Employment Law within the UK - Essay Example

Employment Law Summary: This report examines employment law within the UK in specific relevance to the issues that arise within the airline industry in the case of large airlines who are downsizing after incurring losses due to terrorist threats. This Report proposes to analyze the framework of Employment Law within the UK with special reference to enhanced maternity and redundancy provisions that have been included into the Employment Act of 1996. Additionally, this report will also examine issues of disability and discrimination within the framework of UK law and the dilemma faced by UK companies who are down sizing and may find it difficult to lay off employees, especially those that are disabled or belong to a minority race. This Report will also briefly examine the rights of employees under the new TUPE regulations. [1]. 1.1: Introduction: The changing business scenario within the U.K. poses several challenges, especially for those businesses that function within the hospitality sector. The airline industry in particular has been adversely affected by the threats posed by terrorist activity, as a result many of the larger carriers are resorting to the launch of budget airlines to offset costs, for example GO Airlines which is an offshoot of British Airways, Other budget, “no frills” airlines functioning within the UK are Ryan Air and Easy Jet airlines, which have been able to attract their fair share of travelers by offering cut throat low fares. The larger airlines however, have faced large scale losses as a result of which employee lay offs and/or mergers with other companies are more common now than before. Moreover, several airline companies are also sub contracting their services, for example catering, ticketing etc in order to reduce expenses and the position of independent contractors under UK law also becomes relevant. Other issues that also arise in the context of the airline industry are issues of outsourcing some services or entering into mergers with other companies for some services and this could evoke the provisions of the TUPE Regulations within the UK that spell out the manner in which employee transfers are to take place through mergers. Moreover, the Employee Relations Act has recently proposed several reforms under the Employment Relations Act of 2004, in which there are enhanced provisions relating to unions and the relations of employers with unions which are all relevant in the context of an airline industry whose employees may belong to unions. 1.2: Recruitment and discrimination: The most significant piece of legislation is the Employment Rights Act of 1996, that lays out the conditions of employment, with reforms introduced as the Employment Relations Act of 2004.. Minimum wage levels have been set as of October 1, 2005 at 5.05 pounds per hour for home workers as well and is expected to increase up to 5.35 pounds in 2005, while the wage rate for 18-21 year olds is current 4.25 pounds which may be expected to go up to 4.45 in October 2006.[2] Equal pay is mandated for both sexes [3] and racial discrimination against any employee is prohibited under UK Law [4]. The Race Relations Act framed in 1976 specifically deals with discrimination on the grounds of race in the fields of employment, training education, housing and other services deemed necessary to ensure that the civil liberties of an individual are not hampered. In this context, Feldman highlights the significance of civil liberty as a defining element of the “relationship between the State and its citizens, such as freedom from discriminatory or arbitrary treatment.”[5]. The Race relations also deals with discrimination exercised by employers, whose action would also be deemed to be unlawful under the provisions of this act if he discriminates against an employee or potential employee by “refusing or deliberately omitting to offer him that employment.”[6]. However, when an employer sets out certain preferences for a particular job, this cannot be deemed to constitute discrimination, because preferences expressed during the recruitment cannot be deemed to be guilty of indirect discrimination, since such preferences cannot be equated with requirements, otherwise Section 1(1) (b) of the Race Relations Act would have an “extraordinary wide and capricious effect.”[7]. In the case of D’Souza v Oursley and Another, the Court refused to entertain a racial discrimination complaint, since the Tribunal will be guided in such cases by the inferences it makes based upon the individual circumstances of each case.[8] 1.3: Worker rights, sick leave, maternity and disability benefits: Under the Working Time Regulations[9], workers have the right to four weeks of paid holiday leave per annum and is also entitled to sick leave, but when this is long term sick leave, his right to normal pay will come to an end, therefore holiday leave will not be entertained, and no claims can be brought for unlawful deduction of wages.[10].This was also laid out in the case of Ainsworth, Kilic, Stribger, Thwaites and Khan v Commissioners of Inland Revenue, where it was held that an employee who is on long term sick leave but is still technically an employee of the company is not entitled to holiday if his right to normal pay has come to an end.[11]. The Disability Discrimination Act of 1995 is a significant piece of legislation that makes it unlawful for an employer to discriminate against a disabled person as far as recruitment, promotions and dismissals are concerned. The Act defines a disability as a mental or physical condition that has a long term, adverse effect on the employee and his work performance. Pregnant employees are entitled to 26 weeks ordinary maternity leave, irrespective of how long they may have worked for their employer and are entitled to receive 26 weeks of statutory pay, provided that she has 26 weeks of continuous service with her employer which is measured through the qualifying week, which is the 15th week before the baby is born.[12] In the recent case of Alabaster v Woolwich plc, the Tribunal clarified that when an action is brought for equal pay under the Equal Pay Act of 1970, there is no requirement for a pregnant woman to identify her male partner, and while taking into accounts the payments to be made under the statutory maternity pay scheme, any pay increases made before the woman’s maternity leave are to also be taken into consideration [13]. Alternatively, employees may also be eligible for maternity or paternity leave. Moreover, there can be no dismissals on grounds of childbirth. 1.4: Employee dismissals: When an employee wishes to bring suit against his employer for dismissal on grounds of breach of contract or dismissal due to race discrimination, he/she is required to present the complaint within a specified time period. In the case of Gill v Whitbreads plc, the fact that the complainant had waited too long to bring his suit alleging discrimination was a factor in the refusal of the tribunal to consider the case.[14] In the case of the large scale airline sector which is under consideration in this report, dismissal of employees would be one of the aspects that would be particularly relevant, especially under the criterion of redundancy. Under the Employee Relations Act, an employee who is dismissed shall be deemed to be dismissed for redundancy if the requirements of the business for the particular kind of work performed by the employee have ceased to exist [15]. Therefore since major airlines are shutting down some routes or outsourcing some of their services, as a result of which its requirement for the work performed by such employees no longer exists, redundancy will be said to arise, which has been deemed to be one of the fair reasons for dismissal. [16]. However, the airline in question will have to demonstrate that the redundancy requirements are satisfied, as was laid out in the case of Safeway v Burrell, which are as follows: (a) Has the employee been dismissed? (b) Has the organization’s need for the kind of services provided by the employee diminished? (c) Is this diminution in work the reason for the dismissal? [17] The same question of whether redundancy was the reason for dismissal arose in the case of Murray and Anor v Foyle Meats and the Court applied this three way test in order to determine the grounds for dismissal. [18]. Employees who are dismissed compulsorily under redundancy schemes may have a cause of action to appeal to a Court of law, where the court will determine whether the reasons of redundancy that have been given are justifiable. In the recent case of Agco Ltd v Massey Ferguson Works , the Court made an important distinction between voluntary redundancy and compulsory redundancy in determining eligibility of employees for the corporate pension scheme.[19]. The phrase “retires from service at the request of the employer” was held to apply to those employees who had applied for voluntary redundancy, and it was only these employees who were deemed to be fit for receipt of pensions, as opposed to those who had been dismissed on grounds of compulsory redundancy. Moreover, if the employees are members of employee unions, then it is necessary for employers to inform the Unions, as detailed below. 1.5: Employers and Unions: The Trade Union reform and Employment Rights Act of 1993 lays out most of the terms for the relationship between employers and employee unions. While employees do have the right to belong to a Union, there are certain regulations that have been spelt out in terms of picketing and balloting. Since large scale dismissals are prone to provoke employee action in the form of strikes organized by unions, the law tries to ensure that grievances that are expressed are truly those of the employees and not merely those of the Union leaders, appropriate “scrutineers” are to be appointed and balloting and counting of votes is to be carried out by an independent person.[20]. Peaceful picketing of employees has been allowed under the law [21], however picketing must remain peace and must not be intimidating in any fashion, as clearly laid out by the code on picketing.[22]. In the event that a Union functions as an interfering third party that tries to break off any contract that an employee may have with his/her employer, there is also the possibility that they may be liable under industrial tort, as was the case for example in an employment contract where a third party convinced one of the parties to break off the contract.[23] When an organization is considering dismissal on grounds of redundancy, it is also required to consult the concerned Trade Unions and provide them complete reasons and justification for the dismissals proposed. Therefore any large sector airline that proposes to lay off several or a few of its employees will be obliged to inform the Unions of which those employees are members. Employee representatives must be contacted so that those potentially in danger for dismissal can also be warned of the impending move and employers have a duty to consult with the trade unions in the event of impending dismissals [24]. Section 195(1) spells out the fact that dismissals due to redundancy are categorized as being “for a reason not related to the individual concerned.” The requirement to consult arises especially in a case where more than 20 employees are involved and such consultation with the Unions within a 90 day period, as was laid out in the case of GMB v Man Tuck & Bus UK[25]. In the event that an employer fails to consult and inform employees about proposed dismissals on redundancy grounds, then this could hold them liable for claims of unfair dismissal, and this is what occurred in the case of Mugford v Milford Bank plc. [26]. The consultation is mandatory, especially in the case of AB Plc that plans to dismiss many of its employees and consultation is not the same as warning the employees that they are to be dismissed. 1.6: TUPE Regulations and Other grievances: Tupe regulations primarily arise in the case of employees whose Company is being merged into another. These regulations spell out the fact that the employees already working in a company must be absorbed by the merged company. In such a case therefore, there will a collective contract that will mandate the transfer of the employees concerned, and this was spelt out in the case of Ackinclose and Others v Gateshead Borough Metropolitan Council in which case it was laid out that when a merger takes place, the employees of a particular undertaking will automatically have their contracts transferred to the new Company, on existing terms.[27]. Employee grievances against an employer may be brought t the Employment Appeals Tribunal and there has been concern expressed by employers about the grievance procedure because the only requirement is that an employee must set out his grievance in writing.[28] Employers have pointed out that in some instances a grievance raised informally by an employee which has been rejected then gains validity by merely being set out in writing without the need to prove employee intention in doing so.[29] 1.7: Conclusions: In the context of the above mentioned law, it may be noted that there is a significant human resource impact that results, especially in the case of the airline industry. The enhanced provisions for benefits to employees and the greater validity they possess under the law to raise grievances against their employers makes it difficult for employers to discharge employees without proper cause. Moreover, the extra provisions such as sick leave and maternity leave all place a burden upon employers for additional financial outlays which are draining on a large scale airline sector that is already bearing the brunt of losses. In the instance of mergers and outsourcing, employee rights have been protected and employers have to be vigilant in ensuring that employee needs are met. The requirements of informing and consulting with Unions must be complied with, as also the requirement to terminate the services of employees without any form of discrimination that could arise under various grounds. However, the above report will also show that not all employee suits are successful in every instance, therefore a great deal will depend upon the individual circumstances of every case. However the additional benefits such as maternity leave, sick leave and pension benefits under voluntary redundancy are like to improve employer-employee relations and ensure that motivation of the employees is fostered, since this aspect is so vital for the success of a business. The Race relations Act and the Disability Act ensure that no category of employee is sidelined or treated prejudicially on account of factors beyond his/her control and ensures parity and fairness in the workplace. The enhanced wage schemes are also likely to benefit employees and address the important issue of motivation at the workplace. Thus in conclusion, it may be seen that while UK law does not forbid mergers and outsourcing, using independent contractors or sub contracting services and thereby does not interfere with the freedom of the business to carry out its operations, it does mandate certain conditions to benefit the workers. (2502 words) References: [1]: Transfer of Undertakings regulation 1981 [2]: http://www.lawontheweb.co.uk/basics/employment.htm [3]: Equal Pay Act of 1970 [4]: Race Relations (amended) Act of 2000. [Online] Available at: http://www.opsi.gov.uk/acts/acts2000/20000034.htm [5]: Feldman, David. Civil liberties and human rights in England and Wales. Oxford University Press. 2000: 4 [6]: Part II, Section 4 of the Race Relations Act of 1976. [7] Meer v Tower Hamlets London Borough Council (1988) IRLR 399 at 403 [8]: DSouza v. Ouseley & Anor [2000] EAT 28_99_2501 (25 January 2000) [9]: Working Time Regulations SI 1998/1833 [10] Any claims to pursue and enforce entitlement to holiday pay may be brought under regulation 30 of the 1998 SI regulations, while claims of unlawful deduction of wages are to be brought under the Employee Relations Act of 1996, Section 23. [11] Ainsworth, Kilic, Stribger, Thwaites and Khan v Commissioners of Inland Revenue [2005] EWCA Civ 441 [12]: See maternity leave provisions , PL 958, [online] available at the DTI website [13]: Alabaster v Woolwich plc and DSS, ECJ Case C-147/02, 30th March 2004, reported at [2005] ICR 695 (also at [2004] IRLR 486). [14]: Gill v. Whitbreads Plc [2000] EAT 1274_99_0704 (7 April 2000) [15]: Section 139 (1) of the Employment Rights Act of 1996 [16]: Section 98 of the ERA (1996) [17]: Safeway v Burrell (1997) IRLR 200 EAT [18]: Murray & Anor v Foyle Meats (1999 ) IRLR 562 HL [19] Agco Ltd v Massey Ferguson Works Pension Trust Ltd and ors [2003] EWCA Civ 1044 [20] Subsections 3A of Section 55 and Section 77 of the Trade Union Reform and Employment Rights Act of 1993 (c.19) [online] Available at: http://www.bailii.org/cgi-bin/markup.cgi?doc=/uk/legis/num_act/turaera1993420/ s55.html&query=Employment+Law+balloting&method=all [21] See the 1992 Trade Union and Labour Relations (Consolidation) Act, Code of Practice, Picketing PL928 (1st revision) [22] Para 24 of the Employment Code of Practice (Picketing) Order 1992 SI 1992/2176 [23] Lumley v Gye In Weir, T., 2000 A Casebook on Tort. Sweet and Maxwell: 584-588 [24] Section 188 of the Trade Union and labor Relations Consultation Act (1992) [25] GMB v Man Truck and Bus UK (2001) IRLR 636 EAT [26] Mugford v Midland Bank plc (1997) IRLR 203 EAT [27] Ackinclose and others v Gateshead Metropolitan Borough Council. EAT on 28th October 2004, reported at [2005] IRLR 79. [28] Paragraph 6, schedule 2 of the Employment Act of 2002. [29] http://www.personneltoday.com/Articles/2006/02/21/34025/ What+constitutes+a+Step+1+grievance+note.htm Read More