‘An employee has the right not to be unfairly dismissed by his employer.’
There are certain reasons where dismissal is potentially ‘fair’ provided that the employer acts ‘reasonably’ throughout the dismissal procedures and the reason was sufficient to justify dismissal. The reasons are capability, conduct, redundancy contravention of some statutory requirement and some other substantial reason.
The statutory meaning of dismissal for unfair dismissal purposes in s.95 (1):
- the contract under which he is employed by the employer is terminated by the employer, whether it is so terminated by notice or without notice, or
- where under that contract he is employed for a fixed term, that term expires without being renewed under the same contract.
Establishing the existence of a reason for dismissal falling within the legislation is only the first hurdle upon which employer has the burden of proof. But there is also a reasonable test, where there is no burden of proof placed on either party. The Employment Appeal Tribunal will determine whether the employer acted reasonably or unreasonably in treating the established reason for dismissal as sufficient reason for dismissing the employee, having regard to equity and merits of the case and to the size and administrative resources of the employer’s undertaking. In British Leyland (UK) Ltd v. Swift and Iceland Frozen Foods v. Jones were considered whether the employer’s decision to dismiss fell within the band of reasonable responses open to a reasonable employer.
Unfair Redundancy Dismissal
Redundancy is a prima facie fair ground for dismissal. It is important to remember that the statutory presumption that a dismissal is for redundancy under the Employment Right Act 1996 s. 163 (2), which applies when the claim is for a redundancy payment, does not apply in relation to an unfair dismissal claim. Hence it is up to the employer to prove that redundancy was the reason for dismissal.
Redundancy can mean different things to different people and in different contexts. The statutory scheme in section 139 defined redundancy attributed to:
- the fact that his employer has ceased, or intends to cease to carry on the business for the purposes of which the employee was employed by him, or to carry on that business in the place the employee was so employed, or
- the fact that the requirements of that business for employees to carry out work of a particular kind, or for employees to carry out work of a particular kind in the place where the employee was employed by the employer have ceased or diminished or are expected to cease to diminish.
The dismissal for redundancy may still be challenged as unfair on the grounds that:
(i) If the circumstances constituting the redundancy also applied equally to one or more employees in the same undertaking who held posts similar to that held by the dismissed employee and they have not been dismissed and:
(b) the reason for the selection was because….transfer of undertaking.
(ii) Unreasonable redundancy under the ERA 1996 s. 98 (4).
Whether or not there is a redundancy agreement, the employee may challenge the fairness of the redundancy dismissal under s. (98). This principle was decided in Bessenden Properties Ltd v. Corness.
The rule that an unfair procedures leading to a dismissal does not render the dismissal unfair if it made no difference to the outcome. Lord Bridge argued in his judgment that:
‘in the case of redundancy, the employer will not normally be acting reasonably unless he warns and consults any employees affected or their representative, adopts a fair basis on which to select for redundancy and takes such steps as may be reasonable to avoid or minimize redundancy by redeployment within his own organization.’
Deductions
The ERA prohibits an employer from making a deduction from the wages of a worker or from receiving a payment from him or her, unless:
- the deduction, or payment, has statutory authority (tax and National Insurance would come under this category), or is authorized by the worker’s contract; or
- the worker has previously signified in writing his/her agreement or consent to the making of the deduction.
Wages, in this case, are any sums payable to a worker in connection with his/her employment, including bonuses, commission, holiday pay and other ‘emoluments’ referable to the employment. It also includes guarantee payments, and other entitlements like statutory sick pay and statutory maternity pay. Payments in the nature of a non-contractual bonus are treated as wages, s. 27 (3). The Act treats any situation in which the total amount paid is less than the total amount payable as a deduction.
There will no de deduction if the deficit due to an error of computation by the employer s. 13 (4) (Morgan v. West Glamorgan CC).
When it comes to the worker’s written consent, it must be given before the deduction is made and before the circumstances giving rise to that deduction if it is to be classed as an authorized deduction as it applied to the case in Discount Tobacco & Confectionery Ltd v. Williamson and furthermore the written consent must state the source of deduction as being the wages. But however, even though the employer deducts the employee’s wages, that deduction could be challenged as in Fairfield v. Skinner.
Case and Remedy: Gillian Green with more than two years of continuous service, regardless of the number of hours that she work each week, is entitled to ask for a written statement giving reasons for her dismissal within 14 days of her request.
Gillian Green can bring a complaint of unfair dismissal to the employment tribunal within three months of the EDT. It is up to the employer to establish the reason for dismissal and the tribunal will then decide if the employer acted reasonably or unreasonably in treating the reason for dismissal as sufficient, taking into account the size and resources of the organization.
The tribunal will consider whether the employer’s decision to dismiss fell within the band of reasonable responses to the employee’s conduct which a reasonable employer would adopt.
Once the tribunal is satisfied that an employee has been unfairly dismissed, it has to consider one of three forms of remedy:
- an order for reinstatement
- an order of re-engagement
- an award of compensation
Under the Employment Rights Act 1996 an order for reinstatement is an order that the employer shall treat the complainant in all respects as if he or she had not been dismissed. On making an order for reinstatement the tribunal shall specify:
- any amount payable by the employer in respect of any benefit which the complainant might reasonably be expected to have had but for the dismissal (including arrears of pay) for the period between the date of termination of employment and the date of reinstatement;
- any rights and privileges (including seniority and pension rights) which must be restored to the employee; and
- the date by which the order must be complied with.
An order for reinstatement shall require him or her to be treated as he or she had benefited from the improvement in his or her term and conditions of employment from the date on which he or she would have done so but for being dismissed.
An order for re-engagement is an order, on such terms as the tribunal may decide, that the complainant be engaged by the employer, or by a successor of the employer or by an associated employer, in employment comparable to that from which he or she was dismissed or other suitable employment.
Where an employer fails to comply with a re-employment order, the tribunal makes an additional award of compensation, unless the employer can show that it was not practicable to comply with the order.
Compensation is made of two elements: a basic award and a compensatory award. Where a dismissal is related to automatically unfair reasons, a special award is payable. The basic award is calculated by a fixed mathematical formula:
Years of service x Week’s pay x Multiplier (1/2, 1 or 1 ½).
The compensatory award is to compensate for the loss caused by the dismissal and guidelines were laid down in Norton Tool Co Ltd v. Tewson. The award can be provided to cover the loss up to the date of the tribunal hearing, loss of pension rights, loss of benefits such as the use of company’s facilities, in this case Gillian has lost the use of the hotel’s gymnasium and swimming pool and any future loss for a period to be considered, during which the employee may expect to remain out of employment as a result of dismissal. The tribunal considers just and equitable in all the circumstances having regard to the loss caused to her by the unfair dismissal in so far as the loss is attributable to action taken by the employer.
Deductions can be made from the award in respect of sums paid by the employer, income from a new job, social security benefits, redundancy compensation. The order of deductions was determined in Heggie v. Uniroyal Englebert Tyre Ltd.
The compensatory award may be reduced if Gillian does not take reasonable steps to mitigate her loss by making a reasonable effort to find suitable new employment. Her personal circumstances will have an effect on how easy it will be for her to find new work, for instance her age or state of health may be a factor. The state of the job market will also be taken into account when determine what Gillian should be able to achieve in terms of new employment.
The burden of proof will be on her employer to show that she has failed to mitigate her loss. If the tribunal agrees with her employer then a view will be taken as to when she could reasonably have been expected to have found a suitable job and the estimated earning will be taken into account when calculating compensation.
Gillian Green could proceed to make a claim for redundancy payment based on the ground that she had been dismissed unfairly and that dismissal must have been by ‘reason of redundancy’. Under the Employment Rights Act 1996, it states the amount of a redundancy payment shall be calculated by:
- determining the period, ending with the relevant date, during which the employee has been continuously employed.
- reckoning backwards from the end of that period the number of years of employment falling within that period and,
- allowing the appropriate amount for each of those years of employment.
Gillian Green will get whole years of continuous having attach the multiplier of 1 week’s gross pay for each year employed. The pay is not taxable but it will be offset against any basic award for unfair dismissal in relation to the same dismissal.
If where Gillian accepts her employer’s offer of renewal of the contract of employment as she would like to return to her job by the same or an associated employer there is no dismissal. Therefore there can be no claim to a redundancy payment. And if she regains work, there will be no break in continuity of employment.
If where Gillian’s employer offers her a suitable alternative employment and if she refuses it, she will lose any rights to claim a redundancy payment arising out of the dismissal for redundancy.
Gillian Green has the right to apply to Employment Tribunal for a claim within three months from the day she received her outstanding pay and it had been deducted from her pay in respect of stock shortages which had occurred during her final shift. Gillian’s employer did not have prior written consent to make deduction on a particular ground. Gillian could argue that she did not know or to her knowledge that her employer had introduced a new policy and that the amount deducted may be excessive
Gillian Green has protection at common law against ‘wrongful’ dismissal, but it is limited; that is to say if she is dismissed without due notice she can claim the payment wages she would have earned for the period of notice. From this payment will be deducted any amount which she earned during the period of notice. She has the right, section 11 of the 1996 Act, to bring tribunal proceedings against an employer for failing to give proper notification of deductions from wages in the statutory-required itemized pay statement. These statutory provisions concerning deductions state:
‘Where tribunal has…..ordered an employer to pay or repay to a worker any amount in respect particular deduction or payment…..the amount which the employer is entitled to recover (by whatever means) in respect of the matter in relation to which the deduction or payment was originally made or received shall be treated as reduced by that amount’
Section 26 provides that Gillian Green will lose the right to recover the amount in an other way once her employer has been ordered to repay an unlawful deduction.
Section 24 provides that where a complaint is successful the tribunal shall decide to that effect and order payment of the amount deducted.
The Equal Pay Act 1970
In Glasgow City Council v. Marshall the House of Lords had to decide whether employers who paid employees different rates in respect of their duties as teachers and instructors (the teacher being paid more) had acted lawfully. The legal proceedings were brought before the court under the Equal Pay Act 1970 claiming that they were entitled to equal pay. The House of Lords also decided a case of Strathclyde Regional Council v. Wallace on the fact that female teachers did the same work but were paid at a lower rate. It was ruled that if a difference in pay was explained by financial constraints and a promotion structure and not related to discrimination, then that was sufficient to raise a defense. If, however, if the matter was related to sexual discrimination, the defense would not succeed unless the discrimination could be justified.
The Equal Pay Act 1970 is encapsulated in the UK law and contains in section 1 (1) of the principle:
“If the terms of a contract under which a woman is employed at an establishment in Great Britain do not include (directly or by reference to a collective agreement or otherwise) an equality clause they shall be deemed to include one.”
Furthermore the At also implied that, in respect of a man and a woman, the terms of employment of the woman’s contract shall be not less favourable than similar terms in the man’s contract. That is to say, they, the man and the woman, must be doing the work of equal value. Then there must be equal pay among other terms applied. The principle was applied in Bromley and Others v. H. J. Quick Ltd.
The House of Lords defined work of equal value as:
“where a woman is employed on work which, not being in relation to which paragraph (a) or (b) above applied, is, in terms of the demands made on her (for example under such headings as effort, skill and decision) of equal value to a man in the same employment” (s1 (2) 9c)).
In Pickstone v. Freeman plc, it was decided that the female could be allowed to rely on the work of equal value where there was a male doing the same work as herself for the same pay. Also in Hayward v. Cammell Laird Shipbuilders Ltd a cook won the claim of work of equal value with a painter, a joiner and an engineer who engaged the employment in the same shipyard.
Case and Remedy: It is clear from the fact of the factual case and from the wordings of the Equal Pay Act, Gillian Green, being paid less than Martin, her former colleagues, will entitle to an implied term concerning the pay and other term of employment which can be claimed directly from the employer. If the employer refuses to acknowledge the existence of the term or disagrees with Gillian, then she can apply to the Employment Tribunal for such a claim.
Gillian could have a remedy such as her contract employment could be modified and should include an equality clause. So that her terms of contract are no less favourable than those of Martin and also the benefits which Martin receiving should be included in Gillian’s contract.
In order to make an equal pay challenge Gillian must apply to an employment tribunal. The Equal Pay (Amendment) Regulations 2003 maintain the time limit for bringing equal pay claims at six months from the end of the employment. The time limit will run from six months from the date on which the ‘stable employment relationship’ ends. In any event the time limit will not commence in cases where the employer deliberately concealed relevant facts, until the employee knew of those facts. The six years limitation has been challenged successfully in Kells v. Pilkington plc in which the EAT held that there is no rule of law restricting the period of events in respect of which an equal pay comparison can be made to six years before the date of the application. If the claim is successful Gillian may recover arrears of pay for a period of up to two years prior to the date on which proceedings were started. A payment of damages, rather than back-pay, will be made where the employer has broken a term of contract not directly related to pay, such as holiday entitlement. The limit on compensation of up to two years’ back-pay was successfully challenged in Levez v. TH Jennings (Harlow Pools) Ltd (No 2).
Sex Discrimination Act 1975
Contractual employment rights are regulated under the Equal Pay Act 1970, while other aspects of employment are regulated by the Sex Discrimination Act 1975. The Acts provide protection in all fields of employment. It is unlawful to discriminate on the basis of sex marital status in the context of employment and education. Sexual discrimination may be direct or indirect. Indirect discrimination may arise through unjustified conditions of employment, for instance, through stipulating that applicants be of certain age or height, where these aspects are irrelevant to the particular job. The issue of justifiable qualifications raises in the Price v. Service Commission where a condition was applied that applicant under the age of 28 years old. Mrs Price, aged 35, alleged discrimination and her claim was upheld.
The SDA defines direct discrimination as:
S 1 (1) A person discriminates against a woman in any circumstances….if
(a) on the ground of her sex he treats her less favourable than he treats or would treat a man,
This principle was decided in Coleman v. Skyrail Oceanic Ltd where the employer wrongly dismissed a female worker because of the employer’s view married men should be ‘breadwinners’. The less favourable treatment must be because of sex and not because of another gender factor. The meaning of sex is defined as ‘gender’ in both the EDT and the SDA can be found in the case of Grant v. South West Trains and Macdonald v. Advocate General for Scotland and Pearce v. Governing Body of Mayfair School.
Section 5 (3) states that where the comparison, when sex discrimination is being claimed, is being made the “comparison of the cases of persons of different sex…must be such that the relevant circumstances in the one case are the same or not materially different, in the other”. And it requires a direct comparison to be made with the person of the opposite sex. In Shamoon v. Chief Constable of Royal Ulster Constabulary, the House of Lord provides a guidelines on this particular aspect of discrimination law.
Section 6 of the Sex Discrimination Act provides:
6 (1) It is unlawful for a person, in relation to employment by him at an establishment in Great Britain, to discriminate against a woman –
- in the arrangements he makes for the purpose of determining who should be offered that employment, or
- in the terms on which he offers her that employment, or
- by refusing or deliberately omitting to offer her that employment.
6 (2) It is unlawful for a person, in the case of a woman employed by him at an establishment in Great Britain, to discriminate against her
- in the way he affords her access to opportunities for promotion, transfer or training, or to any other benefits, facilities or services, or by refusing or deliberately omitting to afford her access to them, or
- by dismissing her, or subjecting her to any other detriment.
The burden of proof is on Gillian Green but she will be assisted in getting the information from the employer, for instance the qualifications of her colleagues Martin actually promoted as well as other evidence. In Baker v. Cornwall County Council, the Court of Appeal stated that “If discrimination takes place in circumstances…tribunal should be prepared to draw the inference that the discrimination was on such grounds unless the alleged discriminator can satisfy the tribunal that there was some other innocent explanation”.
If the tribunal finds Gillian Green to be the case of unlawful sex discrimination, it has three possible solutions:
- declaration
- compensation
- recommendation of action to be taken.
Declaration – This is an order declaring the rights of the complainant and the respondent in relation to the act which the complainant relates.
Compensation – This may be awarded for:
- actual losses such as expenses and wages
- future losses of wages and benefits
- injury to feelings.
Recommendation – The tribunal can make a recommendation for specific action but the scope of tribunal’s action is rather weak in ordering an employer to discontinue a discriminatory practice.
If the respondent fails to comply with the recommendation, the tribunal can increase any compensation previously awarded, or, if previously the tribunal did not award compensation, then it may do so. But however, the Court of Appeal in Irvine v. Prestcold Ltd ruled that the tribunal does have the power to make recommendations for the taking of action, it does not include the power to make recommendation that the employer increase the complainant’s wages.
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Table of Cases
Price v. Service Commission (1978) 1 WLR 1417.
Glasgow City Council v. Marshall (2000) 1 WLR 333.
Strathclyde Regional Council v. Wallace (1998) 1 WLR 259.
Bromley and Others v. H. J. Quick Ltd (1988) IRLR 249.
Pickstone v. Freeman plc (1988) IRLR 357.
Hayward v. Cammell Laird Shipbuilders Ltd (1988) IRLR 257.
Levez v. T H Jennings (Harlow Pool) Ltd (No2) (1999) IRLR 764.
Coleman v. Skyrail Oceanic Ltd (1981) IRLR 398.
Kells v. Pilkington plc (2002) IRLR 693.
Sapp v. Shaftesbury Society (1982) IRLR 326, CA.
British Leyland (UK) Ltd v. Swift (1981) IRLR 91.
Iceland Frozen Foods v. Jones (1983) ICR 17.
Bessenden Properties Ltd v. Corness (1977) ICR 821.
Morgan v. West Glamorgan CC (1995) IRLR 68.
Discount Tobacco & Confectionery Ltd v. Williamson (1993) IRLR 327.
Fairfield v. Skinner (1993) IRLR 4.
Norton Tool Co Ltd v. Tewson (1973) IRLR 183.
Heggie v. Uniroyal Englebert TYre Ltd (1999) IRLR 802.
Carmichael and Leese v. National power plc (1999) IRLR 43.
Grant v. South West Trains (1998) IRLR 188, ECJ.
Macdonald v. Advocate General for Scotland and Pearce v. Governing Body of Mayfair School (2003) IRLR 512, HL.
Shamoon v. Chief Constable of Royal Ulster Constabulary (2003) IRLR 285.
Baker v. Cornwall County Council (1990) IRLR 194.
Irvine v. Prestcold Ltd (1981) IRLR 281.
Bibliography
Hilaire Barnett ‘Constitutional & Administrative’ 3rd Cavendish Publishing Ltd.
Richard W, Painter and Keith Puttick ‘Employment Rights’ 3rd Ed.
Gwyneth Pitt ‘Cases & Materials in Employment Law’ 2nd Ed.
Sue Morris ‘Discipline, Grievance and Dismissal’ the Industrial Society.
