UK Employment Law - Term Paper Example

 «UK Employment Law: Constructive Unfair Dismissal System» I Introduction The Employment Rights Act of 1996 provides for the protection of employee from capricious, unfair and wrongful dismissals. The law even takes one more step forward: it protects employees from the kind of conduct of employers that effectively renege on the terms of the employment contract. This protection allows an employee to take the first step of withdrawing and resigning from his job even without explicit words of dismissal from the employee so that such an employee can fast-forward sequence of events and immediately resort to relief in various tribunals and the EAT. This protection is called the constructive dismissal system and is set forth under s. 95 of the Employment Rights Act of 1996. But whilst this provision of law gives employees autonomy to a certain extent, allowing them to initiate the action and take control of the course of things, the provision, nevertheless, clothes itself in vague and imprecise terminologies that hampers the full intent of that protection. Constructive dismissal cases are reputed to be hard-to-win cases. Not only are employees expected to come up with less resources, evidentiary and otherwise, to win their cases in court, they are also hampered by the stringent requirement of courts and tribunals in proving that such dismissals necessarily are serious and repudiatory in nature. Much of this difficulty stems from the fact courts and tribunals have sometimes different perspectives in what are serious and repudiatory dismissals and the fact that there is really no concrete and specific definition of such basic terminologies as constructive dismissal, which is not even mentioned by the law. Nevertheless, the constructive dismissal system is a big boost to employees because as earlier said, it gives them the opportunity to react positively and provides them a way out of a working relation that is turning out to be disadvantageous to them despite the fact that an employer has not explicitly terminated them. II The Constructive Unfair Dismissal System under UK Employment Law Under the Employment Rights Act of 1996, the dismissal of an employee may be effected in three different ways. Sections 95 and 136 of the aforesaid law both referred to such circumstances as: when employment is terminated by the employer with or without notice; non-renewal of the term of employment, if such is applicable, upon its expiration, and; termination of the employment at the instance of the employee, with or without notice, due to and under circumstances allowed by law relative to the employer’s conduct. The last circumstance wherein the conduct of the employer entitles the employee to initiate his resignation is called the constructive unfair dismissal system. Constructive dismissal, therefore, is the statutory right of an employee to object to the conduct of an employer in breaching certain obligations, like health and safety provisions, by resignation without notice. The purpose of the constructive dismissal system is to give the employee a coping mechanism when the employer uses devious and covert strategy to force him out of employment without actually resorting to express acts of termination. It allows the employee to treat his case as dismissed by the employer so that he could pursue compensatory and other relief measures (Smith & Thomas 2007). In referring to the right of the employee to resign under constructive dismissal, §(c) of section 95 of the Employment Rights Act of 1996 states “the employee terminates the contract under which he is employed (with or without notice) in circumstances in which he is entitled to terminate it without notice by reason of the employer’s conduct.” The operative word here which is the source of most contention is the word “entitled,” considering that the law really does not specify as to the particular circumstances that gives an employee an entitlement of withdrawing from employment albeit under this condition it is deemed that it is the employer who terminated the employee. In the context of the employment law, the word ‘entitled’ is pivotal because it is determinative of the legality of the employee’s withdrawal from his employment without himself deemed as having breached the employment contract. It is noted that initially the term implies either of two things: the employer’s behavior towards the employee is intolerable that the employee cannot be expected to stay, and; the employer’s conduct is such that it amounts to a breach of the contract of employment (Smith & Thomas 2008). The first is often referred to as the reasonableness test and the second, the contractual test. The case Western Excavating (EEC) Ltd v Sharp [1978] ICR 221 finally clarified what constitutes constructive dismissal giving rise to or entitling an employee the right to walk away from his job. In that case, an employee entered into a flexi-time arrangement of employment with his employer. On one afternoon, he decided to represent his team in a cards competition and requested time off from his foreman but the latter refused on the ground that no man can be spared as there was much work to do. The employee nonetheless went on playing in the competition for which the foreman responded by terminating him upon a two weeks’ notice. Upon appeal to the in-house grievance committee, the latter mitigated the termination to a five-day suspension without pay. As financial relief, he sought for the release of his vacation pay and applied for a loan from the welfare fund of the company. He was rebuffed in both. Thereafter, he notified his employer that he was compelled to relieve himself of his job albeit he did not want to. He demanded for his vacation pay and filed for compensation with the Industrial Tribunal. The Industrial Tribunal held that the employer’s conduct was unreasonable and therefore, the employee is entitled to leave his job on the ground that the former’s action amounted to constructive dismissal. The Queen’s Bench Division had a different perspective of the facts of the case. According to it, constructive dismissal and the right of the employee under it is activated by the conduct of the employer that reveals a disparity with the terms and provisions of the employment contract so that it effectively terminates the employment of the employee. In other words, there was no constructive dismissal in this case because it was not the obligation of the employer, under the employment contract, to provide financial assistance to the employee. The implication of the Western Excavating case is that the courts are leaning towards the contractual test and had, in effect, narrowed down the application of constructive dismissal to circumstances that are relevant to the employment contract. The decision was, however, qualified by Lawton LJ when he stated: “…I do not find it either necessary or advisable to express any opinion as to what principles of law operate to bring a contract of employment to an end by reason of an employer’s conduct. Sensible persons have no difficulty in recognising such conduct when they hear about it…Lay members of the tribunal… so not spend all their time in court and when out of court they may use, and certainly will hear, short words and terse phrases which describe clearly the kind of employer of whom an employee is entitled without notice to rid himself. This is what [constructive dismissal] is all about; and what is required for the application of this provision is a large measure of common sense.” In addition, subsequent cases had proven that the application of the reasonableness test had not, after all, been totally obliterated by the Western Excavating case. These subsequent cases seemed to ease the initial implication of Western Excavating because the tribunals, through these cases, had effectively made ‘unbearable conduct of the employer’ against an employee as within the ambit of a term impliedly written into the contract respecting ‘trust and confidence.’ The action of the tribunals in willingly reading into employment contracts the term of ‘trust and confidence’ has impliedly resuscitated the reasonableness test within the ambit of constructive dismissal cases. In the case, for example, of Morrow v Safety Stores [2002] IRLR 9, an employer berated his employee, a bakery manager, in front of customers and threatened to find somebody who can do the job more competently than him. Such a confrontation between employer and employee did not only happen once but several times, with the employer constantly criticising the employee with her inability to cope with stock levels. When the case reached the Tribunal, it found a breach of the implied term of mutual trust and confidence but did not deem it serious enough to merit the so-called repudiatory breach of the employment contract. The EAT however had a different view of the matter when it held that every breach of the employer of the implied term of confidence and trust is deemed a renunciation of the employment contract. The case was remanded to the Tribunal. Aside from the implied term of trust and confidence cases, other usual basis for constructive dismissal cases are wages, duties, working hours, job location, unlawful sex discrimination, suspension without pay, swearing at or criticising employees, refusing a pay rise, inadequate support, lackadaisical dealing of grievances and disciplinary matters, failure in providing adequate working environment, and changing terms and conditions after a TUPE transfer (Scrope & Barnett 2008). Many constructive dismissal cases are often underpinned by unilateral acts of the employer in imposing an employment measure against the employee. In McAndrew v Prestwick Circuits Ltd [1988] IRLR 514, the basis for the constructive dismissal case is the unilateral change of employment terms where the employee, under a mobility clause term of employment, refused to transfer to another branch of the employer because of insufficient notice which was initially pegged at 4 days and later extended to a week. The Court held that notwithstanding the mobility clause, the transfer of an employee from one place of work to another must be subject to geographical consideration and sufficient and reasonable notice. In Industrial Rubber Products v Gillon [1977] IRLR 389, the core issue in the constructive dismissal is the failure to pay wages. The Court held in this case that a unilateral decrease in wages is a violation of the employment contract even if the act was done for some good justification and even if the amount involved was not substantial. The issue of unilateral alteration of a worker’s job description and function can also be cause for constructive dismissal as held in the case of Coleman v S & W Baldwin [1977] IRLR 342 whilst the unilateral variation of working hours can also be made subject to a constructive dismissal suit as was in the case of Derby City Council v Marshall [1979] IRLR 261. Even instances of sex discrimination can be used as basis for constructive dismissal cases as held in Shaw v CCL Ltd [unreported, EAT 22 May 2007]. In this case, an employee who had recently given birth and had previously obtained a maternity leave was refused to work part-time upon her comeback. She brought two cases before the Tribunal on sex discrimination and constructive dismissal on the same sets of facts. The Tribunal awarded her £18,000 for the first case but denied her on the second. When the case was appealed to EAT, the latter held that the sex discrimination of the employee at the instance of the employer through refusal to admit her back to work was a repudiation of the employment contract and therefore a basis for constructive dismissal. The adequacy and suitability of workplace facilities, equipment and conditions are also usual basis in the filing of constructive dismissal cases. In Waltons & Morse v Dorrington [1977] IRLR 488, the working condition complained of was the poor ventilation of the workplace that made non-smoking workers suffer the brunt of their heavy smoking colleagues. In the case of Cape Industrial Services Ltd. v Ambler [2002] EWCA Civ 1264, the Court had an occasion to give some guidelines in the determination of the existence of constructive dismissal. In this case, which involves an applicant who felt constructively dismissed from her job when her immediate boss offered her job to another to stop the other from leaving for another job and when the company grievance procedure was not able to resolve her issues, the Court said that in resolving constructive dismissal issues, the following must be kept in mind: the relevant terms of the employment contract that was violated by the employer; whether the breaches can be proven; whether the breaches are significant; whether the resignation of the employee was made on the basis of such breaches; whether the breaches were justifiable, and whether the justification was treated reasonably by the employer. In another case, the Court emphasised that constructive dismissal is applicable only if the conduct being assailed and made the basis of the employee’s resignation is that of the employer only and not of any other party. In Yorke and Anor (tla Yorkes of Dundee) v Moonlight, unreported EAT 19 January 2007, an employee resigned after he received verbal abuse from the father of another employee. The Court dismissed the application on the ground that it was not a ground for constructive dismissal. On the other hand, in Doherty v British Midland Airways [2006] IRLR 90, the Court stressed that constructive dismissal cases are concerned with breaches of employment contracts and not the statutory rights of the applicant. The case involves a GMB employee who filed a constructive dismissal case purportedly because her right under the trade union was breached. The Court debunked the contention of the applicant that her right under trade union was an implied term of the employment contract on the ground that any breach of an employee’s right is a breach of the implied term of trust and confidence. The Lewis v Motorworld Garages Ltd [1985] IRLR 465 is a precedent-setting case because it established the ‘last straw’ doctrine. This case involves an applicant, who had borne a series of breaches committed by his employer: he was demoted without warning; his office was taken away from him; he suffered cut in wages; he often received verbal abuse from his employer who never failed to disparage his work on a daily basis, and threatened dismissal on several occasions. The Court held that albeit the individual breaches did not amount to serious repudiation, all of them taken together or cumulatively, the breaches equated to a fundamental breach that is serious and repudiatory in nature and therefore, within the ambit of the constructive dismissal system. The ‘last straw’ label is actually a misnomer because as can be seen from the Lewis case, the final act of the employee was not the most serious or even repudiatory. In Logan v Commissioners of Customs & Excise [2003] EWCA Civ 1068, which was also a ‘last straw’ doctrine case in constructive dismissal, the Court clarified that the gap of time of the incidents cited as employer breaches is not material. In this case, an employer failed to resolve the grievances of the employee through the company’s grievance mechanism in 1997 and in 1999, another incident of employer breach occurred. The tribunal held that the 18 month gap between the first and second incident was too long for a proper application of the ‘last straw’ doctrine. This was however, overturned by the EAT. III Conclusion: The Impact of the Constructive Unfair Dismissal System on Employees It is said that constructive dismissal cases are often the last recourse of employees in their quest to resolve their grievances against their employees. This is because of the difficulty of bringing such a case and the little possibility of emerging as a victorious applicant. Constructive dismissal cases are most often stacked against the employee because of the stringent procedural and substantive requirements inherent in these cases. An employee who wishes to bring a constructive dismissal action against his or her employee must abide by specific procedural requirements, which are often in conflict with one another. First, the employee must immediately resign and the immediate resignation must due to the breach complained of as was held in the case of Norwest Holst Group Administration Ltd v Harrison [1984] IRLR 419. Another tricky part at this stage is the fact that the law does not require the employee to reveal his reasons for leaving his work because the law allows him to severe his employment without serving notice to his employer of such, but in the case of Weathersfield Ltd v Sargent [1999] IRLR 94 CA it was held that the failure of an employee to inform his employer of the reason of his leaving may throw suspicious on his motives of leaving if confronted later. The difficulty of withdrawing from employment by reason of constructive dismissal can be gleaned from this long passage from Lord Denning’s decision in the Western Excavating case, Lord Denning explicitly stated that “If the employer is guilty of a breach going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more essential terms of the contract, then the employee is entitled to treat himself as discharged from any further performance. If he does so, then he terminates the contract by reason of the employer’s conduct. He is constructively dismissed. The employee is entitled in these circumstances to leave at the instant without giving any notice at all or alternatively, he may give notice and say he is leaving at the end of the notice. But the conduct must in either case be sufficiently serious to entitle him to leave at once. Moreover, he must make up his mind soon after the conduct of which he complains; for, if he continues for any length of time without leaving, he will lose his right to treat himself as discharged. He will be regarded as having elected to affirm the contract.” The implication of that statement is that the employee may do either of two things as a reaction to the repudiatory action of the employee: walk away immediately without informing his employer, or; serve a notice to his employer and continue working until the end of the period stated in the notice. In the first instance, the employee may most likely lose the opportunity to establish his motive for leaving which may affect the presentation of his evidence when he brings the case to the employment tribunal. The second instance is no less difficult than the first because it may mean having to deal with and continue working for an employee under a strained and awkward atmosphere in the workplace. Moreover, the employee must ensure that none of his acts, like serving notice to the employer or staying longer in employment even after the purported breach of the employer may be taken as a sign of waiver of his rights. In the case of British Leyland (UK) v Ashraf [1978] ICR 979, for example, the Court did not find a dismissal but a rather a “resignation by conduct” when a Pakistani was allowed by his employer to take an unpaid vacation leave for five weeks on the condition that he must be at the workplace at a certain date, whether he is in a healthy condition or not. It was often observed that immigrants often fell ill when they reached UK after travel abroad. When the employer failed to show up on that date because he fell ill, his employer deemed him resigned. It was held that dismissal did not apply to the case because there was termination by contract or consensus. A similar incident happened in Igbo v Johnson, Matthey Chemicals Ltd [1985] IRLR 189, EAT where an employee requested for a vacation leave so she could visit her relatives in Nigeria. The leave was granted but only after she had signed a document stating that her failure to return to the workplace at the date stated will mean her termination from employment. Although the employee was already in UK at the date she was supposed to report for work, she was unable to do so because she fell ill. The Court held that there was no dismissal; there was only consensual termination. The concept of self-dismissal may also be used against an employee who leaves work without serving notice to his employer. In the case of Gannon v Firth [1976] IRLR, an employee walked away from job without returning because of some grievance he held against the employer. He left the plant in a dangerous state. The Court held here that the employee had effectively dismissed himself from employment through his conduct. As earlier discussed, the substantive requirements of a constructive dismissal case are equally stringent. The breach of contract doctrine enunciated in the case of Western Excavating implies a narrowed scope of the constructive dismissal cases albeit the courts have allowed the implied term of trust and confidence to be read into employment contracts. Moreover, managerial prerogatives may even cloud an already ambiguous principle. Managerial prerogatives are often ambiguous and their existence may conflict and even override contractual tests of constructive dismissal albeit they would be better dealt with by the reasonableness test. Considering however, that the contractual test takes precedence over the reasonableness test, with the latter taking an obscure and often unclear role in constructive dismissal cases, the likely possibility is that the concept of managerial prerogatives will even make constructive dismissal cases difficult to win by employees (Elias 103). In the case, for example, of Nelson v BBC [1977] IRLR 148, the Court showed its unwillingness to impose itself on express contract terms by reading into it the implied terms. In that case, a BBC correspondent was terminated on the ground that he became redundant as the Caribbean service of BBC was already being shut down. The employee alleged that an express term in the contract reads to the effect that the corporation could bring its workers anywhere it wants to. The tribunal ruled that despite such provision of the contract, it was also necessary to read into the contract that the employee was employed for the purpose of serving the Caribbean BBC service. This was overruled by EAT on the ground that implying a term into a contract cannot be done when there is an express term in such a contract that opposes it (Elias 1997). The implication of all these is that albeit constructive dismissal is a very welcome provision of the Employment Rights Act of 1996 because it provides, in principle, the employee with an additional tool to grapple with employment issues and attempts to level the playing field between employer and employee, the stringent requirements appended to it makes it almost unreachable and useless to employees. The law itself is ambiguous with many of its terminologies not clear cut and without fixed definitions. These may possibly result in loopholes and weaknesses that may be used against the employee and make it more difficult for him to get a favourable ruling from employment tribunals. The case law itself on the subject provides no great hope for the applicant with many decisions going one way or the other. It is no wonder that a constructive dismissal case can be seen to be as one that is stacked against the employee. From the procedural aspects to the substantive prerequisites of this type of employment relief, it would be very difficult for the employee to see a silver lining in the process. The intent of the law is good but unless the average employee can find practical use for it to pursue his rights in courts and tribunals, it will never serve its purpose. Works Cited British Leyland (UK) v Ashraf [1978] ICR 979. Cape Industrial Services Ltd. v Ambler [2002] EWCA Civ 1264. Coleman v S & W Baldwin [1977] IRLR 342. Derby City Council v Marshall [1979] IRLR 261. Elias, Patrick. Unravelling the Concept of Dismissal II. http://www2.warwick.ac.uk/fac/soc/law/staff/academic/neal/courses/lawlabrels/newdocs/eliaspt2.pdf. pp. 103-104. Employment Rights Act of 1996. Gannon v Firth [1976] IRLR. Gillies, Alistair. Constructive Dismissal in UK Employment Law: Is it Constructive or Potentially Destructive? 2009 Dec 9. http://peacesecurity.suite101.com/article.cfm/constructive_dismissal_in_uk_employment_law. Igbo v Johnson, Matthey Chemicals Ltd [1985] IRLR 189, EAT. Industrial Rubber Products v Gillon [1977] IRLR 389. Lewis v Motorworld Garages Ltd [1985] IRLR 465. Logan v Commissioners of Customs & Excise [2003] EWCA Civ 1068. McAndrew v Prestwick Circuits Ltd [1988] IRLR 514. Morrow v Safety Stores [2002] IRLR 9. Nelson v BBC [1977] IRLR 148. Norwest Holst Group Administration Ltd v Harrison [1984] IRLR 419. Scrope, Henry & Barnett, Daniel. Employment Law Handbook, 4th Edition. Henry Scrope, 2008: pp. 176-179. Shaw v CCL Ltd [unreported, EAT 22 May 2007]. Smith, Ian & Thomas, Gareth. Smith & Thomas' Employment Law, 9th Edition. Oxford University Press, 2007: pp. 2414-2415. The City Law School. Employment Law in Practice, 8th Edition. Oxford University Press US, 2008: Thompsons Solicitors. Summary of the Law on Unfair Dismissal and Redundancy. 2010 May. http://www.thompsons.law.co.uk/ltext/l1020001.htm Waltons & Morse v Dorrington [1977] IRLR 488. Weathersfield Ltd v Sargent [1999] IRLR 94 CA. Western Excavating (EEC) Ltd v Sharp [1978] ICR 221. Yorke and Anor (tla Yorkes of Dundee) v Moonlight, unreported EAT 19 January 2007. Read More