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Case studies in employment legislation and common law

Assessment Essay

The set of circumstances give rise to several claims under both employment legislation and at common law. The claims of the various participants will be discussed in turn to establish what rights and remedies arise out of their various situations.

Patrick

The first issue which arises in relation to Patrick is the status of clause 1 in the collective agreement which Glen negotiated with the Office Suppliers Union. The terms of collectively agreements can become incorporated into the contracts of individual employees without the parties to the contract taking active steps to agree to them.[1] The question then is whether or not the clause prohibiting the compulsory redundancy until December 2007 is an appropriate clause for incorporation into the contracts of individual employees. In the case of Kaur v MG Rover Group Ltd [2004] IRLR 279 there was a similar clause in the collective agreement prohibiting compulsory redundancy. Mrs Kaur was threatened with redundancy and sought a declaration that she had a contractual right not to be made redundant. This was granted despite the fact that the actual contract of employment allowed dismissal for any reason. The court held that the term should be given effect in the same way as any other contractual term.

This indicates that Patrick could bring a claim for breach of contract. He would be able to bring this in the employment tribunal because it is a claim arising out of the termination of his employment.[2] He would have to bring the claim in the Employment Tribunal no later than 3 months after the breach, but if he missed this limitation date he would still be able to bring a claim in the county court subject to the usual 6 year limitation period. Patrick may be able to obtain an injunction against Tottenham Office Suppliers plc (TOS) preventing them from making him redundant until after December 2007. Though there has been some doubt as to whether an employer should be made to continue to employ someone in whom he has lost confidence[3], the case of Anderson v Pringle of Scotland Ltd [1998] IRLR indicated that in the absence of ‘mistrust’ preferring one employee over another in a redundancy situation would not imply a loss of confidence in the employee being made redundant. An injunction was granted in that case, but it would be advisable to include a claim for damages in the alternative. If damages are to be given they will be to compensate Patrick for losses arising directly from the breach of contract. In this event that will be his wages between now and December 2007 minus any redundancy payment he received and any income he has obtained in alternative employment.

In any event Patrick is likely to be entitled to a redundancy payment. He has accrued over 2 years’ service as required by section 155 of the Employment Rights Act 1996. He has been dismissed as required by section 136 of the Employment Rights Act 1996. The dismissal does appear to be by reason of redundancy. Glen has specifically stated that he is being made redundant owing to the financial position of the company. This would appear to fall within section 139 (1) (c) of the Employment Rights Act 1996 which states that dismissal is for reason of redundancy if it is wholly or mainly attributable to:

“The fact that the requirements of that business for the employees to carry out work of a particular kind, or for employees to carry out work of a particular kind in the place where they were so employed have ceased or diminished or are expected to cease or diminish.”

Though there are no specific details of what the financial difficulties entail it would appear that the requirement for the warehouse work had diminished because it is three warehouse employees who were involved in the recent issues.

The redundancy payment will be calculated on the following basis:

  1. 1.5 weeks pay for each of the year’s Patrick was in continuous employment during the whole of which he was age 41 or over.
  2. 1 weeks pay for each such year during the whole of which he was between 22 and 41.
  3. 0.5 weeks pay for each year between the ages of 18 and 21.

There is not enough detail relating to Patrick’s age or level of pay to give any definite figure as to what his redundancy payment would be, but there are some points to note; it is gross pay before tax, it will cover bonuses, allowances and any other amount to which the employee is contractually entitled. There is a maximum weekly pay of £280 which can be taken into account.

In summary, I would advise that Patrick seeks an injunction preventing TOS making him redundant in breach of the contractual term not to be made redundant until December 2007 incorporated into his contract of employment following the collective agreement negotiated between Glen and the Office Suppliers Union. I would advise that a claim for damages is included in the alternative. If he does not continue working he will be entitled to a redundancy payment.

Garry

The first point to note is that Gary will not be able to make a claim for a redundancy payment even if the dismissal is considered to be by reason of redundancy. This is because he only has 18 months of service and the Employment Rights Act requires 2 years to make an employee eligible for a redundancy payment as noted above. Any claim Glen will have will rely on him showing that he was entitled to refuse the lower rate of pay and therefore his dismissal by Glen was unreasonable. The level of pay will certainly be considered to be a term of Garry’s employment contract. In reducing Gary’s wages by £50 per week Glen is unilaterally varying his contract of employment. Unilateral variation will constitute a breach of contract. It is possible therefore that Gary’s dismissal for refusing to accept the alteration will be an unfair dismissal.

In the case of Gilham v Kent County Council (No 2) [1985] ICR 233 a group of dinner ladies were sacked for refusing to accept a reduction in pay. It was held that the employers breach did not make the dismissal automatically unfair, the tribunal had to assess whether the employer’s behaviour was reasonable. Under section 98 (4) of the Employment Rights Act the determination of whether a dismissal is fair or unfair:

“(a) depends on whether in the circumstances (including the size and administrative resources of the employer’s undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee.”

The employment tribunal must not substitute their own feelings for those of the employer and must only decide whether the decision falls within a band of reasonable responses open to the employer.[4] In the present case, when considering the administrative resources of TOS who we know were in financial difficulty, it is certainly arguable that the decision was within the band of reasonable responses to Garry’s refusal to accept the lower rate of pay.

I would advise that Gary brings a claim for unfair dismissal arguing that the decision to dismiss was unreasonable. He has the requisite continuity of employment, which for unfair dismissal is 1 year. However, the tribunal may well find that the dismissal was reasonable as I have suggested so I would advise that he also brings a claim for breach of contract in the alternative. If he is successful in his claim for unfair dismissal he will receive a basic award calculated in a similar way to the redundancy payment. The exact amount will depend on his age and level of pay. He will also receive a compensatory award which will compensate him for any actual loss arising out of the dismissal such as loss of net wages in between the effective date of termination and the employment tribunal and any future losses which the tribunal consider reasonable. If he does not succeed in an unfair dismissal claim and does succeed on a breach of contract claim he will only receive damages to compensate him for the losses arising out of the breach of contract i.e. the unilateral reduction in wages and would not receive a basic award.

Paul

Similarly to Gary, the unilateral reduction in Paul’s wages will constitute a breach of contract. The obvious difference is that at the present time Paul has accepted the reduction and carried on working. He may therefore lose the right to complain about the breach. In the case of Western Excavating (ECC) Ltd v Sharp [1978] QB 761 Lord Denning stated at page 709:

“[The employee] 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 the right to treat himself as discharged.”

The law in this area is now dealt with under statute. Section 95 (1) (c) of the Employment Rights Act 1996 states that an employee is treated as dismissed if:

“The employee terminates the contract with or without notice in circumstances in which he was entitled to terminate it without notice by reason of the employers conduct.”

This is the concept of constructive dismissal. The employer must be in repudiatory breach of contract for the employee to be able to resign and claim that they were constructively dismissed. It is likely that a unilateral reduction in wages will be considered a repudiatory breach of the contract.[5] Paul would therefore have been entitled to resign immediately on being informed of the reduction in pay, but his continuing to work may have lost him the right to do so. This will depend on the length of time he has carried on working as well as the circumstances. In the present case it is significant that Paul has not signed the new contract, but not determinative as he has been working under the new pay and may therefore be held to have impliedly accepted the alteration. In the case of Marriot v Oxford District Cooperative Society Ltd (No2) [1970] 1 QB 186 it was held that 4 weeks of work under protest was not sufficient to extinguish the right of the employee to treat himself as discharged for repudiatory breach of contract. The Redundancy payments legislation also allows 4 weeks in the new position to determine whether it is suitable.[6]

Taking all these considerations into account I would advise that if Paul were to resign immediately he would still be able to claim constructive dismissal, however if he continues to work for much longer he will be taken to have accepted the alteration in his contact and lose the right to any remedy for breach. If he does resign and it is accepted that it was a constructive dismissal all this will establish is that he was dismissed. It will then be necessary to show that this was by reason of redundancy. Similar arguments apply here as with Patrick and I am of the opinion that he would be able to show that he was dismissed because of a reduction in the requirement for his type of work to be carried out. Whether or not he will be entitled to a redundancy payment will depend on whether he has 2 years of continuous employment. If not he may still be able to make a claim for unfair dismissal in the same way as Gary. This will rely on him having 1 year of continuous employment.

It is important to note that in the case of Patrick and Paul, even if they have already received a redundancy payment they may still be able to claim that their dismissal was unfair. They would be able to do so if they could show that they were not in fact redundant within the meaning of Section 139 (1) of the Employment Rights Act 1996 as discussed above. Any redundancy payment would be deducted from the basic award of their damages for unfair dismissal.

Martin

Martin’s case also falls within the realms of constructive dismissal. Whether or not this is made out will again depend on whether it can be shown that TOS were in repudiatory breach of a contractual term. Without the contract it is impossible to tell whether there were any express terms relating to driver safety, but this is by no means fatal to Martin’s claim. There are implied terms relating to employee safety which may well have been breached by TOS on this occasion. For example obligations under the Health and Safety legislation have been held to establish implied contractual terms.[7] Furthermore, there is a common law duty of care to provide a safe system of work which will also be implied into the contract. On those grounds it would seem likely that failing to service the vans when it was specifically known that they were in need of it would constitute a breach serious enough to warrant Martin treating the contract as repudiated. He may therefore have a claim in unfair dismissal.

What does seem clear is that he will have an action in negligence against TOS who will be vicariously liable for the failure of Delia to service the vans when she was fully aware that they required it. It seems unequivocal that all the elements of negligence are present. There is a duty of care to provide a safe system of work. That duty was breached when Delia failed to service the vans. It was reasonably foreseeable that a failure to service the vans might lead to an accident. Where Martin’s claim may run into difficulty is in establishing that he suffered any damage. Recent recognition of the problems caused by stress at work led the High Court to expand employers’ duty to provide a safe system of working where a social worker suffered a nervous breakdown through excessive workload. He was promised assistance on his return to work. They failed to do so and were held liable for the further harm caused because the previous breakdown had made further harm foreseeable.[8] It is arguable then that Martin may be able to recover damages for psychiatric harm if he can establish that it was sufficiently serious.

With regard to the reference I would advise the following: The employer is under no obligation to provide a reference, but where he does choose to do so he is now under a duty to provide an accurate reference. The duty is not only to the recipient of the reference, but also to the subject of it. [9] There is now a cause of action in negligence in this area as a result of the decision in Hedley Byrne and Co v Heller [1964] AC 465 which allowed for the recovery of pure economic loss where a special relationship exists between the parties.

Whilst the reference is required to be accurate it is not necessary, to escape liability, that it be fully comprehensive. The duty is to take reasonable care not to give misleading information whether as a result of unfairly selective provision of information or by the inclusion of facts and opinions in such a manner as to give rise to a mistaken inference in the mind of a reasonable recipient.[10] It would appear that the wording of the reference in the present case would be misleading to a prospective employer. Whilst there is nothing false in the reference, the fact that it omits to mention that Martin resigned from his position because he was involved in an accident because of faulty breaks on the vehicle leaves the impression that he was dismissed for writing off the vehicle. Martin will therefore be able to claim damages to compensate him for any losses arising out of the inaccurate reference. For example if the reference proves to prevent him finding alternative employment for any period of time TOS may be liable for loss of earnings during that period.

Campbell

Campbell’s complaint falls within the ambit of section 57(a) of the Employment Rights Act 1996 which provides that an employee is entitled to be permitted by his employer to take a reasonable amount of unpaid time off during working hours in order to take necessary action to assist a dependant. The definition of a dependant includes a parent. However the section specifically states that this is to provide for situations when the employee is needed:

“ (a) to provide assistance on an occasions when a dependant falls ill, gives birth or is injured or assaulted;

(b) to make arrangements for the provision of care for a dependant who is ill or inured;

(d) because of the unexpected disruption or termination of arrangements for the care of a dependant;”

It is clear from cases such as Qua v John, Ford, Morrison Solicitors [2003] IRLR that the falling ill must be an unexpected or sudden event. The employee will only be permitted sufficient time to deal with the immediate crisis and arrange for alternative care not to care for the person themselves. From the facts of the present case it does not appear to be an emergency case of falling ill as Campbell’s mother is seriously ill and he has taken time off to look after har in the past. It also does not appear that relieving the carer for an afternoon would count as an emergency unexpected situation. However it might be that the carer has had to leave suddenly bringing the situaton within the bounds of s57(A) (1) (d) above. If Campbell can establish that the situation falls within the section he will be entitled to a declaration to that effect from the employment tribunal and any damages which are just and equitable in the circumstances.

Word Count: 2967 excluding footnotes and bibliography.

BIBLIOGRAPHY

CASES

  • Brand v LCC The Times, 28 October 1967
  • Kaur v MG Rover Group Ltd [2004] IRLR 279
  • Anderson v Pringle of Scotland Ltd [1998] IRLR
  • Gilham v Kent County Council (No 2) [1985] ICR 233
  • Iceland Frozen Foods Ltd v Jones [1982] IRLR 439
  • Western Excavating (ECC) Ltd v Sharp [1978] QB 761
  • McAndrew v Prestwick Circuits Ltd [1988] IRLR 514
  • Marriot v Oxford District Cooperative Society Ltd (No2) [1970] 1 QB 186
  • Waltons and Morse v Dorrington [1997] IRLR 488 (EAT)
  • Walker v Northumberland County Council [1995] IRLR 35
  • Spring v Guardian Assurance [1994] ICR 596
  • Hedley Byrne and Co v Heller [1964] AC 465
  • Kidd v Axa Equity and Law Life Assurance Association plc [2000] IRLR 301
  • Qua v John, Ford, Morrison Solicitors [2003] IRLR

LEGISLATION

  • Employment Tribunal’s Extension of Jurisdiction (England and Wales) Order 1994 (SI 1994/1623)
  • Employment Rights Act 1996

OTHER

  • Halsbury’s Laws of England
  • Tolley’s Employment Law Service
  • Harvey on Employment Law
  • Employment Law in Practice Nigel Duncan et al. 7th Edition, Oxford University Press.

1


Footnotes

[1] Brand v LCC The Times, 28 October 1967

[2] Employment Tribunal’s Extension of Jurisdiction (England and Wales) Order 1994 (SI 1994/1623)

[3] For example the case of Ali v Southwark Borough Council [1988] ICR 567

[4] Iceland Frozen Foods Ltd v Jones [1982] IRLR 439

[5] McAndrew v Prestwick Circuits Ltd [1988] IRLR 514

[6] Section 141 Employment Rights Act 1996

[7] Waltons and Morse v Dorrington [1997] IRLR 488 (EAT)

[8] Walker v Northumberland County Council [1995] IRLR 35

[9] Spring v Guardian Assurance [1994] ICR 596

[10] Kidd v Axa Equity and Law Life Assurance Association plc [2000] IRLR 301


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