Unfair dismissal and Employment Rights Act

Unfair dismissal is the term used in English, Welsh and Scottish Law to describe an employer's action when terminating an employee's employment contrary to the requirements of the Employment Rights Act 1996.

Wrongful dismissal like unfair dismissal is used to describe the termination of employment of an employee by the employer by the breach of the employment contract primarily like dismissing without serving a notice to the employee where the employee is obliged to provide notice as stated in the employment contract, insufficient notice. The statutory right for notice is 1 week for every 1 year of service up to a max of 12weeks. An employee wrongfully dismissed can sue for wages and benefits lost.

Richard who worked as a manager in a hotel has been dismissed for being constantly late and under the influence of alcohol.

Richard’s dismissal was fair under the Section 98 of Employment Rights Act (here on called ERA) 1996 on fair dismissal on the grounds of:-

Conduct

Legislation

In this research paper of unfair and wrongful dismissal the legislation of British judicial system into consideration are as follows:-

Employment Rights Act 1996

Impact of Employment Act 2002 – [up until April 6 2009]

Disciplinary, Dismissal and Grievance Regulations from October 2004 – April 2009 [3 stage / 2 stage modified procedure]

Employment Act 2008

Codes of Practice –the new Advisory, Conciliation and Arbitration Service (Acas) Code [2009]

It is important to have such acts as Individual employment rights are important in the government’s approach to competitiveness and the labour market. Fair treatment of individuals enhances commitment and competitiveness. If an employee is dismissed there are certain rights he can exercise and appeals can be made to an employment tribunal which decides the dismissal methods and the result of the appeal. But the act also encourages the use of internal procedures and expects the matter to be resolved among the employee and employers. Before registering of a formal complaint the tribunal expects the parties involved to reconcile the matter through Advisory, Conciliation and Arbitration Service (Acas) where a specialist can be hired to sort out the matter.( http://www.acas.org.uk/index.aspx?articleid=1797)

But under the new category of automatically unfair dismissal on the grounds of not following disciplinary procedure Richard’s dismissal can be considered as unfair dismissal. With no notice served to Richard prior to his dismissal it makes him qualify for wrongful dismissal also. Under the British employment act of 1996 s.86 (1) an employee is entitled to a notice before his/her removal. The primary cause of Richard’s removal was his misconduct at his job, towards his duty and the company. The British Employment Rights Act of 1996 justifies removal on the basis of misconduct as stated in Employment Rights Act 1996 (ERA) s.98(2)(b) “If the principal reason for a dismissal relates to serious misconduct which the employer reasonably believes has been committed by the employee, then the dismissal can be regarded as prima facie "fair" " (http://www.opsi.gov.uk/acts/acts1996/ukpga_19960018_en_11#pt10-ch1-pb3-l1g98)

Being dismissed Richard can execute the following rights provided to him by the ERA 1996:-

Informal talks with hotel management to resolve the issue of dismissal.

To approach Advisory, Conciliation and Arbitration Service (Acas) where a specialist can help Richard and his employers to sort out the matter and reach an agreement.

Individual arbitration, where an independent arbitrator mutually decided by the parties hears the case and makes a legally binding decision.

Appeal to the employment tribunal within three months of his dismissal.

(http://www.direct.gov.uk/en/Employment/RedundancyAndLeavingYourJob/Dismissal/DG_175828)

Agreeing not to make a complaint of unfair dismissal

If Richard reaches a 'compromise agreement' with his employer, where he agreed not to make an unfair dismissal complaint, then he cannot make a claim to an Employment Tribunal. Bu making a 'compromise agreement' with hotel management, the tribunal expects Richard to have received independent legal advice.

Applying to the employment tribunal

Applying for a claim, the employment tribunal expects Richard to have followed all other procedures before moving to the tribunal. He can appeal to the employment tribunal if he has been in service for a year or more but under unfair dismissal the appeal can be made. Richard has to apply to the tribunal within three months of his dismissal. Richard has to prove it to the tribunal that he has been dismissed and the grounds of his dismissal.

Once unfair dismissal is proved, the burden of proof shifts to the hotel management to justify Richard’s removal was a fair dismissal to the tribunal. Although Richard’s dismissal was fair on the basis of gross misconduct the tribunal will look into the procedure of his dismissal.

For a proper dismissal the company had to follow the following procedure:-

Remove Richard from the premises and suspend him on full pay and set up an investigation

Interview relevant employees and Richard.

Richard had to be given a warning and told about the allegations put on him.

Richard should have been given a chance by the management to defend his case.

The company failed to do any of this procedure and asked Richard to leave the premises breaching the contract of employment as the company has to serve a notice of dismissal and the not investigating the matter the tribunal might rule in Richard’s favour.

If the tribunal gives the ruling in Richard’s favour he will be given compensation and may be asked to resume his duties. The Employment tribunal may ask hotel management to re-engage Richard within the company but in a different department. Richard he has the right to refuse re employment but this will affect the amount of compensation.

The tribunal can lower the compensation amount if Richard’s conduct played a part in his dismissal. The tribunal intends to compensate Richard to reinstate him where he would have been financially had he not been suspended but the tribunal will not compensate for the hurt feelings. Richard’s conduct was the reason for his dismissal so the employment tribunal may reduce the compensation.

Ravi, a manager in a hotel in India was dismissed for the same reason as Richard, being under the influence of alcohol and constantly late for work.

However Indian law states clearly an employer has a right to terminate the services of an employee without giving a reason.(  C.K. Johri: “India", in R. Blanpain (ed.): International encyclopaedia for labour law and industrial relations (The Hague, Kluwer Law International, 1999), Vol. 7, p. 102) However, this law has been affected by legislative intervention and by the development by the courts of natural justice requirements.

The main statutes which regulate termination of employment are the

Industrial Employment (Standing Orders) Act (IESA), 1946

The Industrial Disputes Act (IDA), 1947, as amended. (http://www.ilo.org/public/english/dialogue/ifpdial/info/termination/countries/india.htm#3)

The IESA empowers Ravi a permanent employee of the hotel to the right of notice before dismissal from his duty under. The IESA employers are required to give in writing one month’s notice or payment in lieu of such notice in order to lawfully terminate the employment of permanent monthly-paid workers.( http://www.ilo.org/public/english/dialogue/ifpdial/info/termination/countries/india.htm#3)( http://labour.nic.in/act/welcome.html)

Under the ISEA the hotel management had to follow a procedure for the termination of Ravi’s employment. Failing which Ravi can take legal proceedings against them. In accordance to IESA the company on the grounds of misconduct could have:-

Only suspended Ravi for a period not exceeding four days.

Cannot be dismissed without notice or any compensation in lieu of notice.

However the labour law jurisprudence in India is influenced by the rules of natural justice entitles Ravi the right

To a written notice stating the reason for their decision of dismissal

To hold a meeting so as Ravi could appeal against their decision and to hold a “Hearing" by the management to answer the charges before being dismissed (sec. 33, IDA).

(http://www.ilo.org/public/english/dialogue/ifpdial/info/termination/countries/india.htm#3)

If the company decides on dismissing Ravi they had to tell him from when the dismissal is to take effect and how much notice being provided.

Allowance

During the suspension period the hotel management had to pay Ravi the following salaries and perks:-

If there is departmental enquiry and observation :-

During the first ninety days of suspension, Ravi would have received one-half of his monthly salaries and other allowances he would have got if on leave.

If the investigation gets prolonged to more than ninety days, he would have received three-fourth of his basic salary and allowances.

If the enquiry gets elongated due to Ravi, he would be entitled to one-fourth his salary.

The proceedings been investigated by an outside agency:-

For the first one hundred and eighty days the salary should be one- half of the basic salary.

If the investigation gets prolonged then Ravi would receive three-fourth of the salary.

And if Ravi is liable for the extending of the investigation he would have obtained one-fourth the salary.

However the proceedings are expected to be completed within three months and can be elongated if required by the enquiring officer.

Under the amendment of 1965 of Industrial Dispute Act (sec 2A), an employee dismissal is termed as a dispute, enabling Ravi to take his claim to the Labour courts. The Sec 2A of IESA evinces “If a worker is dissatisfied with his or her termination of employment is entitled, in the first instance, to raise the matter as a labour dispute with an officer from the conciliation department of the Ministry of Labour. The officer will attempt to conciliate the matter and must submit a report to the Government if conciliation fails, pending a decision from the governmental authority on whether the matter merits adjudication before the Labour Court or Tribunal."

(http://66.102.9.132/search?q=cache:7PNu0IsC3sAJ:www.labour.nic.in/act/acts/IndustrialEmploymentAct.doc+industrial+employment+standing+act&cd=1&hl=en&ct=clnk)

There is no time period within which Ravi should raise a claim of unfair dismissal to the tribunal. However, excessive delay may prejudice a worker’s case. Ravi can Challenge the dismissal to the Labour Court under sec. 11A of the Industrial Relations (Amendment) Disputes Act, 1971. The Labour Court may review a termination of employment and set aside a dismissal if it decides that the dismissal was not justified. The burden of proving that dismissal was for a valid reason rests with the employer.

Compensation

The Labour Court, Industrial Tribunal and National Tribunal review disputes relating to termination of employment, including the examination of the procedure of termination and to award compensation in the form of damages and reinstatement (sec. 11A, IDA). However, before reinstating Ravi, the judicial body will inquire into the feasibility of reinstatement; for example, whether the Ravi has lost confidence in the employer and whether industrial peace and harmony will be threatened.

Table of comparison between Richard’s and Ravi’s right under the respective country laws.

Country in discussion

United Kingdom

India

Employee

Richard

Ravi

Reason of dismissal

Constantly late and under the influence of alcohol

Constantly late and under the influence of alcohol

Grounds of dismissal

Misconduct

Misconduct

Written notice required by legislation

Yes

Yes

Time period of notice

Max 12 weeks

Max

Payment in lieu of notice

Yes

Yes

Suspension during investigation/ salary

Yes/ if employment contact states salary to be paid it will be paid in full

Yes/usually half salary is paid

Hearing before the management

Yes

Yes

Private legal advice

Yes

Yes

Right to claim to tribunal

Yes

Yes

Time frame to apply to tribunal

Within three months of dismissal

No such time frame

Need to prove unfair dismissal

Yes

Yes

Employer need to prove dismissal was fair

Yes

Yes

Compensation by tribunal/court

Yes

Yes

Reinstatement

Yes

Yes

Right to go back to work

Depends upon the employee, might result in less compensation.

The employee has to choose reinstatement

Compensation of personal injury

No

Yes