The Employment Rights Act 1996 Law Employment Essay

Published Date: 02 Nov 2017

The Employment Rights Act 1996 ha been the keyway to employment relations for a number of years and has been a symbol of controversy, when dealing with unfair dismissal cases. The courts and tribunals have reluctantly been inclined towards the employer but occasionally favoured employees. However, the outcome of cases show that judges tend to favour employers. Collin Hugh states that:

'The reluctance of the tribunals to adopt the strict rules of natural justice demanded by respect for the dignity of individuals is revealed in many of their decisions ... This unwillingness to implement the principles of natural justice for disciplinary dismissals seems to be grounded in efficiency considerations [9] .'

As mentioned above, Judges may interpret the law in favour of an employee in terms of procedural fairness in dismissal cases. This includes a band of ‘reasonable responses test’, this leads to efficiency and a standard of fairness. Moreover, at common law there is no flexibility, and ‘natural justice’ principle is of the essence as observed in Malloch v Aberdeen Corporation [10] . Procedural fairness has not been encapsulated within the 1996 act. However, the introduction of the Employment Act 2002 saw some changes that one can assume to constitute procedural fairness and according to Smith and Wood, the legislation is somewhat a return to the principle of British Labour Pump Ltd v Byrne [11] .

"The new section 98A will contain a major advantage for such an employer. It will state that, in relation to any part of a procedure that is more advanced than the standard [section 98A] procedure, if an employer fails to follow any part of that part [i.e. his own superior procedure] the dismissal will still not be unfair if the employer shows that he would have decided to dismiss the employee if he had followed the procedure [12] ".

It was observed that the decision in Polkey v AE Dayton Services Ltd, [13] overruled the authority of Byrne, and restored the importance of procedural standards in terms unfair dismissal legislation and further recognised that a dismissal may be unreasonable under s.98 (4), [14] where the employer procedure was unfair prior to making the dismissal, although the employer had good grounds for the dismissal such as the need to make redundancies [15] .' However, it can be observed that the courts made a U-turn when applying the ‘no difference’ rule of Byrne. [16] In Duffy v Yeomans & Partners Ltd, [17] the Court of Appeal, rejected an appeal from the EAT, and stated that it was reasonable for an employer to make an employee redundant without prior consultation, even where there was no deliberate decision that such consultation would serve no useful purpose.

A further analysis can be made. In constructive dismissal cases, an employee’s dismissal needs to be ‘fair’ or ‘unfair’. Thus, it is assumed that employees seem to believe that they are entitled to compensation simply because they have been constructively dismissed. However, this is not the case. Two views need to be established, firstly, where the resignation is triggered by the conduct of the employer that falls short of being a breach of fundamental terms is simply a resignation, or a mere misdeed by the employer, can result in the employee’s constructive dismissal. Secondly, where the employee’s misconduct triggers a breach of contract by the employer and results in the constructive dismissal being reasonable [18] as observed in Savoia v Chiltern Herb Farms Ltd [19] .

In constructive dismissal cases, an employee resigns and claims unfair dismissal by virtue of constructive dismissal, this was observed in Western Excavating v Sharp, [20] Lord Denning MR proposed that the test for constructive dismissal should require a fundamental or repudiatory breach of contract, he justified the proposal on the ground that it would provide certainty, avoid unpredictable decisions and it could be easily understood [21] .

It is common knowledge that there are implied in contract of employment mutual rights and obligations of trust and confidence, such that a breach of this implied term may lead to an employee’s constructive dismissal [22] . Moreover, the outcome of the contractual approach may be slightly different from the simple ‘reasonableness’ approach [23] .

Lord Hoffman in Malik v Bank of Credit and Commerce International SA [1998] AC 20, HL described this term as a ‘default’ one, i.e. it applies between all employers and employees unless expressly negated. It is now rare for unreasonable conduct not to be a breach of this or some other implied term. As observed in Hilton International (UK) Ltd v Protopapa [24] a supervisor was scolded by a superior in front of her colleagues, the employer appealed but the employment appeals tribunal did not overturn the earlier decision and stated that; an employer must be held responsible for actions of their employees for acts done in the course of their employment. Similarly, where an invalid resolution is used to take away the duties of a member of staff [25] , the employer will be held accountable for a breach of the implied term of mutual respect [26] . Furthermore, a breach of a fundamental term at common law will usually be repudiatory. [27] An employee may also think that a particular situation amounts to a breach of contract. However, this might not be the case at all times. Such that a breach of rule by the employee, may amount to a breach duty of his contractual terms to obey orders, since rules have no contractual force, then the employer may have the right to alter them unilaterally, without a breach of contract taking place. Providing that, the reason for change does not breach the implied term of mutual trust and confidence. In this case, the employers introduced a no-smoking policy after consultation with staff as well as proposed to help quit smoking was given and breach of which was not subject to disciplinary measures until a warning was given [28] . The applicant claimed that they had done so in breach of contract as he was allowed to smoke in a specified area for a number of years. The court chose not to consider the argument, and held that the change was a matter of policy, therefore there was no breach of contract [29] .

The dictum of judges, in relation to managerial prerogative in unfair dismissal cases are at times more inclined to the employer, and the courts fail to address the process through which the employee has been dismissed. Whether fair or unfair, for as long as the outcome of the dismissal would not have changed in principle. In order to assert to this, three main aspects need to be considered within the employer and employee relationship. Firstly, I will discuss the concept of an employee contained within the reasoning in O’Kelly v Trusthouse Forte plc. [30] . Secondly, I will analyse the concept of ‘Some Other Substantial Reason’ and finally, I will analyse the concept within the ‘range of reasonable responses’ test.

In O’Kelly there was a missed opportunity for the courts to extend the protection of employment law to employees at risk of unfair dismissal. The court considered that ‘Regular casuals’ were not employees [31] . The reason being was that there was the insignificant amount of ‘mutuality of obligation’ as they were on ‘standby’ and came to work when requested. However, the court of appeal did find elements that would qualify them as employees; they were not in business on their own; the "employer" had substantial amount of control over employee; a discipline and grievance procedure applied; and they could not take time off without requesting. Despite the facts they were found to be self-employed. The CA could have ruled otherwise as their work was more inclined to that of a fulltime employee and significantly equal to permanent staff [32] . The CA further stated that the employee had no right to claim unfair dismissal if they were not offered work and were equally not obliged to accept any work that was offered [33] . Similarly, the same was established in Nethermere (St Neots) Ltd v Taverna and Gardiner [34] , where the CA said that a contract of employment cannot exist in the absence of mutual obligations subsisting over the entire duration of the relevant period [35] .

The terms, ‘Some other substantial reason’ is an ill-defined category in the statute which has attracted major criticism from commentators [36] . This permits an employer to dismiss an employee, and claim that the dismissal was for a fair reason in all circumstances, although this is not provided by the Act [37] . In Dobie v Burns International Security Services [38] , the employee was dismissed as a result of a complaint by a customer. On justifying the reason for dismissing, the employer said that had they not done so, their business would have been affected by withdrawal of the customer. On appeal, the EAT, said that even if the injustice caused to the employee was considered in relation to length of time of employment and the employees work record, it would have not made any difference to the decision to dismiss [39] . In Hollister v National Farmers Union [40] , it was held that a dismissal of an employee who refused to accept any unilateral variation to contractual terms of employment is fair [41] . Furthermore, the CA differing from the EAT, said that it was not necessary for the employer to consult with the employee [42] . In RS Components Ltd v Irwin [43] , the company was losing money as a consequence of ex-employees activities that set up in competition. In order to prevent this from happening again, the company required that its existing salesmen needed to sign a restrictive covenant. Four of which refused to sign, and were dismissed as a result. The National Industrial Relations Court held their dismissal fair [44] .

These three cases demonstrate the scope of which the concept of SOSR can be applied to various practical scenarios as well as in circumstances that the employer has acted contrary to the contractual terms or unilateral changes in job contents [45] .furthermore, the courts have had the opportunity to interpret the SOSR in similar terms to the other four potential fair reasons. However, in RS Components it was stated that SOSR should not be construed ‘ejusdem generis’ to the aforementioned categories [46] . Similarly, in Kent CC v Gilham, [47] the CA held that the employer needs to show that there was a fair reason to dismiss, then a ‘trivial or unworthy’ reason would be fair [48] . In Chubb Fire Security Ltd v Harper [49] , it was considered that it may be possible to balance the advantage in favour of the employer as opposed to the disadvantage of the employee resulting in a reorganisation [50] . This also amounted to a SOSR. Thus, it can be observed that for a reason that the employer believes to be fair under the circumstances, a dismissal will be upheld by the courts. Furthermore, the SOSR may even be used by employers in instances where the dismissal procedure does not reflect true facts or even address current values. In Saunders v Scottish National Camps Ltd [51] , The employee was dismissed as a result of his gender and was also considered to be a threat to the children as opposed to a heterosexual male. This was held to be fair under the SOSR even though there was no evidence of any threat posed to the children.

Finally, unfair dismissal legislation in the UK, has allowed an employer to dismiss his employee without being judged to have acted unfairly. This is known as the ‘band of reasonable responses’. Moreover, for a dismissal to be considered unfair, it has to fall outside this category [52] . The test to dismiss within the band of reasonable responses was established in Iceland Frozen Foods Ltd v Jones [53] , which empowered the employer with an array of discretionary powers as well as procedural means of doing so [54] .

Conclusion

The ERA 1996, s.98 (4) does not provide for test of reasonable responses, it is claimed that this miss-represents and is ill interpreted of what was actually intended by the Act. Henceforth, this is still remains the test despite favouring employer as opposed to a provision that would provide a remedy to the employee that has been unfairly dismissed. This, demonstrates that judges are further inclined to the discretionary powers of managerial prerogative. However, it may also be observed that on a balance, the dictum of judges also favours that of the employees, but the scale is greatly tipped toward that of the employer; given that reasonableness, fairness and truth within the case is not always considered.