25,000.
Credit is thus supplied by virtue of the hire charges. It covers normal domestic rental agreements (e.g. for a TV) and business rentals or leases of equipment (e.g. photocopiers) to individual traders or partnerships.
Exempt Agreements
These are agreements exempted from the provisions of the Act by statutory instrument, under authority given by Section 16. At present these comprise the following:
(i)Credit agreements connected with land
(ii)Agreements where the debtor is required to make only a small number of repayments
(iii)Agreements where the level of credit charges payable by the debtor is less than a certain level (less than the higher of 13% or 1% above the highest of the clearing bank base rates)
(iv)Agreements connected with foreign trade.
Regulated Agreements
These are consumer credit or consumer hire agreements which are not exempt.
Small Agreements
These are regulated agreements for credit not exceeding £50. Certain provisions of the Act do not apply to small agreements.
©ABE and RRC
Principles of Consumer Credit 353
Licensing
(a)Regulations
Anyone who carries on a consumer credit or consumer hire business is required, under Section 21 of the Act, to be licensed to do so by the Director-General of Fair Trading. Any business which provides credit under regulated consumer credit agreements, or which bails goods under regulated consumer hire agreements, is required to have a licence. A licence is not, however, required if the business:
Provides credit or hire only in excess of £25,000
Provides it only to companies.
(b)Requirements
The requirements for the granting of licences are contained in Part III of the Act. Briefly, a licensee must be, in the opinion of the Director-General, a fit and proper person. If so, the Director-General is bound to grant a licence, but is empowered to look at all the evidence and circumstances, including hearsay, in coming to a decision.
The matters which the Director-General is specifically required to consider are:
Convictions for fraud or dishonesty
Any contraventions of the Consumer Credit Act
Instances of racial or sexual discrimination. In Quinn v. Williams Furniture Ltd (1981) the defendants contravened the Sex Discrimination Act, and it was held that this fact entitled the Director-General to refuse a licence.
Any improper business practices.
(c)Categories
A standard licence specifies the name of the person to whom it is granted, the name of the business to which it relates, and the activities which are permitted. There are six categories:
Category A – consumer credit business
Category B – consumer hire business
Category C – credit brokerage
Category D – debt adjusting and debt counselling
Category E – debt collecting
Category F – operating a credit reference agency.
We have already mentioned the first two, but certain other activities connected with credit, other than providing it, are caught by the Act. A licence is required by anyone undertaking the business of credit brokerage, which is arranging for credit to be supplied to an individual under a regulated agreement. Such people as "finance or mortgage brokers" and insurance brokers fall into this category.
A licence is also required for the business of debt adjusting and debt counselling.
The first of these encompasses the business of negotiating on behalf of an individual with his/her creditors for debts to be paid off over a period, reduced, or otherwise adjusted. The second is the business of giving advice in connection with the debts of an individual.
Debt collecting is the business of collecting debts from individuals on behalf of, or as agent for, the creditor, and for this a licence is required.
354Principles of Consumer Credit
Operating a credit reference agency entails the provision of references to creditors, or potential creditors, as to the creditworthiness of individuals. This includes not only such well known names as Dun and Bradstreet, but also trade associations and similar associations who provide credit references on individuals for their members.
(d)Group Licences
A group licence is similar, but it applies to all those persons within a group which is specified in the licence, not merely to a single named trader or business. This is plainly appropriate to organisations whose members all carry on similar activities which are subject to the licensing requirements of the Act. A group licence is not intended to be granted to organisations with a number of branches, such as banks or chain stores.
A group licence has been granted, for example, to:
Solicitors holding a practising certificate
Chartered and certified accountants
Liquidators and trustees in bankruptcy
Certain charities
Citizens advice bureaux.
(e)Proceedings
If the Director-General intends either not to grant a licence, or not to the full extent requested by the applicant, he is required to notify the applicant of this, giving his reasons. The applicant then has 21 days in which to make written representations to the Director-General or to request an oral hearing.
After considering the representations, written or oral, the Director-General may grant the licence in whole or in part, or refuse it. If it is refused or only partially granted, he must state his reasons in writing. In this event, if the applicant is aggrieved by the decision, he has a right of appeal to the Secretary of State and thereafter, on a point of law only, to the High Court.
(f)Renewals
A licence, whether standard or group, lasts for ten years; thereafter, it is renewable for a further period of ten years, and so on. If the Director-General is minded to refuse a renewal, the same procedure as for refusal of the original applies.
However, throughout its period of validity, a licence can be prematurely terminated or suspended by the Director-General. Either of these penalties may be incurred if the licensee or her employees or agents engage in improper practices in the conduct of their business. Termination is just what the term implies, i.e. revocation of the licence. Suspension can be either for a fixed period or indefinitely. In the latter event, the Director-General can at any time bring the period of suspension to an end, or alternatively the licensee can apply for the suspension to be lifted.
The procedure for revocation or suspension is again similar. The Director-General must give notice to the licensee. Then the licensee is entitled to make written or oral representations, followed if necessary by an appeal, as in the case of failure to grant a licence. The termination or suspension takes effect only after the licensee has exhausted the appeal procedure – if she does so.
Unlicensed Trading
If a person carries out any business which is required by the Act to be licensed, without having the relevant licence, he/she commits a criminal offence. Any agreements entered
