Analysis of Employment Contract in Sport Inc - Case Study Example

Employment Law Ian had been employed for nine months, and Alf for a year with Car – Sport Inc, as general handy men. They did not sign the written statement of particulars of their employment, which required them to work flexible hours at the discretion of the management. The company handbook had stipulated that work hours could be changed without the consent of the employees, and that grievance procedures were inapplicable during the one year probation period. Although, Ian and Alf did not sign the written statement of employment, it is to be construed that they had accepted the terms of the employment contract. This conclusion can be drawn, because they had commenced to work in that company. Since, the company handbook had specified that grievance procedures could not be invoked by probationers; Alf cannot resort to these procedures. Since, Ian is a member of the trade union; he has to accept the 8 hour shift that had been negotiated by the trade union. In all employment contracts, mutual trust and confidence are implied terms. Employers should not behave in a manner that is detrimental to the relationship of mutual trust and confidence. This implied term should not be infringed by any employer wilfully and its breach constitutes a fundamental breach of the contract. Many employers assume that the serving of reasonable notice to their employees would be sufficient for making changes to the existing terms of the employment agreements. It is very important to note that changing the contractual terms unilaterally, in the absence of the employee’s acceptance, renders the employment contract null and void. As such, this constitutes a breach of the contract between the employer and the employee. If this breach is of sufficient gravity, the employee is empowered to resign from the employment and initiate legal action against the employer on grounds of unfair dismissal. If the employer had made major changes to the existing contractual terms, then the employee can contend that the original terms of the employment contract were no longer in force. Therefore, unilateral changes to employment contracts pose great risks to the employer as he cannot circumvent the statutory principles of unfair dismissal1. In Woods v WM Service, it was held that employers are prohibited from causing serious damage to the relationship of trust between the employer and employee, without just cause. There are several practices that could cause damage to this relationship. Such practices may include the unilateral modification of the nature of the employment or the unilateral change made to the status of the employee, without proper reason. Similarly, a unilateral reduction in the employee’s pay or increase in working hours would also constitute unfair policy. To prove that the relationship had been damaged by the practices of the employer, the employee is required to show that the employer had caused a deliberate and serious breach in either the express or implied terms of the employment contract2. Employment contracts need not necessarily be in a written form. However, it is the duty of the employer to supply a written statement of the duties, responsibilities and rights of the employee within a period of two months from the appointment of the latter. The contract of employment is completed when the employee accepts the job offer. As such, the employee and the employer are bound by the terms of the employment agreement till the completion of the contract period. The contract ends when a notice is given or if the contractual terms are changed. In order to change the terms of the employment agreement, there should be mutual agreement between the employer and the employee, regarding such change. Furthermore, the employer must provide a written statement that contains the full particulars of the job and the main terms of the contract to the employee. Such written statements must incorporate important terms of the contract, like, salary, working hours, holiday privileges, sick pay particulars and notice periods. The statement must include information regarding the disciplinary action that will be taken if the employee fails to discharge his duty. Moreover, grievance procedures must be included in this statement. If the employer subsequently changes some of the terms or adds new terms to the existing ones, then it is mandatory for the employer to provide written information to the employee, in this regard, within a period of one month3. As soon as the employee and the employer agree to the terms and clauses of the employment agreement, an employment contract is formed between them. If the employee begins working on the terms and conditions offered by the employer, then that employee and the employer are bound by the terms of the agreement. As such, an employment contract need not be in writing, nevertheless, a contract of apprenticeship has to be in writing. A written statement has to be supplied to an employee that incorporates the main terms of the employment and other relevant information. As a general practice, employers are required to provide this written statement to their employees, within two months of the commencement of the work4. If the employer fails to provide the written statement of the job particulars then the employee may approach the employment tribunal. Furthermore, employees can seek the direction of the tribunal if the terms of the written statement are ambiguous or lack accuracy. Similarly, employees may seek the intervention of the tribunal if there is a dispute with regard to the accuracy of the written statement that was issued to them. In the event of the termination or completion of the employment period, a notice in this regard is to be issued within three months from the end of employment. Thereupon, the tribunal specifies the particulars that are to be furnished to the employee. Dismissed employees can request their employer to provide the reasons for their dismissal, in writing. However, they must have completed, at least a year, in that job, if they are to be provided with such a written statement5. It is advantageous for the employer to ensure flexibility in respect of the work; and the employer can insist that the employees work in accordance with the terms of the employment contract. This flexibility clause or job mobility clause makes it very clear that the duties of employees may change periodically. Hence, the employer can require the employee to perform new responsibilities, without such changes being deemed to be a breach of the employment contract. However, such changes must be reasonable, if they are to be permitted by a court or employment tribunal6. The employer is required to consult the employee before making changes to the terms of the employment agreement. If it is not possible to consult the employee, then the employer must inform the employee’s representative. During this consultation, the employer must discuss the reasons for effecting the changes, and permit the employee or his representative to propose alternative solutions for the changes. Concurrence regarding such changes can be ratified by the employer and the employee, or between the employer and the employees’ trade union. At times, the employment agreement could specify that such changes could be made by reaching an agreement with trade union, and that the employer would not approach individual employees for this purpose. In such instances, the agreement is binding, even though the employee is not a member of the trade union. In order to give effect to the changes, the consent of the employee is compulsory. If the employee refuses to accept the changes, the employer cannot enforce them. In such circumstances, the employer is empowered to terminate the contract by giving a reasonable notice to the employee. To obviate this circumstance, the employer can first terminate the employment and subsequently, offer a new employment agreement that contains the changes. However, such dismissal is to conform to the relevant statute regarding dismissal procedures7. In our case, the employer had not consulted Ian or Alf before making changes to their work schedules. Since the company has come to an agreement with the trade union – in which Alf is a member – in respect of this issue, Alf has to accede to its decision. Furthermore, an agreement with the recognised Trade union is binding on all the members. Probation periods are only applicable to new employees; and a trial period is generally prescribed for internal promotions or change in job role for existing employees in an organisation. The period of probation must be incorporated in the clauses of the employment contract, which is to be given in writing, to the employee at the time of appointment. In case a promoted employee proves unsuccessful during the trial period, then that employee is to be reverted to his earlier job. During the probationary period, new employees are not entitled to any contractual benefits. However, during the trial period, employees are entitled to all the benefits of the employment8. According to Section 230(2) of the ERA 1996, an employment contract can be a contract of services or apprenticeship. It can be either expressed or implied, and written or verbal. Section 143 of the Trade Union and Labour Relations (Consolidation Act) 1992 states that the term employment implies there should be a contract of employment. Furthermore, the term employment includes all related terms and expressions. Under the provisions of the Section 136 and 98(2) of the ERA 1996, an employee has the right not to be dismissed by his employer9. Employment contracts do not contain the procedures laid down by legislation. Thus, an employee cannot resort to legal action if the employer failed to implement a statutory procedure. In contrast to this, if the employer incorporates a statutory procedure or any other disciplinary procedure and stipulates it as a contractual requirement, then failure to implement such procedure will constitute a breach of contract.10 It is of great importance to have in place, a mechanism for dealing with employee grievances. This maxim was reinstated by the decision in Chris Metcalf Ltd v. Maddocks11. This case dealt with an employee who had been dismissed for having declined to perform specific orders. This particular firm had 90 employees, but it had failed to implement a formal grievance procedure for them. In addition, its employees had not been provided with a statement of particulars. Due to these serious shortcomings, there was a failure of communication between the management and the employees. The acuity of the situation was such that an employee’s refusal to comply with instructions could not be adequately articulated. The industrial tribunal laid the blame for this sorry state of affairs, squarely on the shoulders of the firm, and the latter’s subsequent appeal against this ruling was unsuccessful12. The employer is under a statutory duty to consult the employee or the trade union before changing the contractual terms and these changes must be in writing. The Information and Consultation of Employees Regulations provides a right to employees of companies that have 50 or more employees. Such employees can request the employer to inform and consult them. It is the duty of the employer to supply them with information about the business that they are employed in13. If a dispute or grievance is related to more than one employee, then the problem can be resolved through collective agreements. For this to transpire there should be a recognised trade union in that company14. The employer is under a statutory duty to consult the employee or the trade union before changing the contractual terms and these changes must be in writing. The Information and Consultation of Employees Regulations provides a right to employees of companies that have 50 or more employees. Such employees can request the employer to inform and consult them. It is the duty of the employer to supply them with information about the business that they are employed in15. The employees’ trade union negotiated a revolving 8 hour shift with the company’s management. These changes were displayed on the notice board, but not included in the revised written particulars of employment. The consequence of these changes was that the workers had to lose lucrative bonus amounts. Ian on objecting to these changes was informed that he would be dismissed. Alf had entered into an informal agreement with his foreman regarding working hours, and he contended that this agreement would be contravened. Their attempt to invoke the grievance procedure was not permitted by the company, which decided that as probationers, they could not do so. These changes had been endorsed by most of the union members. Ian is a member of the union, whereas Alf had left the union, in the recent past. Dismissals without prior consultation with employees or trade union representatives are always regarded as unfair dismissals. In order to make a constructive dismissal there should be consultation with the employee or the representing body of the employees. In Mennell v Newall, it was held that employees should not be deprived of their statutory right to receive their salary in full. There should not be any unauthorised and unlawful deductions from their pay. This decision became a protective weapon for employees, who had been dismissed for having refused to accept changes in the existing terms, which proved to be detrimental to their financial interests16. The Employment Act 1996 provides a right to the employees to receive a notice period before being dismissed by the employer. This notice should have a minimum period of time, which is to be determined on the basis of the length of employment. This period may be increased by the clauses of the employment contract, but it can never be reduced. Under the present statutory provisions, in order to qualify for protection against unfair dismissal, an employee must have completed at least one year of continuous service with the same employer. The sick leave period, holiday period and Maternity Leave period are also included in the period of service of the employee in the company17. The Employment Act 2002 (Dispute Resolution) Regulations 2004 came into force in October 2004. This piece of legislation greatly affects the interests of employers and employees. These Regulations require employers to implement procedures for grievances and disciplinary actions. Employees are obliged to first initiate these statutory procedures in cases of grievances or disputes. This is the prerequisite for placing such issues before the Employment Tribunal. Similarly, employers are required by this statute to employ these formal disciplinary procedures, to enable them to dismiss their employees. If the employer fails to employ these procedures, then such dismissals would constitute unfair dismissals, and they would be held liable by the courts18. Ian had completed a year with this company. Hence, he is eligible for all the benefits and he also enjoys all the rights enjoyed by the other employees. Therefore, he can initiate grievance proceedings against the management. If the employer terminates the services of an employee without giving adequate notice, he will be liable for legal action to be initiated by the aggrieved employee, as stated in the Mennell v Newall decision. If all the employees object to the changes, then the company will have to abstain from making such changes. This will be to the benefit of Ian and Alf. If Ian had walked off the job in response to the management’s action, then he cannot proceed against the management for unfair dismissal or other grievances. Employment contracts are agreements between employees and employers. Both the employee as well as the employer is bestowed with some rights and duties, in this process; and these rights and duties are considered to be the terms and clauses of the contractual agreement. The extant employment legislation in the United Kingdom, protects the rights of the employee and at the same time safeguards the interests of the employer. Bibliography ACAS, Disciplinary and grievance procedures, accessed 25 August 2008. Burrows, W. Contractual terms - Written particulars. accessed 24 August 2008. Deparment For Business. (2007, October). Individual Rights and Responsibilities of Employees. accessed 24 August 2008. Department for Business, Enterprise and Regulatory Reform, Change an employee’s terms of employment, accessed 25 August 2008. Directgov, Contracts of employment: introduction. accessed 24 August 2008. Directgov, Changes to employment conditions: what if you don't agree? accessed 24 August 2008. Elizabeth Stevens, A Suitable Candidate: probationary periods for new employees (21 Sep 2007) accessed 25 August 2008. Graham John Gennard, Employee Relations (CIPD Publishing, 2002) 389 Handling discipline and grievance issues: Disciplinary and grievance procedures and the employment contract, accessed 25 August 2008. Hawthorne, J, TOPICAL EMPLOYMENT LAW ISSUES. accessed 25 August 2008. Length of Service. accessed 24 August 2008. Mennell v Newell and Wright (Transport Contractors) Limited (1997) IRLR 519 (Court of Appeal) Mick Marchington and Adrian Wilkinson, Human Resource Management at Work: people management and development (CIPD Publishing, 2005) 309 Roger Blanpain and others, The Global Workplace (Cambridge University Press, 2007) 335 Section 94[1] of Employment Regulation Act Woods V WM Car Services (Peterborough) Ltd (1981) ICR 666 Read More