employment law problem question

Nevertheless, the employees at Zephyr Auto can also bring an action against the company in a, ‘a Wages Act Claim’ to a tribunal to recover their deducted wages. Section 13 provides that an employer shall not make deductions from wages of a worker employed by him unless the deduction is, required or authorised by statute, required or authorised by a provision in the contract of employment which has either been given to him or notified to him previously in writing, or the employee has agreed to it in writing prior to the making of the deduction. The requirement of prior written agreement means prior to the event causing the deduction, not just to the deduction itself, authoritative cases in relation to this situation would be Discount Tabacco and Confectionary Ltd v Williamson and York City and District Travel Ltd v Smith.

In relation to the job security agreement with UCW containing a seniority agreement which stipulates that “selection for redundancy will be made on the basis of seniority with the company on the basis of last in, first out”. Albert has been working for the company for ten years and he is not a member of the union UCW, he was informed that he has been selected for redundancy. Redundancy is a prima facie fair ground for dismissal. The employer must establish that redundancy was the principal reason for dismissal since the statutory presumption of redundancy in the Employment Right Act 1996, for the purposes of the redundancy payments scheme it is not applicable in an unfair dismissal claim, authority for this would be the case of Midland Foot Comfort Centre Ltd v Richmond.

The redundancy payments legislation gives an individual a right to payment upon redundancy, but it does not lay down any particular procedures for handling redundancies. There are however two obligations laid upon the employer who is about to make employees redundant, firstly, to consult employee or trade union representatives and secondly, to notify the Secretary of State. In order to ensure that redundancy may not be held to amount to an unfair dismissal, it is important that the employer should follow a procedure of good industrial practice, such as was laid down in the case of Williams v Compair Maxam Ltd, the employer should give as much warning as possible, the employer should consult with the trade union, particularly regarding selection procedure, the selection procedure should be objective, the employer should ensure that the selection procedure is followed and the employer should seek to offer alternative employment.

The results or products of collective bargaining may affect an individual’s contract of employment in three ways. The first is by express incorporation into the contract of employment. If a term is agreed upon by both parties whereby the, say, rate of pay is effected by the collective agreement in force between the trade union and the employer, the rate of pay to the employee may be varied accordingly without the need for any further agreement, similar situation can be seen in the case of Robertson v British Gas. Such a term may be included in the contracts of employment of both union members and non-union members.  

The second theory of incorporation into an individual employee’s contract is by was of agency, the idea that the trade union is acting as an agent for its members as individuals. Although the laws of agency may permit this, in practice it is most unlikely that either the union or its members would wish to be so bound. The case of Burton Group v Smith is authority for the presumption that the trade union does not act as agent for its individual members in collective agreements.

Thirdly, it may be possible to incorporate the products of collective agreements (or any other terms) in to an individual’s contract by conduct, in effect as part of custom and practice. It is possible for almost any term to become an express term of the contract, if agreed to by both parties. It appears that the Unfair Contract Terms Act 1977 applies to the contract of employment; authoritative cases are Johnstone v Bloomsbury Health Authority and Brigden v American Express Bank 

In earlier times when the law encouraged rational collective bargaining where an employer had is under a duty to disclose certain information to an independent trade union which is recognised by him. This duty was first enacted in the Industrial Relations Act 1971; it is now contained in the Trade Union and Labour Relations Act 1992, sections 181-5 and the Code of Practice No 2 ‘Disclosure of information to Trade unions for collective bargaining purposes’, produced by ACAS pursuant to section 181(4).

The issue in relation to Barry informing Albert that his bonus had been discontinued as he has not met his sales targets in the last six months. When Albert applied for the job, he signed a written statement of particulars which stated that the terms of his contract were to be governed by collective agreements, Albert signed the statement but also stating that he was not a union member. Zephyr Autos has a job security agreement with UCW which states that discretionary bonuses are payable for good performance.

The leading case in terms of Albert’s situation would be Robertson and Jackson v British Gas Corpn, where the Court of Appeal held that employees could still claim a bonus which had been incorporated into their contracts even though the collective agreement whence it had originally come had been unilaterally abrogated by the employer. If an employer wishes to not incorporate the terms of a collective agreement, it may not be sufficient enough just to abrogate the agreement if it is incorporated in the employers contracts; he may have to go further and show that those contracts have also been varied.

The final issue it that, Denise was dismissed for gross misconduct after Barry suspected that she has been misusing company funds by concocting false invoices, she was dismissed after a brief investigation was conducted, but it was inconclusive.

In cases of dismissal by gross misconduct, a series of warnings may be particularly important, where repetition eventually justifies the dismissal. Warnings in this context will normally amount to a disciplinary action, so the employer should that this is given in accordance with any procedure laid down in the employee’s contract or work rule book. It is important that the employer achieves the right balance between certainty and flexibility.  On one hand it is important that people committing like offences should be treated alike, this is in favour of a consistent application of disciplinary rules, regardless of who the culprit is, this can be seen in the case of Post Office v Funnell. On the other hand it is regarded that, the key to unfair dismissal is flexibility by the employer.

In cases where the employer has suspicion and in more serious cases its important that a full investigation is conducted, providing that the employer has contractual authority to do so. The Code of Practice states that when an employee is suspended it is particularly important that the employer’s investigations should be even-handed and fair; this is further illustrated in the case Av B. during the investigation the employee will still be entitled to pay and the duration should be only for a brief period, so the employer should come to a reasonable decision to dismiss once he has had time to make reasonable investigations; any prolonged delay before the employer takes a decisive action could conceivably make the dismissal unfair, as can be illustrated in the case Cf Refund Rentals Ltd v McDermott.

In cases where there is only a suspicion that the employee has committed an offence, the employer may feel that the employee ought to be dismissed immediately, but at the same time the employee under suspicion must not be treated arbitrarily. Currently, and in particular since the decision of the EAT in British Home Stores ltd v Burchell, approved by the Court of Appeal in W Weddel & Co ltd v Tepper and Whitbread plc v Hall and fully in line with the current, post Polkey approach, is that the employer may dismiss if he has a genuine belief in the employee’s guilt, which is based upon reasonable grounds. The employer does not have to prove that the employee is guilty, as long as his suspicion is based upon reasonable grounds; it is irrelevant if the employee is later acquitted of the offence, and authority of this would Dhaliwal v British Airways Board. The reasonableness of his belief will depend upon whether the employer made a reasonable investigation to establish the facts before coming to a conclusion.

A reasonable investigation consists of the employer making careful inquiry, allowing the employee to be heard in his own defence, the EAT have suggested that the employer might at least give the employee an opportunity to make representations particularly if the employer ought to go as far as dismissal.

 

Apply

In terms of the changes that Barry would like to introduce he would first need to get inform the UCW, then inform and consult all the employees and it must be in writing and dated; it is also imperative that negotiated agreement must be approved by the workforce. This means that it must be signed by all the negotiating representatives or signed by a majority of the negotiating representatives and either approved in writing by at least 50% of the employees. So if Barry could take such steps then the company will be safeguarded.

To safeguard the company in relation to the pay cut introduced by Barry, it is important that it is authorised by a provision in the contract of employment which has either been given to the employee’s or they have been notified previously in writing, or the employee’s have agreed to it in writing prior to the making of the deduction.

 Zephyr Auto may be liable for unfair dismissal in relation to Albert being made redundant. Even though Albert is not a member of the union UCW, he did sign the written statement of particulars which means that he agrees to the collective agreements. In terms of Albert’s situation the most similar and authoritative case would be Young v Canadian Northern Rly Co 

Zephyr Auto may still be liable to pay Alberts Discontinued bonus even if Barry claims that Albert was not meeting his sales target, authority for this would be Robertson and Jackson v British Gas Corpn, where the Court of Appeal held that employees could still claim a bonus which had been incorporated into their contracts even though the collective agreement whence it had originally come had been unilaterally abrogated by the employer. Barry should have previously warned Albert that he was not doing well towards his bonus, if he wanted to rely on the statement of ‘good performance.

There would not be any particular issue in terms of Denise being dismissed for gross misconduct after Barry suspicions. There may well be a considerable area of discretion in which several solutions might have been reasonable and as long as dismissal was within that area the employer is not to be penalised for choosing it in preference to any lesser measure, this can be seen in the case of Trust House Forte Leisure Ltd v Aquilar. As Barry has necessary belief in Denise’s gross misconduct, then the decision to dismiss her is a standard usual outcome in a theft case.  Nevertheless, to safeguard the company Barry can inform the police and have Denise criminally liable and also to reposes any information regarding the company she may have.

In conclusion, after I have assessed all the issues, rules and applied them to the situation that Barry and Zephyr Auto are facing I would be able to advise them as to the legal issues and the possible steps to safeguard the company. All the legal issues that could be faced are that, firstly, Zephyr Autos would possibly be liable to pay out Albert’s Bonus, as it is incorporated in the employment contact as part of the collective agreement. Secondly, Albert may have sufficient grounds to bring an action of unfair dismissal against Zephyr Autos as he had signed a binding collective agreement, which stipulates that “selection for redundancy will be made on the basis of seniority with the company on the bases of last in, first out”. Finally, to safeguard the company an action against Denise could prevent her from having possession of confidential company details and she may possibly face criminal charges. Furthermore, next time Zephyr Autos ought to conduct an investigation they should take procedural steps by suspending the employee fist to prevent any complications and interference.  

Word count – 2869

Bibliography

Smith & Wood’s, Employment Law (9th ed), Oxford University Press (2008)

Andrew C. Bell, Employment Law (3rd ed), Nutshells, London, Sweet & Maxwell (2006)

---