Relationship of the Employer and Employee - Essay Example

EMPLOYMENT LAW Table of Contents CONSTRUCTIVE DISMISSAL 3 Introduction 3 Issues 4 Discussion 4 Conclusion and Recommendation 8 CLOSURE OF BUSINESS 9 Introduction 9 Discussion 10 Conclusion and Recommendation 14 BIBLIOGRAPHY 15 Constructive Dismissal I. Introduction The existence of employer-employee relationship is tested against the nature of engagement, selection, supervision and termination. It is further established on the capacity of the employer to furnish work while the employee possesses the skills to perform the required task. In many instances, the relationship between the employer and employee thrives but in some, it simply does not fit. Thus, the employer may exercise its prerogative to terminate the employee through the processes as enunciated in the ACAS (Advisory, Conciliation and Arbitration Service) Code of Conduct. If the employee finds the termination unlawful then redress may be undertaken before the employment tribunal. Dismissal is not encouraged as the livelihood of the employee is at stake but it does not entail the destruction of the employer if fair causes exist to justify termination. Dismissal is deemed just when anchored on the employee’s misconduct, inability to discharge the duties due to lack of qualifications, the position is redundant, continued employment is prohibited by statutory duty and other analogous reasons. The employee is not without any recourse from unlawful dismissals. An employee may institute a suit before the employment tribunal provided that such employee has rendered one year continuous service. However, an employee may bring an action regardless of length of service when based on “automatically unfair grounds” thus the time element is not a pre-condition. If the dismissal is rooted on medical reasons, it is sufficient that the employee has rendered one month of service. Accordingly, an employee who was treated unfairly may proceed against the employer. This is the dilemma of Ms. Sally Trent who owns ST Solutions, a small business with seven employees including Sally. A suit for constructive dismissal and harassment was lodged by Trish Dodge, her Secretary/Administrator for about twenty months. According to Sally, Trish was competent in her job notwithstanding long absences due to illness which she failed disclosed. There were no complaints regarding her conduct or had problems dealing with Sally and the other employees. Conflict arose between Trish and Brian, a freelance web designer, who regularly found fault with Trish by shouting words “you are useless”. When Trish complained to Sally, she told Brian during a drinking get-together to avoid contact with Trish. Brian ignored the warning prompting Trish to walk out. In her letter, Trish stated that she cannot work in the same office as Brian. Sally hired a “temp” who discovered discrepancies in Trish’s work. I. Issue/s The inquiries of Sally are—whether she can be compelled to answer the charges against her; or can avoid liability by invoking the lapses in Trish’s performance and what measures can she undertake to avoid future problems. II. Discussion The claims of Trish for constructive dismissal and harassment are supported by law and jurisprudence. Under the Employment Rights Act 1996, constructive dismissal occurs when an “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 employers conduct." Sally committed a breach when she neglected protect Trish despite knowledge of the oppressive and unbecoming conduct of Brian. Moreover, Sally failed to prevent Brian from harassing and humiliating Trish. Undoubtedly, the actuation of Brian is not isolated but a series of harassing and humiliating events which culminated in the resignation of Trish. Sally failed to follow the process enunciated in Employment Act of 2002 and the guidelines issued by the ACAS Code of Practice on Disciplinary and Grievance Procedures directing all employers to institute a grievance process where complaints shall be ventilated. Instead of calling the parties to the grievance proceedings to thresh out the issues, Sally merely conducted an informal one-on-one discussion with Brian while out drinking which did not foster a reconciliatory attitude on Brian’s part. The rationale of the grievance hearing is to allow the parties to explain their sides and to come up with a compromise but in the instant case no conciliatory meeting was conducted. Consequently, Trish can claim constructive dismissal as her complaint was not addressed at all. Sally may set up the defence that she did not commit breach of duty since Trish’s complaint was not in writing thus she cannot commence an investigation. However, this argument could easily be demolished by the lack of procedures to govern problems in the workplace and such error may be corrected by requiring Trish to execute a written complaint. Again, it may be argued that Sally cannot be held liable for Brian’s behaviour as he is an independent contractor however the same cannot be sustained or given credence. The Protection from Harassment Act of 1997 laid down the principle that a person should not harass another or perform an act which a person knows or ought to know amounts to harassment of the other. And, if an employer allows harassment or distress within the work environment to flourish then such employer becomes liable under the doctrine of vicarious liability. In Majrowski vs Guy’s and St Thomas’ NHS Trust, it was ruled that Protection from Harassment Act 1997 (PHA) could be applied to harassment in the workplace although originally it was intended to protect those who are victims of stalking. Nonetheless, it was unanimously held that an employer can be vicariously liable under the PHA for harassment committed by an employee in the course of their employment. It is beyond dispute that the actuation of Brian, notwithstanding that he is an independent contractor, in harassing and humiliating Trish was in the course of his employment as he constantly berates Trish for being incompetent and useless. Thus, Sally can be held vicariously liable for the unbecoming behaviour of Brian. Again, it is noticeable that Sally failed to act with dispatch on the complaint of Trish. Moreover, there is no anti-harassment policy in place to ascertain that all employees are aware that harassment of any form is not tolerated in the workplace. So also, any grounds which Sally may invoke to validate the dismissal of Trish is deemed waived for her failure to exercise these prerogative. Firstly, Sally failed to furnish her employees of their Job Description thus the functions and duties of the employees were not delineated such that even Brian, a freelance web designer, seems to exercise a lot of authority around the office. Secondly, Sally failed to provide key result areas for each employee to achieve for a given evaluation period so there is no way to determine whether the targets were met or not. There are no key performance indicators to serve as benchmarks to establish competence. Thirdly, the competence of each employee was not passed upon. Sally merely relied upon her perception to gauge the competence of the employees. Sally did not conduct any performance evaluation to indicate that Trish performed below the standard. This is significant to show that Trish was given opportunity to redeem herself and improve her performance but all these obligations were neglected by Sally. Lastly, there is no manifestation that Trish has committed any malfeasance or misfeasance or that she was warned or reprimanded for any offense. Thus, any charges of incompetence or inefficiency will not have a leg to stand on. Regarding Trish’s absences, the same was tolerated due to her illness thus it cannot be used against her to justify a charge of misconduct. So also, Trish cannot be held to answer the findings of discrepancies in the petty cash since she was not notified of any accounting that was conducted. Due process requires that Trish must be informed of an inquiry against her so she can debunk the findings. There being no investigation against her and no direct link that she committed any impropriety or dishonest conduct or that she personally benefited, she cannot be indicted. Mere suspicion no matter how persuasive cannot be the basis to impute wrongdoing. Sally as the employer has the freedom to set the standards of employment based on her own specifications, including the criteria for hiring, working conditions, discipline, dismissal and transfer of work. The determination of the qualifications and fitness of workers are prerogatives belonging to Sally exclusively. She can screen and require applicants to undergo pre-employment medical examination and other tests as she cannot be compelled to retain their services if they failed to comply with her standards. III. Conclusion and Recommendation Sally cannot be absolved from any liability as she failed to fulfil her obligation as the employer. In her future dealings, Sally must institute total reforms. Grievances must be properly heard to comply with the policy that dismissal is the last resort. An employee policy manual setting employment standard must be issued and its contents disseminated to all the employees for compliance. Harassment in any form should not be tolerated or accepted but rather it should be penalized. Sally as the employer can determine the qualifications of her employees however the fitness requirements should not discriminate or circumvent the rights of the employees accorded statutorily. Closure of Business I. Introduction Employers are allowed to terminate the services of their employers not only by reason of financial losses even when the business is profitable provided that the statutory requirements for closure or redundancy are complied with. Thus, an employer cannot be charged with unfair dismissal if the severance of work is anchored on closure of business or redundancy. Due to unfavourable business climate, Sally Trent is contemplating on closing her photo/design shop which employs five people. Of the five employed, Gale reports on a part-time basis with a job title sales and photo shop assistant, two are Saturday staff where one had gone off to college and the remaining two are full-time employees, Greg and Tony who are the manager and assistant manager, respectively. Gale, Greg and Tony have employment contracts but it is only Greg’s contract which has a re-assignment provision. If Sally proceeds with her plan to close shop and declare all positions redundant, she would be able to absorb one to her other business but at a lower salary. But as Sally considers closing her photo/design shop, another business opportunity was offered by ProntoPics Plus Ltd. but it shall entail commercial printing which would compete with Sally’s other business. If Sally accepts the offer, the operations of the photo/design shop shall remain the same which would include the status and salaries of the employees. To help Sally decide, she wants to know her legal options and obligations pursuant to the scenario presented above. II. Discussion The promotion of the welfare of the working class is a recognized policy but an employee’s tenure is not a perpetual right intended to destroy or oppress the employer. The employer therefore has the prerogative to exercise in good faith the right to close the operation of the business, either totally or partially. The employer cannot be compelled to continue to operate its business but must nonetheless comply with legal processes before it can implement the cessation of its business or reduction of its operations. To manifest good faith, the employer must define the criteria in objective and fair manner on who will be retained and who will be let go through the redundancy plan and thereafter, notify the employees affected in writing. It is not enough though to notify the employees, the issue must be explained to them individually. It is further required for the employer to consult and listen to the suggestions of the employees to forestall termination. And, if other alternatives or options are available then the same must be explored as opposed to the implementation of redundancy or termination phase. There are two options presented by Sally thus it shall be discussed separately. The first scenario is to close the shop completely due to losses. The lack of business transaction validates the severance of employment. Since it is within the discretion of Sally to cease business operation, she cannot be compelled to continue operating at a loss due to misplace sympathy to the employees. However, she must pay redundancy payment to the dismissed employees who have rendered continuous service at least two years reckoned at the date of the dismissal. If an alternative work offer is made to the employee that is of similar conditions, pay, status and other benefits to the employee’s present position, he is free to accept or reject the offer. However, if it is shown that the offer is unreasonably rejected the employees can no longer demand redundancy pay and worse consequence of such refusal shall exempt the employer from paying the same. Applying the foregoing standard, Greg shall not be entitled to redundancy payment as he can be re-assigned to Sally’s other business offices pursuant to his contract. If the offer to be re-assigned is refused by Greg, he cannot make a claim for redundancy payment. Nonetheless, Greg can fight the re-assignment on ground that it is a diminution of his present status not to mention that his salary is substantially reduced. In all probability, the position of Greg should he refuse the re-assignment is more feasible hence if he demands payment of redundancy pay then it must settled amicably to avoid protracted and tedious litigation. Gale who works part-time, including the two Saturday personnel should not be treated differently. They are accorded the same rights as full-time workers but since there tenure is not secure, they are the first to be removed. It is however required that their removal must be based on reasonable and equitable grounds as well. Employers cannot escape liability if the motivation for their termination is tainted with bad faith. The recent rulings of the House of Lords in the case of Safeway Stores Limited v Burrell [1997] IRLR 200 applying the provision of Section 139 of the Employment Act 1996, statutorily defined redundancy to include not only dismissals being attributable wholly or mainly to redundancy in the employers business but also the location of business and/or reduction in working of particular kind. In Murray & another v Foyles Meats Limited [1999] IRLR 562, it was decided that redundancy is a question of fact which requires an inquiry whether the employers business requirements altered in accordance with Section 139 and if so, is this the reason for the cessation of work? If the question is answer in the affirmative then redundancy exists and therefore validated. This brings us to the second alternative presented by Sally. This, by far, is the better solution since the termination of her employees shall be obviated. Nonetheless, she can still proceed with the termination of the employees whose function may no longer be relevant since the work required under the new contract with ProntoPics is different from the old photo/design shop. So also, the termination may be likewise be justified under redundancy since the functions or job offered by ProntoPics is similar to her present business at Haddenham, she cannot be compelled to maintain two offices and personnel performing the same functions or engaged in the same business undertaking. Much more, it is not logical or prudent for her businesses to compete with each other. It cannot be denied that the operation of a business is for the realization of profit or gain. Thus it is within the legitimate domain of the employer to maximize his profit by adopting measures which would streamline his operation as well as trim down his personnel without sacrificing quality of work. Again, Sally is not under obligation to maintain the employees whose jobs duplicate the functions of other employees. It is within Sally’s best interest and prerogative to adopt policies or institute changes in her operations to ensure that profits are increased and in such exercise, Sally can legitimately merge or consolidate her businesses or sell assets notwithstanding that in the process it may cause the termination of some of her employees. It cannot be argued that Sally has to retain her employees in the photo/design shop as the losses which she initially declared are no longer availing. An employer may cease business operation even though the undertaking is profitable provided that the termination was done in good faith and those displaced or terminated are paid their corresponding redundancy pays according the length of service rendered. Sally has the prerogative to abolish positions which she deems no longer relevant or necessary otherwise the sole discretion or prerogative of Sally as the owner is unjustly interfered into. The decision to abolish positions or close down a business cannot be assailed unless ill-motive or bad faith is proven with substantial evidence. III. Recommendation and Conclusion Sally, as the business owner has the prerogative to protect herself against losses and self destruction with the continuous operation of a failing business venture. However, she also has the moral and legal duty to see to it that the rights and well being of her employees are protected. In compliance with this obligation the Law has laid out the conditions and the process by which she can cease the operation of her business and proceed with the termination of the employees thereof. A group and individual dialogue between Sally and her employees should be scheduled at the soonest possible time to discuss among other things the intention of Sally to close the business due to business reversals and the future of the employees concerned. The dialogues and the process of termination should be documented and must be compliant to the requirement of the Labour Law with regards to redundancy. Every opportunity that will redound to the benefit of the employee should be explored to ensure that the rights of the employee are not respected but promoted. Even if Sally has no legal obligation to retain some if not most of her employees she is however, compelled to present the opportunities available with the possible acceptance of the offer of ProntoPics. The employees therefore would have the option to refuse the offer or accept it if they so desired. BIBLIOGRAPHY ACAS Code of Practice 1. Disciplinary and Grievance Procedures. 2009. 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[online] Available from http://www.legislation.gov.uk/ukpga/1996/18/section/139 [Accessed 19 February 2011] United Kingdom. Employment Act of 2002. 2002 c. 22. [online] Available from: http://www.legislation.gov.uk/ukpga/2002/22/contents [Accessed: 19 February 2011] United Kingdom. Employment Rights Act of 1996. 1996 c.18. [online] Available from: http://www.legislation.gov.uk/ukpga/1996/18/part/X [Accessed 19 February 2011] United Kingdom. Majrowski (Respondent) v. Guys and St. Thomas NHS Trust (Appellants). [2006] UKHL 34. [online] Available from: http://www.publications.parliament.uk/pa/ld200506/ldjudgmt/jd060712/majro-1.htm#1 [Accessed 19 February 2011] United Kingdom. Murray & another v Foyles Meats Limited [1999] IRLR 562. [online] Available from http://www.bailii.org/uk/cases/UKHL/1999/30.html [Accessed 19 February 2011] United Kingdom. The Protection From Harassment Act of 1997. 1997 c.40. [online] Available from: http://www.legislation.gov.uk/ukpga/1997/40/contents [Accessed 19 February 2011] United Kingdom. Safeway Stores Limited v Burrell [1997] IRLR 200. Read More