Contributed By DAC Beachcroft LLP
Under UK employment law there are three categories of individuals who perform work for others: employees, workers and self-employed contractors. An employee will work under a contract of service. A self-employed contractor will work under a contract for services. Anyone who is neither an employee nor a worker will be self-employed for employment law purposes.
The distinction is significant as many important employment rights are only given to employees. For example, all workers are entitled to the National Minimum Wage and working time rights protection; however, only employees can claim unfair dismissal, maternity leave and redundancy rights.
It is not always easy to establish which category an individual falls into. There are statutory definitions for the first two categories, although the current position has been substantially defined through case law. There has been a significant quantity of litigation about worker status in the UK in the recent past. Most of these cases have conferred worker status on individuals.
There are many different types of employees and therefore there are various types of employment contracts to reflect those differences. Contracts will have specific clauses depending on whether they are indefinite or for a fixed duration and for a full-time or part-time employee.
There are no formal requirements to enter into an employment contract. In particular, there is no requirement for an employment contract to be in writing. However, employees must be given a written statement of certain specified terms within two months of starting employment. This would include details such as how much the employee is to be paid, their job title or a brief description of their role and what holidays they are entitled to, etc. From 6 April 2020 this right is being extended so that all workers have the right to a written statement of terms from day 1, and additional detail will need to be provided.
In an employment contract, the parties can agree whatever terms they wish. However, due to the unequal bargaining power between parties, statute sets out a minimum entitlement in various areas, as discussed below.
Working hours in the UK are governed by the Working Time Regulations, which set out that most workers' average working time (including overtime) must not exceed 48 hours per week. However, there is some flexibility; if a worker wants to work in excess of this limit, they can agree in writing to "opt out" of the limit.
While there is no statutory maximum working hours per day, in general a worker is entitled to the following breaks and rest periods (although employers often allow longer and more frequent rest):
There is no statutory right to payment for overtime in the UK. Employers must ensure that all overtime rates are set out in an employee’s contract of employment. Employers also often pay an enhanced rate for overtime, although they are not obliged to do so.
Employees with 26 weeks' continuous service with their employer have the right to make a flexible working request that could entail, for example, requesting part-time employment, to work from home or to work condensed hours. The employer needs to follow a reasonable process when considering this request.
Various types of atypical working arrangements may also be implemented, including the use of fixed-term employees (ie, employees engaged for a defined period of time), agency workers (ie, individuals who are employed by an agency and assigned to end-user clients for specific engagements) and zero-hour contract workers (ie, workers who are engaged on an ad hoc basis with no guarantee of work). Atypical workers such as these will still benefit from the applicable statutory and contractual protections if they meet the relevant employment status test.
These atypical working arrangements are also specifically regulated, to differing extents, including:
There are no specific terms required for a part-time contract, but part-time employees are protected from being treated less favourably because they are part-time.
Most workers aged 16 or over are entitled to receive the National Minimum Wage (NMW). Workers aged 25 and over are entitled to the National Living Wage (NLW). The exact rate is dependent on the worker’s age. The rates are set by the government and change every April. The rates applicable from 1 April 2019 are:
Many employers pay more than the NMW and NLW.
In the UK there is no requirement to make a thirteenth month salary payment.
Employees may receive a bonus as part of their compensation. Bonuses can be guaranteed, discretionary or a combination of the two. Where a bonus is guaranteed, an employer will be contractually obliged to pay the amount that has been guaranteed. A bonus may be based on criteria such as the achievement of individual, team and company targets. Where a bonus scheme is discretionary, an employer will have reserved the right to decide whether the payments are actually made. An employer cannot act in a way that is arbitrary or capricious when exercising its discretion regarding whether to pay an employee a bonus. Where a bonus is a combination, there will be a discretionary element built into a contractual right to participate in the bonus scheme. Employees are often expected to remain employed at the date the bonus is announced and/or paid.
Holiday Entitlement and Pay
Most workers have a right to a minimum of 5.6 weeks' holiday (28 days for a full-time worker) and must be paid their normal remuneration during that time. Any additional contractual holiday will be set out in the individual's terms and conditions.
Parents and adoptive parents benefit from paid leave on the birth, or adoption, of a child. It is open for employed women to take up to one year's statutory maternity leave. This is a right from day 1 of their employment. Whether an employed woman is entitled to statutory maternity pay is more complicated and will depend on how long she has worked for her employer at the point at which she is expecting the child. It is paid at 90% of average earnings for the first six weeks and then a flat statutory rate for the remaining 33 weeks. This rate changes annually in April and is currently £148.68. Fathers are also entitled to two weeks' paternity leave paid at the flat rate.
In addition, shared parental leave was introduced in 2015 to offer flexibility to parents and adoptive parents as to how they take leave in the first year after the child is born or placed for adoption. Shared parental leave effectively allows parents to share the statutory maternity or adoption leave and pay that is available to mothers and primary adopters under the maternity and adoption provisions.
After one year's employment, each parent is also entitled to 18 weeks' unpaid parental leave. This is per child and can be taken between the child's birth and their 18th birthday.
Employees are entitled to statutory sick pay (SSP) after four days' consecutive leave up to a maximum of 28 weeks. SSP is paid by the employer. Again this changes annually in April. The current rate is £94.25 per week. Many employers offer enhanced sick pay.
During employment, employees have an implied duty of confidentiality. This also applies after the end of employment but in a more limited manner. In cases where employees have access to confidential information, it is advisable to include an express confidentiality clause in the employee's contract of employment preventing disclosure or use of any confidential information both during and after employment. It is also important for employers to define what they class as confidential information in relation to their specific business.
Employees are not generally liable for any loss or injury to others while at work. An employer must hold employer’s liability insurance to cover this. One exception is when a colleague or former colleague successfully brings a discrimination or whistle-blowing claim against a named individual employee respondent. In those circumstances, an employee may be liable for acts of discrimination or detrimental treatment of the whistle-blower.
A non-competition (or non-compete) clause prevents an employee joining a competitor employer for a defined period after the termination of their employment. The starting point is that restrictive covenants, including non-compete clauses, are void because they restrain trade and are contrary to public policy. However, if an employer can show that it has a legitimate business interest it is appropriate to protect (for example, confidential information or customer connections) and that the clause is no wider than reasonable to protect that interest, the employer may well be able to enforce the non-compete clause.
Non-compete clauses, and other forms of restrictive covenants, need to be incorporated into the contract of employment either by being in the original contract, or by requiring the employee to sign a side letter. This is particularly important on a promotion.
Consideration is required for entering into restrictive covenants, including non-compete clauses. Where these are entered into at the start of employment, consideration will be in the form of the employee's regular salary and benefits. If covenants are introduced or amended at a later date, such as on promotion, new consideration – for example, a pay rise – will be required.
Non-compete clauses are the hardest restrictive covenants to enforce. A non-compete clause is more likely to be enforced by the court if the individual employee's influence over customers or suppliers is so great that the only effective protection is to ensure they are not engaged in a competing business for a limited period of time. The court will look at whether the covenants are sufficiently clear and not drafted too broadly. This will include looking at the limits placed on the non-compete clause, including how a competitor business is defined, as well as the geographical scope and length of time the non-compete restriction lasts.
Once it has decided that the non-compete clause is clear, that the employer has a legitimate interest it needs to protect and the covenant is reasonable to protect that interest, the court will then decide whether to enforce the clause by granting an injunction. This is at the court's discretion. It will consider a range of factors, including the nature and extent of the damage caused by any actual or threatened breach of the non-compete clause. If contractual undertakings have been offered to mitigate any damage caused, or damages would in itself be an adequate remedy, the court is unlikely to enforce a non-compete clause.
The starting point for restrictive covenants concerning employees is the same as for a non-compete clause: does the employer have a legitimate business interest it needs to protect and does the covenant go no wider than necessary to reasonably protect that interest? Protecting the employer's legitimate interest in the stability of its workforce is an interest that a court would be willing to protect.
In terms of assessing whether the covenant is no wider than necessary, the covenant will need to be carefully drafted to ensure it is reasonable. The length of the restriction, the seniority of the departing employee and the status of the staff the departing employee is being prevented from poaching will all be relevant. In determining the length of the restriction preventing an outgoing employee from soliciting its employees, an employer would need to consider how long after termination the outgoing employee's influence over the other employees will continue, and draft the restriction accordingly. A clause seeking to stop a departing employee poaching any employee of their former employer irrespective of their expertise, seniority or whether they worked with them during their employment is unlikely to be viewed as a reasonable restraint.
The starting point for restrictive covenants concerning customers is the same as the above. Protecting the employer's legitimate interest in customer connections is an interest that a court would be willing to protect.
A restriction on the solicitation of customers usually prevents the ex-employee from contacting a customer with a view to obtaining their business. This can be extended to cover the situation where no active steps are taken by the outgoing employee, but where the customer approaches them and wishes to move its business in any event. The latter prohibition is known as a non-dealing covenant. A non-dealing covenant is a broader prohibition so a court is likely to be more cautious when considering whether to uphold it.
In terms of assessing whether a covenant is no wider than necessary, the covenant will need to be carefully drafted to ensure it is reasonable. Again, the length of the restriction and the identity of the customers that the departing employee is prevented from soliciting or dealing with will be relevant. Enforcement will be more likely where the employer can establish a substantial personal connection between the departing employee and the particular customers, and in the case of non-dealing, that significant loss will occur regardless of whether it was the customer or departing employee that made the approach. The prohibited contact must be focused on the contact that would harm the employer's business: a restriction preventing any contact at all with customers is unlikely to be enforceable.
UK employers, as data controllers, must process personal data in accordance with the EU's General Data Protection Regulation 2016/679 (GDPR) and the UK's Data Protection Act 2018 (DPA).
Employers need to comply with the GDPR’s data protection principles when handling their employees’ personal data and, among other things, ensure that they:
In order to process data lawfully, the employer's processing of the personal data must satisfy one of a number of prescribed conditions for processing. The most relevant conditions for an employer are likely to be that the processing is necessary:
Additional conditions must be satisfied in order to process "special categories of data" such as health information, racial or ethnic origin, trade union membership, etc, and criminal conviction information.
Employees as data subjects also have various rights, including the right to seek the erasure or correction of their personal data, to object to particular aspects of how their data is processed, and otherwise to seek the restriction of the processing of their personal data. Employees also have the right to request the transfer of their personal data to another party in a commonly used format and the right to request access to their personal data.
When conducting employee monitoring within the workplace, employers need to have regard to this statutory framework as well as the guidance and codes of practice issued by the Regulator (the Information Commissioner) and the contractual implied term of trust and confidence. Accordingly, it is important for an employer to consider whether to undertake a data privacy impact assessment before conducting any employee monitoring activities and to publicise any systematic monitoring it does conduct.
British citizens and some Commonwealth citizens have a right of abode under the Immigration Act 1971 that means they are free to live in and travel to/from the UK without hindrance. Those without the right of abode must obtain leave to enter or remain under the Immigration Rules HC 395 (as amended) (the ‘Immigration Rules’) excluding EEA and Swiss nationals who benefit from Free Movement Rights.
Leave to Enter and Remain
There are a number of different visa categories under the Immigration Rules that allow non-UK/European Economic Area (EEA) nationals to live and work in the UK. Some of these categories require a sponsor whereas others are non-sponsored routes. Of these, the most notable sponsored visa categories are:
The following are non-sponsored visa categories.
Each visa category has specific conditions on who the individual can work for and in what capacity, together with how long they can spend in the UK on that visa. It will therefore be important for employers to weigh up which is the most appropriate visa before making a selection.
Free Movement Rights of EEA and Swiss Nationals
Freedom of movement allows EEA and Swiss nationals to live and work in the UK subject to certain criteria being met. The rights of residence of EEA and Swiss nationals are split into three categories as set out below.
Initial Right of Residence
An EEA or Swiss national is permitted to enter the UK for up to three months on proving their nationality.
Extended Right of Residence
In order to reside lawfully in the UK beyond the first three months, EEA and Swiss nationals must demonstrate that they are exercising Treaty rights by:
This is known as the Qualified Person test. Provided the individual in question can meet the requirements of one of the categories set out above, they will enjoy an extended right of residence and can continue to reside lawfully in the UK. They can also have their family members join them in the UK whilst they remain a Qualified Person.
Permanent Right of Residence
Once an EEA or Swiss national (or their family members) spends five years in the UK in accordance with the Free Movement Regulations, they automatically acquire a permanent right of residence.
There has been much discussion about the UK leaving the EEA, which will bring an end to Free Movement Rights. There is still uncertainty around what the future arrangement with Europe will look like and how EEA and Swiss nationals will be affected. The next deadline for the UK and Europe to reach an agreement is 31 October 2019 and we will have to wait and see how the situation develops.
In anticipation of the UK leaving the EEA, the government established the EU Settlement Scheme, which allows EEA and Swiss nationals (along with specified family members) to obtain residence documentation in certain circumstances to evidence their continued right to live and work in the UK.
Aside from routine registration requirements such as registering biometric details or nationals of certain countries having to register with the police, there are no special registration requirements for EEA or non-EEA workers.
A trade union is a membership-based organisation. They play a significant role in employee relations in the UK and are present in both the public and the private sector. Trade unions negotiate terms and conditions with employers on behalf of employees, seek recognition from employers to represent employees, provide legal and sometimes financial assistance and services to their members as well as campaigning for social and political change.
A trade union is governed by its rule book, and an Executive Council will be responsible for implementing these rules. The rule book will typically cover the aims of the union, union membership, how it is structured (often by region through branches), workplace representation, funding and the legal assistance a union will provide if a member suffers an injury at work or has an employment issue.
A trade union can apply to have its name included on a public list maintained by the Certification Officer that provides the union with procedural and tax advantages. The Certification Officer also provides statutory oversight of the union and has a range of powers and duties to ensure trade unions abide by statutory requirements, their own rules, and that their finances are managed effectively. Union members are protected from detrimental treatment by employers because of their union membership or activities.
Works councils are not used much in the UK. However, a statutory framework is in place for employers to establish a permanent consultative body made up of management and employee representatives to inform and consult its workforce about economic and employment-related matters.
There are many forms of employee representative bodies in the UK. A union may perform this function and trade union members at each workplace will be elected among themselves to the forum in agreed cycles.
Alternatively, an employer may establish a standing employee representative forum that both acts as a conduit between management and staff on informal issues, and discharges statutory obligations, such as the need to inform and consult in a collective redundancy situation, as and when the need arises. Each representative will gather the views of their constituents on issues collectively affecting the workplace. Such bodies are governed by their own informal constitution.
A union may be voluntarily recognised by an employer. There is no single way in which this has to happen, it is a matter of whether the employer agrees to such recognition and what it and the union agree the union is recognised to bargain over.
If a union has been refused voluntary recognition and the workforce has 21 or more employees, the union can apply for statutory recognition from the Central Arbitration Committee (CAC), an independent statutory body. There is a complicated statutory process for making a request for recognition. If recognition is granted through this process and no agreement is reached on what recognition should cover, the CAC makes a declaration it covers pay, hours and holidays.
A trade union that is recognised by an employer acquires further rights, including the ability to negotiate collective bargaining arrangements on behalf of a group of workers and for its workplace representatives to be eligible for time off to carry out union duties. Union representatives may negotiate with their employers for their members on pay and other conditions (such as working hours and holidays), be informed and consulted with about redundancies and staff transfers, and accompany members to disciplinary and grievance meetings.
Unions also have the ability to call for industrial action (including organising strike action). They are subject to a complicated process for balloting their members, and over the subject of the collective dispute if they wish to avoid being legally liable to the employer and third parties affected by the action. Most commonly a union organising a strike induces workers to break their contracts of employment, which the union can be sued for unless it has complied with these legal duties.
An employer can dismiss an employee at any point. The courts, or more commonly the employment tribunals in the UK, will only look at the dismissal if an employee challenges it as unfair, wrongful, or discriminatory (see 7.1 Wrongful Dismissal Claim and 7.2 Anti-discrimination Issues). If an employment tribunal finds that the dismissal is unfair, it can order the employer to re-engage or reinstate the employee, or, more usually, pay the employee financial compensation.
Generally speaking, employees with more than two years' service have the right not to be unfairly dismissed. This means that they must be dismissed for one of five potentially fair reasons for dismissal, and that the employer must act reasonably in all the circumstances in treating that reason as sufficient reason for dismissal. The employer will also need to show that they followed a fair procedure.
The five potentially fair reasons are conduct, capability (which covers poor performance and health), redundancy, illegality (such as losing the right to work in the UK under immigration rules) and "some other substantial reason", which would cover, for example, dismissing an employee as part of a reorganisation that does not fit the statutory definition of a redundancy.
If an employee has less than two years' service, they could still be unfairly dismissed if the employer dismisses them for an "automatically unfair" reason (see 6.5 Protected Employees).
Each of the potentially fair reasons for dismissal requires a different procedure to be adopted by the employer. Some principles of procedural fairness that apply to most potentially fair reasons are that the employee should know they are at risk of dismissal, and why, and should be allowed to make representations about this, usually at a meeting or a hearing.
In cases of conduct and capability involving poor performance, the Advisory Conciliation and Arbitration Service (ACAS) Code of Practice on Disciplinary and Grievance Procedures sets out principles for the procedure an employer should adopt before dismissing an employee. This involves holding a meeting at which the employee may be accompanied by the trade union representative or colleague, and offering the employee a right of appeal against the dismissal decision.
In conduct cases, the employer will need to show that it genuinely believed that the employee had committed the act of misconduct and it had reasonable grounds for that belief, so an investigation will be key. It must also show that the dismissal fell within the range of responses open to a reasonable employer in light of the employee's conduct, and that it has acted consistently with other employees who have committed similar acts of misconduct. Any mitigation offered by the employee also needs to be taken into account by the employer.
In capability involving poor performance cases, the employer will need to show how the employee was underperforming and that this was the genuine reason for the dismissal. The procedure adopted will involve telling the employee how they are underperforming, warning them what will happen if they do not improve, and giving the employee a reasonable period of time to improve. It may also involve giving them training and coaching, and thinking about alternative roles that might be available before dismissing them. There is no time limit for ensuring a performance-related dismissal is fair, but, generally speaking, a fair poor performance procedure will take between three and six months.
Where the dismissal is on health grounds, the procedure will depend on whether the employee has had intermittent sickness absence or is on long-term sickness absence. Many employers have triggers for absence and once these have been reached convene a hearing to issue a warning. This will set out what will happen if their absence record does not improve: usually another warning before dismissal.
Where an employee has been on long-term sickness absence, a fair procedure will involve obtaining up-to-date medical advice, including a prognosis for the employee, if and when they might be able to return to work and on what basis (part-time, full-time, or phased return) as well as what they will and will not be able to do when they return. The employer will then have to consider whether they can reasonably wait for the employee to return, and if not, why not. The employer will need to consult with the employee about this, and consider any alternative vacancies they might be able to redeploy into.
In both cases of dismissing on health grounds, employers need to make adjustments for employees who have a qualifying disability (see 7.2 Anti-discrimination Issues) to avoid disability discrimination. The burden is on the employer to show they have done this, and why adjustments might not work.
Redundancy has a specific legal definition and involves a reduced requirement for employees either because there is a reduction in the amount of work, or fewer employees are needed to carry out the particular work, or the business closes. If the ground for dismissal is redundancy, and fewer than 20 employees are affected, a fair procedure will involve warning the employee they are at risk of redundancy, selecting them fairly from the pool of those at risk using objective selection criteria, consulting with them individually about their redundancy and considering whether there is any suitable alternative employment available to avoid the redundancy. An employee will also be entitled to a statutory redundancy payment. If more than 20 employees are affected, the employer will also have to follow collective consultation obligations, in addition to individual consultation, to ensure it has conducted a fair procedure.
Where an employer proposes to dismiss 20 or more employees at one establishment by reason of redundancy within a 90-day period, UK law places an obligation on the employer to inform and consult appropriate representatives of the affected employees. Redundancy in this context is wide enough to catch re-organisations and changes to terms and conditions as well as the classic redundancy definition for dismissal. Collective consultation may be with a trade union, representatives of a standing employee forum or those elected specially for the purpose of collective consultation. Consultation must involve a meaningful exchange of views, and be undertaken with a view to reaching agreement. It must cover ways to avoid the redundancies, reducing the number of dismissals and mitigating the consequences of the dismissals. It does not matter if agreement is not reached provided the consultation has been genuine.
The law does not stipulate minimum periods for consultation, but states that consultation should begin "in good time" and before any firm decisions on redundancies are taken. Minimum periods between the start of consultation and the first dismissal taking effect are stipulated by the relevant statute. This is 45 days before the first dismissal where 100 or more dismissals are proposed, or 30 days before the first dismissal where between 20 and 99 dismissals are proposed.
The penalty for failing to inform and consult is a protective award of up to 90 days' gross pay per employee. This is the starting point, but it might be reduced depending on the extent of the employer's failure to comply with its collective consultation obligations.
In "some other substantial reason" dismissals, the decision needs to fall within the range of reasonable responses open to a reasonable employer. This might involve the employer investigating the situation, consulting with the employee, warning the employee of the risk of dismissal, giving them a chance to state their case, and exploring alternatives to dismissal.
Notice requirements are usually set out in an employee's contract of employment. This will also usually stipulate that notice must be given in writing.
If there is no contractual notice period, the law imposes a statutory obligation on the employer to give an employee a minimum period of notice. If an employee's contractual notice is longer than the statutory minimum, the contractual notice period will prevail.
Statutory minimum notice depends on an employee's length of service: if an employee has been employed for more than a month but less than two years, they are entitled to at least one week. After that, minimum statutory notice is one week per year of service up to a maximum of 12 weeks. Notice must be communicated to the employee with an ascertainable date on which the employment will end.
An employee can waive their right to notice, or accept a payment in lieu of it. Other than by making a payment in lieu of notice (if the employer has reserved this right in the contract of employment), an employer may only dismiss without giving an employee (contractual or statutory) notice if the employee has committed a fundamental breach of contract, which is also usually an act of gross misconduct.
In addition to receiving notice, or a payment in lieu of it, employees who are made redundant are entitled to a statutory redundancy payment provided they have worked for their employer for at least two years. This is worked out according to a statutory formula, which is subject to a cap, and takes into account the employee's age, length of service and pay. The maximum statutory redundancy payment until 5 April 2020 is £15,750. Some employers offer enhanced redundancy payments.
As long as notice is given in accordance with the contract of employment, or statutory minimum notice requirements, no further specific procedures need to be followed when giving notice.
When an employee is dismissed for gross misconduct, their employer may also be entitled to dismiss them without the appropriate contractual notice, or a payment in lieu of it, because they will also usually have committed a repudiatory, or fundamental, breach of contract. Such a dismissal will also have an impact on any reference that an employer can give if their reference policy is to give anything more than a name and dates of employment.
A repudiatory breach of contract is a breach that is so serious it entitles the innocent party to the contract to terminate it without giving notice. This is known as summary dismissal.
Examples of gross misconduct include theft, physical violence, serious insubordination and bullying. Despite this being called a summary dismissal, the employee is still entitled to a fair conduct dismissal procedure (see 6.1 Grounds for Termination), including knowing what the allegations are against them, attending a disciplinary hearing and being offered an appeal.
An employee who is summarily dismissed may claim they have been wrongfully dismissed (see 7.1 Wrongful Dismissal Claim) and/or unfairly dismissed. If an employee succeeds in a claim of unfair dismissal, they will be entitled to compensation made up of a basic award (calculated by reference to the employee's age, length of service and pay). This is capped at £15,750 until 5 April 2020. They will also be entitled to a compensatory award that reflects the loss they have suffered as a result of the unfair dismissal. The maximum compensatory award until 5 April 2020 is the lower of a year's salary or £86,444. The claim usually needs to be bought within three months of the termination date.
Employees may settle or waive most claims they may have against their employer by using a settlement agreement that complies with certain statutory requirements.
ACAS has a duty to try to resolve both potential and actual employment-related claims. Employees and ex-employees can therefore settle claims, or potential claims, by negotiating a settlement using an ACAS conciliator. These settlements are recorded on a COT3 form and the terms of such an agreement are binding, meaning the employee cannot bring any employment tribunal claims for the matters they have settled.
For a settlement agreement to be valid, certain conditions must be met. In particular, the agreement must be in writing and relate to a particular complaint or proceedings that an employee could bring in relation to the termination of their employment. The employee must also receive independent legal advice (usually from a solicitor but sometimes this is from a trade union adviser) on the terms and effect of the proposed agreement and its effect on the employee's ability to pursue any claims before an employment tribunal. Often the employer will pay for at least some of the employee's legal fees.
The independent adviser must have a current contract of insurance, or professional indemnity insurance, in place covering the advice, so that if they are wrong, the employee can sue them in negligence. The agreement must also identify the adviser and state that the conditions regulating settlement agreements under the relevant statutory provisions have been satisfied. In practice, settlement agreements also waive contractual claims, such as wrongful dismissal, alongside the statutory claims even though meeting the requirements to waive statutory claims is not necessary.
Some employees are further protected against dismissal in the workplace if they are dismissed for an automatically unfair reason. In such circumstances they do not need to have two years' service in order to bring an unfair dismissal claim. This would include dismissing an employee for making a protected disclosure ("whistle-blowing"); a reason relating to pregnancy, maternity or other family leave; carrying out health and safety activities, trade union membership or otherwise acting as an employee representative.
Employees who are dismissed because they have blown the whistle are also entitled to uncapped compensation.
As well as protection from dismissal, UK law affords some employee's protection from action short of dismissal, known as detriment, because they have exercised various statutory rights. Such rights include exercising rights in relation to being a part-time or fixed-term worker, exercising rights in relation to working hours, exercising the right to be accompanied at a disciplinary or grievance hearing, requesting flexible working or exercising rights as a trade union or employee representative.
A wrongful dismissal claim is available where an employee is dismissed in breach of contract. This is usually when they have been dismissed without being given the appropriate contractual notice period.
An employee who succeeds in a wrongful dismissal claim is entitled to compensation for salary and other benefits they would have received had they been dismissed in compliance with the contract (ie, had they remained employed until the end of their notice period, or until the end of the contract's fixed term).
As wrongful dismissal is a contractual claim, rather than one rooted in statute, employees can bring their claims in the employment tribunal or the civil courts. If they bring the claim in the employment tribunal, any damages are limited to £25,000.
Protection from discrimination in the UK is governed by the Equality Act 2010. The aim of the Act is to prevent discrimination against workers because of specific protected characteristics. Employees and workers are protected against discrimination because of sex, race, disability, age, religion and belief, pregnancy and maternity, marriage and civil partnership, gender reassignment and sexual orientation. There are also additional provisions setting out the right to equal pay when comparing men and women.
Discrimination can take several different forms. It may be direct – treating someone less favourably than others because of one of the above characteristics; or indirect – putting rules or arrangements in place that apply to everyone but that put people with a certain characteristic at a particular disadvantage. It can be lawful to have those rules or arrangements in place, provided they can be justified by the employer. This means the employer has to show that they are pursuing a legitimate aim proportionately.
Other forms of discrimination are harassment (unwanted behaviour linked to a protected characteristic that violates someone's dignity or creates an offensive environment for them) and victimisation (treating someone unfairly because they have complained about discrimination or harassment). There are also additional forms of discrimination specific to disability. Disability is defined as a “physical or mental impairment which has a long term adverse effect on an individual’s ability to carry out normal day to day activities”. This confers wide-ranging protection incorporating many physical and mental health conditions, including neurodiverse conditions such as autism and dyslexia.
A two-stage approach to the burden of proof applies in discrimination claims; first, can the individual show the tribunal facts from which the tribunal could infer, without any other explanation from the employer, that discrimination took place? If not, the claim fails. If yes, the burden shifts to the employer to explain to the tribunal that it did not in fact discriminate.
Where an individual succeeds in a discrimination claim, the tribunal may give a declaration of the rights of the individual, make a recommendation to the employer aimed at reducing the adverse effect of the discrimination on the individual and/or order compensation. Unlike unfair dismissal, compensation in discrimination claims is uncapped, which can lead to significantly higher awards. Compensation in discrimination claims can cover a claimant's financial loss (for example, loss of salary) but may also include an amount to compensate for injury to feelings. The level of injury to feelings compensation falls into three bands.
Aggravated damages can also be awarded in discrimination claims. These are awarded in the most serious cases where the behaviour of the respondent employer has aggravated the claimant's injury and are additional to any amount the tribunal may award under the injury to feelings bands set out above. They can be awarded where the employer has acted in a "high-handed, malicious, insulting or oppressive manner". This can be, for example, in the manner in which they conduct internal proceedings while the claimant is still employed, or post dismissal if they were to conduct the legal proceedings in a manner designed to intimidate the claimant.
The above types of damages all seek to compensate the claimant rather than punish the employer. In contrast, the purpose of punitive damages is to punish and deter. Punitive damages are permitted in discrimination claims but are rarely awarded. They are only available in a very limited set of cases, where the compensation itself is insufficient punishment. They are applicable where the employer is a "servant of the government", such as a public authority, and the conduct is oppressive, arbitrary or unconstitutional action; or where the employer's actions are calculated to make a profit that could exceed the compensation otherwise payable to the claimant.
The award of aggravated and punitive damages is a point on which the law in England and Wales differs from that in Scotland. Punitive damages are unlikely to be awarded in Scotland. In addition, while English tribunals can make a separate award of aggravated damages in respect of an act of discrimination, this rule does not apply in Scotland. Despite this, damages for injury to feelings in Scotland may include such an element to reflect the way in which the claimant was treated.
Most legal disputes arising from employment are heard in employment tribunals, including unfair dismissal, redundancy and discrimination.
There are specialised employment tribunal forms: to start a claim, the claimant must complete and submit an ET1 form; if the employer wishes to submit a response to defend the claim, it would use an ET3 form.
It is possible to have class actions and test cases in the employment tribunal. Two or more claimants can make their claims on the same claim form if their claims are based on the same set of facts. In this situation, representatives often act on behalf of a number of different claimants. In recent years this has been common in holiday pay cases, worker status cases and equal pay claims. At an early stage of the case a judge will usually select a small number of claims to run as test cases.
Employment tribunals are less formal than civil courts. Parties can be represented by solicitors, barristers, trade union representatives or a non-legally qualified friend or family member – or can represent themselves. Tribunal panels are composed of three members: a legally qualified employment judge who runs the proceedings and two lay members – one who represents employer organisations and one who represents employee organisations. Some types of cases (such as unfair dismissal) can be heard by an employment judge sitting alone whereas discrimination claims will be heard by a panel.
At a full hearing the party who has the burden of proof will present their evidence first. The panel will look at documentary evidence and hear witness evidence, including that of the claimant. At the end of the hearing they will give their judgment orally or will reserve judgment and subsequently issue a written judgment. Any appeal from the employment tribunal will be to the Employment Appeal Tribunal (EAT), and possibly onwards to the Court of Appeal and Supreme Court.
Before making a claim to the employment tribunal, a claimant must notify ACAS that they intend to bring a claim. They will then be offered the chance to try to settle the dispute using ACAS early conciliation. Parties are not obliged to engage with early conciliation but if they do, the time limit for bridging an employment tribunal claim is extended by the period of early conciliation. Once the early conciliation period ends, ACAS issues an EC certificate. The EC certificate will give the claimant a unique reference number that they have to include on their ET1 should they go on to present a claim.
Arbitration is possible in employment disputes, but historically it has not often been used. A pre-dispute arbitration agreement would generally not be enforceable as it is likely to fall foul of the restrictions on contracting out of statutory employment rights. However, parties could enter into a settlement agreement compliant with the statutory requirements once a dispute has arisen, whereby they agree that the employee's statutory claims are submitted to arbitration.
Although it is possible in the employment tribunal for a judge to make a costs order that the losing party pays the winning party, this is relatively rare. Unlike in the UK's civil courts, each party usually bears its own cost irrespective of who wins the case.
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