Issues between Employee and Employer Relations - Essay Example

?Employment Law This paper attempts to provide solution to the below two issues between employee and employer relations regarding contractual employment, termination and to look into the options available with the employment law and other laws relating to employee and employer benefits. a) Tom, personal trainer vs Unfil Ltd, a Gym Club, Jesmond, Newcastle According to brief facts of the case, it is understood that Tom was employed by Unfit Gym Club in April 2009 on condition that he will wear company uniform and will use equipments supplied by the company. The terms and conditions also stated that he would get minimum of 20 sessions with the members of the company. Regarding health facilities, the company did not provide him with sick pay, and in case of absence due to ill health, he had to substitute himself with one of the company’s other trainers with prior permission from the company. The company did not entitle him to membership of the company’s pension scheme and was responsible for paying his own taxes and National Insurance. However, one fine day Tom was shocked to receive the termination letter from the company ending the contract with the Unfit Ltd. stating his continuous poor performance as the reason. According to the United Kingdom’s Employment Rights Act, 1996, all employees are supposed to have an employment contract with their employer, either in written or oral. It is further clarified that there is an express contract between employee and employer in case of no written contract is created, which makes Tom and his employer liable to the employment rights act and mandates both the parties to follow the rules and regulation specified in the law (www.direct.gov.uk). There are few points for consideration on behalf of Tom on the basis of which he can make a claim for unfair dismissal from Unfit Ltd. Notice Period According to Employment Rights Act 1996, Sec. 86 (1), any employer is responsible to give prior notice of not less than one week to the employee, who has been employed for less than two years. Further Sec, 86 (6) does not affect any right to a contract of employment to treat the contract of employment as terminable without prior notice of the conduct to other party. Unfit Ltd, gym club terminated Tom without immediate effect without prior notice is the only point which has can be put before tribunal for claim (www.legislation.gov.uk) As the reason specified by the Unfit Ltd, gym club is the ‘persistent poor job performance’, it is further clarified that even in the absence of written statements of terms and conditions of employment, an employee working for one month is liable to receive not less than one week of notice, unless dismissed for gross misconduct. The brief facts of the case does not mention the Tom’s period of employment and his date of ending the contract with Unfit Ltd. Tom has been employed for more than three years with the company, making him liable for receiving of termination notice from his employer for at least three weeks in advance, according to Sec 86 (1) (b) (www.legislation.gov.uk).. However, it has to be mentioned that termination in the contract is fair if the reason relates to the conduct of the employee under Sec. 98 (2) (b) which empowers the employer to terminate the employee for its bad conduct or ‘poor job performance’. Even though the company has the right to terminate employee under section 98 (2) (b), it is necessary to give prior notice to the employee informing and explaining the reasons for his termination, three weeks in advance as mentioned in Sec. 86 (1) (b) (www.legislation.gov.uk). Since the employer, Unfit Ltd, gym club has not given any advance notice before immediate termination; Tom has the right to make a claim for unfair dismissal before Employment Tribunal under Employment Rights (Dispute Resolution) Act 1998 (www.legislation.co.uk). Further an employee is entitled to ask for a written statement from the employer stating the reasons of termination which is governed under Employment Rights Act 1996 under Sec. 92 (1) (b) if the employee’s contract is terminated without prior notice (www.legislation.gov.uk). It is further mentioned that employer has not thought about any alternatives to dismissal; like transfer to a different job or different duties in case of poor performance, but instead has terminated the service without any prior notice leading to unfair dismissal under section 92 (1) (b) (www.roydens.co.uk) Employment Appeals Tribunal (EAT) decides cases that relate to specific rights like unfair dismissal. Employee seeking claim should make an appeal before EAT within three months from the date of termination (www.direct.gov.uk). Tom has exceptional chance of seeking claim as employer has not given him prior notice. Tom can seek claim for compensation or reinstatement to the job for unfair termination without notice from Unfit, gym club under section 112 (1) (2) (3) & (4) and 113 of Employee Rights Act, 1996 as witnessed in Gyes v Societe Generale, London Branch, where the claimant seeking compensation appealed to EAT after his termination of contract since his service was terminated without notice and with immediate effect from the company (Mehta, 2010). The high court decided in favor of claimant which implies that it is the responsibility of the employer to communicate to the employee regarding his termination of his employment under a contractual pay in lieu of notice clause. (www.personneltoday.com). It was upheld by the Employment Appeal Tribunal (EAT) in Samuel v London Borough of Lewisham, that “appellant was entitled to nine weeks pay in lieu of contractual notice, less monies earned from alternative employment during notice period” (EAT/1015/00). Basing on the evidence from this case, Tom can make a claim in EAT against Unfit, Gym Club seeking compensation for immediate termination and pay in lieu of termination without notice not providing any other alternatives. But ‘an employer can terminate an employee’s contract if the employee is found guilty of gross misconduct which happens to be serious damaging the reputation of the company (Dunn & anr v AAH Ltd). A claim could be raised against the company, Unfit, Gym Club, for preventing the employee from gaining employment rights and thereby dismissing him without giving proper notice which is mandatory for the employers and employees governed by the Employment Rights, 1996. As witnessed in Raspin v United New Shops Ltd, 1999, it was held that an employee dismissed with prior and proper notice of termination may be eligible to claim compensation for damages for the loss of unfair dismissal rights (Scutt, 2011). Since, there are many examples and events supporting the case of Tom against Unfit, Gym Club; Tom can apply for claim in Employment Appeal Tribunal under Employment Rights Act 1996 for unfair dismissal for poor job performance without proper notice in advance. It would be essential to state the working conditions and facilities laid in the contract about sick pay, not entitling the employee to seek compensation for sick leaves which is eligible under the Statutory Sick Pay (General) Regulations Act, 1982. Tom has the favorable chance to seek claim in form of compensation or reinstatement to the job by his employer, Unfit, Gym Club as specified under Employment Rights Act, 1996 and Employment Rights (Dispute Resolution) Act 1988. Evidence of judgments in employment tribunal cases also reveals that Tom can make a claim at EAT level to seek compensation for unfair dismissal on the grounds of his employer not giving prior notice for termination or compensation in lieu of notice. b) Strategic Plan to reduce the redundancies In the United Kingdom, the term ‘redundancy’ is defined by law as situation in which, for economic reasons, there is no longer a need for the job in question to be carried in the place where it is currently carried out. However, the selection of employees to be made redundant can take into account the ability to perform the job, it is clarified that individual failings are the not the reasons for jobs being lost. According to the Employment Rights Act, 1996; redundancy occurs only when a dismissal arises either mainly or wholly for one of the following reasons 1) where the employer has ceased or intends to cease, carrying on the business in which the employee is or was employed; 2) where the employee ceases or intends to cease, carrying out this business at the place where the employee is or was employed, 3) where the requirements for employees to carry out the work of a particular kind have ceased or diminished and where the employee is employed to carry out the work and 4) where the requirements to carry out work of a particular kind have created or diminished at the place where the employee is employed (Taylor, 2002). Martin and Jackson (2002) mention that when an organization has more employees that it needs for its activities it invariably has to look to reducing the number of employees. It is further stated that employees are a major cost and an organization whose income is reduced may not be able to continue paying its all the employees. The Trade Union and Labour Relations (Consolidation) Act 1992, under Sec 195 refers to redundancy as being dismissals where the reaons for dismissal are not related to the people being dismissed. Redundancies fall into the category of ‘potentially fair dismissals’ as far as employment tribunals are concerned. A redundancy can be judged fair as long as the correct procedures are followed and as long as people are treated equally (Taylor, 2002). The Trade Union and Labour Relations (Consolidation) Act 1992 under Sec. 188 states that it is the duty of an employer to consult the representatives of the employees who may be affected by the proposed dismissals or may be affected by measures taken in connection with those dismissals to carry out the redundancy strategy (www.legislation.gov.uk). However, it is necessary that management should consider all the alternatives before going for consultation about the redundancy procedures with the representatives. Measures to reduce redundancies Cross (1985) identified two types of approaches to reduce redundancies through a study. One could be styled a marketing approach involved efforts to promote sales through identifying new markets or becoming more competitive in existing markets by cutting prices or other means. The manpower can be used to adjust the size of the workforce without to declare redundancies. The individual manpower measures most commonly mentioned were natural wastage or temporary layoffs, voluntary early retirement’s ore redundancy, reducing the number of part time workers. It is necessary to identify creative ways to minimize the costs of the business and to cut short the number of employee layoffs. As per the procedure, management has decided to lay off 400 employees out of 2000 and will consult appropriate representative of those employees about collective redundancies. As it is supposed the members from trade unions will be arriving for consultation on the redundancy polices, following alternatives may be discussed: a) Salary reduction: In view of the economic downturn and low output, instead of reducing the workforce, it is suggested to reduce the salary of all the employees in the workforce which will save the job of those 400 employees. However, the percentage of salary reduction can be calculated depending on the years of employment with company. More the experience, less will be pay cuts and less experience, half pay cut. This strategy may help in boosting the morale of staff and develop corporate culture and trust in the company (Atkinson, 2011). Similar strategy is already in force in the United Kingdom wherein 50 percent firms in Ireland have introduced measures to control or reduce their pay bill while 50 percent have cut pay for some or all staff, 50 percent have implemented compulsory redundancies and 20 percent have changed pension arrangements for existing staff (UCD, 2011). b) Voluntary retirement scheme: Management could announce voluntary retirement scheme to its entire employee with all the employee benefits. This would entice the old employees nearing retirement or those employees looking to start their own business (Atkinson, 2011). c) Part Time employees: Removal of part time employees is another option to reduce the redundant workforce instead of firing full time employees working in the company for years. d) Introduction of Flexible working arrangements: Promoting flexible working opportunities to those employees, who have opted for voluntary retirement or part time employees which may include working from home, job sharing or varying or reducing hours of works. However, any such plans, if implemented will be regulated and protected under Flexible Working Regulations of the company and agreement so as to avoid complaints of direct and indirect discrimination in the future (Atkinson, 2011). Firms in Ireland have introduced short time working, reduced the working hours and initiated more rigorous work schedules to overcome costs and redundancies (UCD, 2011). e) Employee Benefits: Reviewing employee benefits will also help in adjusting our redundancies like replacing putting hold on the luxuries provided by the company in the present situation. Assuming that there will be few voluntary retirements and laying off part time workers, costs of employee benefits will be reduced drastically. Moreover, employee benefits for the remaining employees could be reduced to meet the expenses and cut down the costs of administration and management of the company. After salary reduction, it is necessary to inform insurance and medical agents regarding the new salary structure which will help in minimizing the company’s welfare expenditure (Atkinson, 2011). f) Sabbatical Policy: If voluntary retirement does not impresses the employees, company may introduce a sabbatical policy for staff, allowing them to take a leave which will not be compensated which should be subject to managements final agreement based on operational requirements and employee should be informed about the leave procedure which gives no guarantee of re-appointing them in the same position (Atkinson, 2011). g) Eliminating Outsourcing Staff: Outsourcing projects should be stopped and in-house resources should be used to work on the projects. Staff with additional qualifications shall be used to work on multiple assignments whereas college interns and co-op students could be assigned research work, setting up databases, etc. most of whom shall work for low salary (www.appraisaltoday.com). h) Offering extra annual leave: Other alternative to reduce the redundancies and avoid staff reduction is to offering extra annual leave to the employees in lieu of sacrificing their salary on a pro rata basis on temporary basis (Atkinson, 2011). These alternatives could be used to reduce the number of employees being laid off to reduce the redundancies as law protects redundant employees in various ways. To carry out the discussion about the alternatives mentioned above, consultation has to be carried out with trade union or employee representatives. It is further suggested that where the reduction in work could be temporary, it should be possible to reduce the labor cost by means of reductions in overtime, by short time working or by lay-offs. Whereas in circumstances where the reduction is not expected to be temporary, one of the most popular alternatives is to use natural wastage which refers to the fact that in any organization people will tend to leave naturally who may retire, find another job location, etc.(Martin and Jackson, 2002) Basing on the Employment Rights Act, 1996, Employment Appeal Tribunal, and Trade Union and Labour Relations (Consolidation) Act 1992, above recommendations shall be used to reduce the redundancies without affecting the optimal resources which could be used to strengthen the activity of companies processes and management. Moreover, Trade Union and Labour Relations (Consolidation) Act 1992 specifies to pay minimum redundancy pay to the employees according to their age and year of experience, who have worked continuously for at least two years (www.legislation.gov.uk). Therefore it is suggested to implement the recommendations mentioned above to avoid additional costs of redundancy. References 1. 51 Ways to cut costs and increase cash flow, Appraisal Today, http://www.appraisaltoday.com 2. Atkinson, J 2011, Creative Ways to Cut Your Staff Costs During a Recession, Cuts Watch, http://www.cutswatch.org.uk 3. Cross, M 1985, Managing workforce reduction: an international survey, Australia: Routledge, 4. Dunn & anr v AAH Ltd -- trust and confidence goes both ways between employer and employee, 2010, British Employment Law, www.emplaw.co.uk 5. Employment Relations Act, 1999, The National Archives, www.legislation.gov.uk 6. Employment Rights (Dispute Resolution) Act, 1998, The National Archives, www.legislation.gov.uk 7. Employment Rights Act, 1996, The National Archives, www.legislation.gov.uk 8. Employment Tribunals, An Introduction, Direectgov. www.direct.gov.uk 9. Employment, Terms and Conditions, Direectgov. www.direct.gov.uk 10. Jackson T and Martin M 2002, Personnel practice, Ed. 3, UK: CIPD Publishing 11. Mehta R. 2010 Geys v Societe Generale, London Branch, Case Law, Personnel Today, http://www.personneltoday.com 12. Raspin v United News Shops Ltd, [1998] UKEAT 1186_96_1509, http://www.bailii.org 13. Redundancy Procedure, UK Employment Law, http://www.roydens.co.uk 14. Samuel v London Borough of Lewisham, Appeal No. EAT/1015/00, 29th Nov. 2001 15. Scutt M (2011) Unfair Dismissal Without 12 Months Continuous Employment Experience?, Jobsworth by Michael Scutt, http://michaelscutt.co.uk 16. Taylor S 2002. People Resourcing, Ed. 2, Great Britain: CIPD Publishing 17. The Statutory Sick Pay (General) Regulations 1982, The National Archives, www.legislation.gov.uk 18. Trade Union and Labour Relations (Consolidation) Act 1992, www.legislation.gov.uk 19. Trades Union Congress, TUC, http://www.tuc.org.uk 20. UCD News, 2011, Recession: Firms try to cut costs and preserve staff morale, University College, Dublin, http://www.ucd.ie 21. Wrongful dismissal / a general note 2010, www.emplaw.co.uk Read More