British labour law
Encyclopedia
United Kingdom labour law involves the legal relationship between workers, employers and trade unions. People at work in the UK benefit from a minimum charter of employment rights. This includes the right to a minimum wage of £6.08 under the National Minimum Wage Act 1998
, 28 paid holidays, and no longer working hours than one consents to under the Working Time Regulations 1998
, the right to leave for child care, and the right to request flexible working patterns under the Employment Rights Act 1996
. The Equality Act 2010 ensures people are judged by the content of their character, and not regulated characteristics such as race, gender, sexuality, beliefs, disabilities or age. The Employment Rights Act 1996
adds that, unless the employee repudiates the relationship, before a dismissal every employer must give reasonable notice after one month of work, backed by a sufficiently fair reason after one year of work, and with a redundancy payment after two years. If a company is taken over the Transfer of Undertakings (Protection of Employment) Regulations 2006 state that employees' terms cannot be worsened, including to the point of dismissal, without a good economic, technical or organisational reason.
Beyond individual rights, workers have the ability to participate in decisions about how their enterprise is managed through a growing set of statutory rights and the traditional models of collective bargaining
. Gradually, the number of "John Lewis
" style participatory institutions at work have grown, often mirroring European standards. Workers have the right to codetermine how their occupational pensions are managed under the Pensions Act 2004
, and how health and safety policies in the workplace are formulated under the Health and Safety at Work Act 1974. In larger firms with over 50 staff, workers must be informed and consulted about major economic developments, particularly about business difficulties. This is happens through a steadily increasing number of works council
s, which usually must be requested by staff. The UK has not yet implemented earlier proposals
, or followed the majority practice in the EU to require that employees have a vote for members' of their company's board of directors
. Collective bargaining
between trade unions and company management remains the UK's primary participatory model. Collective agreements are backed up by the threat of a strike which is lawful if "in contemplation or furtherance of a trade dispute". Since the early 1980s, industrial action has steadily decreased, as has membership of trade unions. The Trade Union and Labour Relations (Consolidation) Act 1992
sets out rules for the constitution of trade unions, members' rights, the conditions to be fulfilled before strike action may be taken and the legal status of collective agreements.
Labour law in its modern form is primarily a creation of the last three decades of the 20th century. However, as a system of regulating the employment relationship, labour law has existed since people worked. In feudal England, the first significant labour laws followed the Black Death
. Given the shortage of workers and consequent price rises the Ordinance of Labourers 1349 and the Statute of Labourers 1351 attempted to suppress sources of wage inflation by banning workers organisation, creating offences for any able-bodied person that did not work, and fixing wages at pre-plague levels. Ultimately this led to the Peasants' Revolt
of 1381, which was in turn suppressed and followed up with the Statute of Cambridge 1388, which banned workers from moving around the country. Yet conditions were improving as serfdom was breaking down. One sign was the beginning of the more enlightened Truck Acts
, dating from 1464, that required that workers be paid in cash and not kind. In 1772 slavery
was declared to be illegal in R v Knowles, ex parte Somersett, and the subsequent Slave Trade Act 1807 and Slavery Abolition Act 1833 enforced prohibition throughout the British Empire
. The turn into the nineteenth century coincided with the start of the massive boom in production. Gradually people's relationship to their employers moved from one of status - formal subordination and deference - to contract whereby people were formally free to choose their work. However, freedom of contract
did not, as the economist Adam Smith
observed, change a worker's factual dependency on employers.
As its height, the businesses and corporations of Britain's industrial revolution
organised half the world's production across a third of the globe's surface and a quarter of its population. Joint Stock Companies
, building railways, canals and factories, manufacturing household goods, connecting telegraphs, distributing coal, formed the backbone of the laissez faire model of commerce. Industrialisation also meant greater urbanisation, and inevitably miserable conditions in the factories. The Factory Acts
dating from 1803 required minimum standards on hours and conditions of working children. But people were also attempting to organise more formally. Initially, trade unions were suppressed, particularly following the French Revolution
of 1787 under the Combination Act 1799. The Master and Servant Act 1823 and subsequent updates stipulated that all workmen were subject to criminal penalties for disobedience, and calling for strikes was punished as an "aggravated" breach of contract
. But then the position was slowly liberalised and through the Trade Union Act 1871
and the Conspiracy, and Protection of Property Act 1875 trade unions were legitimised. Toward the turn of the century, in Mogul Steamship Co Ltd v McGregor, Gow & Co
, the House of Lords emphasised that businesses should be free to organise into trade associations in the same way that employees organised into unions. However, with growing unrest and industrial action the House of Lords changed its mind. At the turn of the century he notorious judgment of Taff Vale Railway Co v Amalgamated Society of Railway Servants, made unions liable in economic tort for the costs of industrial action
. Although a combination of employers in a company could dismiss employees without notice, a combination of employees in a trade union were punished for withdrawing their labour. The case led trade unions to form a Labour Representation Committee, which then became the UK Labour Party, to lobby for the reversal of the law. After the United Kingdom general election, 1906
a coalition government composed of the new Labour Party
and the Liberals, among whom David Lloyd George
and Winston Churchill
were rising stars, quickly passed the Trade Disputes Act 1906
. This laid down the essential principle of collective labour law that any strike "in contemplation or furtherance of a trade dispute" is immune from civil law sanctions. Accompanying this, the government embarked on widespread social reform. The Old Age Pensions Act 1908 provided pensions for retirees. The Trade Boards Act 1909
created industrial panels to fix minimum wages. And the National Insurance Act 1911
levied a fee to insure people got benefits in the event of unemployment.
During World War One the brutality of the Western Front
demanded the participation of every available person and resource. As women took over traditional "men's jobs" the Suffragette
movement gained momentum. Before the war's conclusion, the Representation of the People Act 1918
gave universal suffrage to men over age 21 and women over 28. A new beginning was promised by the victors to their people. The Versailles Treaty created the International Labour Organisation to draw up common standards between countries, for as it said, "peace can be established only if it is based on social justice
", and echoed the US Clayton Act 1914 in pronouncing that "labour should not be regarded merely as a commodity or an article of commerce". But the international system remained disjointed as the United States Congress
withheld its approval to join the League of Nations
. Within the UK the postwar settlement was to make a home fit for heroes. Whitley Councils extended the Trade Boards Act 1909 system to Joint Industrial Councils that encouraged (non legally binding) fair wage agreements, while the Ministry of Labour
actively organised and advised the growth of trade unions. This was based on a theory of collective bargaining, agreement or action, advocated by Sidney Webb and Beatrice Webb
in Industrial Democracy to remedy the inequality of bargaining power
of workers. Without legal force
behind collective agreements, the law remained in a state of collective laissez faire
, encouraging voluntarism
for agreement and dispute settlement between industrial partners. The 1920s and 1930s were economically volatile. In 1926 a General Strike
against coal miners' pay cuts paralysed the country, though was broken by Winston Churchill
, by then the Chancellor of the Exchequer
. The Labour Party
had formed Parliamentary majorities in 1924 and 1929, but achieved little in the way of reform, particularly after the onset of the Great Depression
.
By the Second World War and the Labour government of Clement Attlee
, trade union membership was well established and collective agreements covered over 80 per cent of the workforce. With the British Empire
in rapid dissolution, immigration from Commonwealth
countries, and record levels of female workplace participation the character of Britain's workforce was changing fast. Though the common law was sometimes comparatively progressive, sometimes not, the first statutes to prohibit discrimination focused on gender and race emerged in the 1960s as the Civil Rights Act
was passed in the United States. Discrimination in employment (as in consumer or public service access) was formally prohibited on grounds of race in 1965, gender in 1975, disability in 1995, sexual orientation and religion in 2003 and age in 2006. A complicated and inconsistent jamboree of Acts and statutory instruments was placed into a comprehensive code in the Equality Act 2010. Much discrimination law is now applicable throughout the European Union, to which the UK acceded in 1972. Although labour laws in the early European Treaties and case law were scant, the Social Chapter
of the Maastricht Treaty
brought employment rights squarely into the EU's jurisprudence. Meanwhile, starting from the Contracts of Employment Act 1963
, workers gained a growing list of minimum statutory rights, such as the right to reasonable notice before a fair dismissal and a redundancy payment. Labour governments through the 1960s and 1970s were troubled by reform of the unwieldy trade union system. Despite producing reports such as In Place of Strife
and the Report of the committee of inquiry on industrial democracy
which would have made unions accountable to their members created more direct workplace participation, reform did not take place.
From 1979, a new Conservative government took a strongly sceptical policy to all forms of labour law and regulation. During the 1980s ten major Acts gradually reduced the autonomy of trade unions and the legality of industrial action. Reforms to the internal structure of unions mandated that representatives be elected and a ballot is taken before a strike, that no worker could strike in sympathetic secondary action
with workers with a different employer, and that employers could not run a closed shop
system of requiring all workers to join the recognised union. The wage councils were dismantled. A public campaign against the merits of unions paralleled the decline of membership and collective agreement coverage to under 40 per cent. In addition, the government opted out of the EU Social Chapter
in the Maastricht Treaty
. In 1997 the new Labour government brought the UK into the EU's Social Chapter, which has served as the source for most reform in UK law since that time. Domestic led reform was minimal. The National Minimum Wage Act 1998
established a country-wide minimum wage, but did not attempt to reinvigorate the Wage Board system. The Employment Relations Act 1999 introduced a 60 page procedure requiring employers to compulsorily recognise and bargain with a union holding support among workers, though union membership remained at a level steadily declining below 30 per cent.
, is to ensure that every working person has a minimum charter of rights in their workplace. Traditionally it draws a divide between self employed people, who are free to contract
for any terms they wish, and employees, whose employers are responsible for complying with labour laws. UK courts and statutes, however, use a number of different terms for different rights, including "worker", "employee", "jobholder", "apprentice" or someone with an "employment relation". A "worker" is entitled to a minimum wage
of £5.92 per hour, 28 statutory minimum days of holiday and a formal right to opt out of working over 48 hours a week, enrolment in a pension plan, not to mention the right to equal treatment and anti-discrimination that also apply to consumers and public services. An "employee" has all those rights, and also a safe system of work, the right to a written contract of employment, time off for pregnancy or child care, reasonable notice before a fair dismissal and a redundancy payment, and the duty to contribute to the National Insurance
fund and pay income tax
. The scope of the terms "worker", "employee", and others, are more or less left to the courts to construe according to the context of its use in a statute. English courts view an employment contract as involving a relation of mutual trust and confidence
, which allows them to develop and enlarge the remedies available for workers and employers alike when one side acts out of bad faith
.
”, and stands as a justification for mandating additional terms to what might otherwise be agreed under a system of total freedom of contract
.
In the UK an ‘employee’ has all available rights (all the rights of a ‘worker’ but also child care, retirement and job security rights). The meaning is explicitly left to the common law under the main statute, the Employment Rights Act 1996
section 230, and has developed according to the classical 19th century contrast between a contract ‘of service’ and one ‘for services’. The government may also pass secondary legislation to include specific groups of people into the ‘employee’ category. While the classical test was that an employee was subject to a sufficient degree of ‘control’, new forms of work where people were had greater autonomy outside the factory to choose how to do their jobs, meant that, particularly from the mid-20th century, additional tests of employment were developed. Multiple factors, including how much one could said to be ‘integrated’ into the business, or whether one metaphorically wore the ‘badge’ of the organisation, were looked at, with a focus, it was said on ‘economic reality’ and form over substance. Multiple relevant factors would include how much the employee was ‘controlled’, if they owned their tools, if they had the chance of profit and bore the risk of loss. But in the late 1970s and 1980s, some courts began to speak of a new test of ‘mutuality of obligation’. One view of this was merely that workers exchanged work for a wage. Another view stated that the employment relationship had to be one where there was an ongoing obligation to offer and accept work. This led to cases where employers, typically of people on low wages and little legal understanding, pleaded that they had only hired a person on a casual basis and thus should not be entitled to the major job security rights. However the leading case, Autoclenz Ltd v Belcher
decided by a unanimous Supreme Court in 2011, brought the definition of an employment contract in line with that in used in the EU. Confirming that employment contracts are one of a specific type, and separate from commercial agreements, Lord Clarke held that an exchange of work for a wage was essential, that what the private "true" intentions of the parties wanted was not as important as the reality, and that bargains took place in the context of an unequal bargaining relation. As he put it,
This meant that a group of car valeters, although described in their contracts as being self employed, with a right to substitute another person to do their work, and professed to have no obligation to undertake work, were entitled to a minimum wage and paid leave. The contract terms could be disregarded because they did not represent the reality of the situation. In addition, a ‘worker’ is defined in ERA 1996 section 230 as someone with a contract of employment or who personally performs work and is not a client or a customer. This concept has greater scope, and protects more people, than does the term ‘employee’. This class of person is entitled to a safe system of work, a minimum wage
and limits on working time, as well as discrimination and trade union rights, but not job security, child care and retirement rights. This concept thus reaches up to protect people who are quasi-self employed professionals, albeit not so vulnerable, such as a home cleaner, or music teacher who visits student homes, or a taxi cab driver wearing a firm’s logo.
, Lord Kerr emphasised that this process of construction is one that must be “intellectually segregated” from the general law of contract
, because of the relation of dependency an employee has. In this case, Ms Barratt was told her employment was terminated in a letter that she opened 3 days after its arrival. When, 3 months and 2 days after arrival, she lodged an unfair dismissal claim, the employer argued it was time barred on the ground that in ordinary contract law one is bound by a notice when a reasonable person would have read a message. The Supreme Court held that Ms Barratt was in time for a claim because she was only bound by the notice when she actually read it. The applicable in employment was different, given the purpose of employment law to protect the employee. From formation to termination, employment contracts are to be construed in the context of statutory protection of dependent workers.
The terms of employment are all those things promised to an employee when work begins, so long as they do not contravene statutory minimum rights. In addition, terms can be incorporated by reasonable notice, for instance by referring to a staff handbook in a written employment agreement, or even in a document in a filing cabinet next to the staff handbook. While without express wording they are presumed not binding between the union and employer, a collective agreement may give rise to individual rights. The test applied by the courts is to ask loosely whether its terms are ‘apt’ for incorporation, and not statements of ‘policy’ or ‘aspiration’. Where the collective agreement’s words are clear, a "last in first out" rule was held to potentially qualify, but another clause purporting to censure compulsory redundancies was held to sound like it was binding ‘in honour’ only.
In addition to statutory rights, expressly agreed terms and incorporated terms, the contractual hallmark of the employment relation is the series of standardised implied terms (or terms implied in law) that accompany it. In addition to individualised implied terms that the courts construe to reflect the reasonable expectations of the parties, the courts have long held that employees are owed additional obligations, such as a safe system of work and payment of wages even when the employer has no work to offer. Reflecting more recent priorities, employers have also been recognised to have a duty to inform their employees of their workplace pension rights, although they have stopped short of requiring employers to give advice on qualifying for workplace disability benefits. The key implied term, however, is the duty of good faith
, or “mutual trust and confidence”. This is a flexible concept that is applied in a broad variety of circumstances leading to remedies in damages or an injunction, such as to require employers do not act in an authoritarian manner, call employees names behind their back, treat workers unequally when upgrading pay, run the company as a front for international crime, or exercise discretion to award a bonus capriciously. There is tension among judges about the extent to which the core implied term of mutual trust and confidence can be 'contracted out of', with the House of Lords having held that the parties are "free" to do so, while others approach the question as a matter of construction of the agreement which is within exclusive judicial competence to define.
The second, and older hallmark of the employment contract is that employees are bound to follow their employers’ instructions while at work, so long as that does not contravene statute or their agreed terms. Every employment relation leaves the employer with a residue of discretion, historically expressed as the ‘master-servant’ relationship. Today, in practice, this leaves the employer with the ability to vary the terms of work in accordance with business need. The courts have allowed this to continue, so long as it does not contradict a contract’s express terms, which always require an employee’s consent, or renegotiation of a collective agreement. However, it has also been held that employers may insert ‘flexibility clauses’ allowing them to reserve the right to vary any contract term. The limits of the courts’ tolerance of such practices are evident if they touch procedures for accessing justice, or potentially if they would contravene the duty of mutual trust and confidence.
. That applies to any workplace where an article is made or changed, or animals are kept and slaughtered. The Employer's Liability (Defective Equipment) Act 1969 made employers automatically liable for equipment with defects supplied by third parties. Because isolated employees lack the technical skill, time, training to litigate, such regulation's primary line of enforcement was through inspectors or agencies before matters went to court. Today the Health and Safety at Work etc. Act 1974, enforced by the Health and Safety Executive
, is the main law. The HSE can delegate enforcement to local authorities, whose inspectors have the power to investigate and require changes to workplace systems. In addition, HSWA 1974 section 2 foresees that employees will set up their own workplace committees, elected by the employees and with the power to codetermine health and safety matters with management. Spelling out the general duties found in HSWA 1974, are a set of health and safety regulations
, which must also stay in line with the European-wide harmonised requirements of the Health and Safety Directive.
.jpg)
While the modern scheme of legislation and regulation engenders a comprehensive approach to enforcement and worker participation for health and safety matters, the common law remains relevant for getting civil law compensation, and some limits on an employers' duties. Although the legislative provisions are not automatic, breach of a statutory duty is evidence that a civil law duty has been breached. Injured employees can generally claim for loss of income, and relatives or dependents recover small sums to reflect distress. In principle, employers are vicariously liable
for all actions of people acting for them in the "course of employment" whenever their actions have a "close connection" to the job, and even if it breaks an employer's rules. Only if an employee is on a "frolic of his own", and the employer cannot be said to have placed him in a position to cause harm, will the employer have a defence. Under the Employers’ Liability (Compulsory Insurance) Act 1969, employers must take out insurance for all injury costs, and insurance companies are precluded by law and practice from suing their employees to recover costs unless there is fraud. However, until the mid 20th century there were a series of major limitations. First, until 1937, if an employee was injured by a co-worker, the doctrine of common employment
, the employer could only be liable if it was shown they were personally liable by carelessness in selecting staff. The House of Lords changed this in Wilsons & Clyde Coal Co Ltd v English
, holding an employer had a non-delegable duty of care for all employees. Lord Wright held there were "fundamental obligations of a contract of employment... for which employers are absolutely responsible". The second old restriction was that, until 1891, volenti non fit injuria
meant workers were assumed to voluntarily accept the dangers of their work by agreeing to their contracts of employment. Only if an employee callously ignores clear directions of the employer will he be taken to have voluntarily assumed the risk, like in ICI Ltd v Shatwell
where an experience quarry shotfirer said he "could not be bothered" to wait 10 minutes before setting of a detonation, and blew up his brother. Third, even if a worker was slightly at fault, until 1945 such contributory negligence
precluded the whole of the claim. Now the court will only reduce damages by the amount the employee contributed to their own injury. The fourth defence available to employers, which still exists, is ex turpi causa non oritur actio
, that if the employee was engaged in any illegal activity they may not claim compensation for injuries. In Hewison v Meridian Shipping Services Pte Ltd
Mr Hewison concealed his epilepsy so that he could work offshore was technically guilty of illegally attempting to gain a pecuniary advantage by deception under the Theft Act 1968
section 16. After being struck in the head by a defective gangplank he suffered worse fits than before, but the Court of Appeal, by a majority, held his illegal act precluded any compensation.
The common law of tort also remains particularly relevant for the type of liability an employer has where there is scientific uncertainty about the cause of an injury. In asbestos disease
cases, a worker may have been employed with at a number of jobs where he was exposed to asbestos, but his injury cannot with certainty be traced to any one. Although he may be able to sue all of them, a number may have already gone insolvent. In Fairchild v Glenhaven Funeral Services Ltd the House of Lords held that if any employer had materially increase the risk of harm to the worker, they could would be jointly and severally liable and could be sued for the full sum, leaving it up to them to seek contribution from others and thus the risk of other businesses' insolvency. For a brief period, in Barker v Corus the House of Lords then decided that employers would only be liable on a proportionate basis, thus throwing the risk of employers' insolvency back onto workers. Immediately Parliament passed the Compensation Act 2006
section 3 to reverse the decision on its facts. It has also been held in Chandler v Cape plc
, in 2011, that even though a subsidiary company is the direct employer of a worker, a parent company will owe a duty of care. Thus shareholders may not be able to hide behind the corporate veil
to escape their obligations for the health and safety of the workforce.
". The Truck Acts
were the earliest wage regulations, requiring workment to be paid in money, and not kind. Now, the Employment Rights Act 1996
section 13 stipulates that employers can only dock employees’ wages (e.g. for missing stock) if the employee consented to deductions in writing. This, however, does not cover industrial action, so following ancient common law on part performance of work, employees who refused to 3 out of 37 hours a week in minor workplace disobendience, had their pay cut for the full 37. From the Trade Boards Act 1909
, the UK had set minimum wages according to the specific needs of different sectors of work. But this system was eroded through the 1980s and eventually repealed in 1993. To bring the United Kingdom back into compliance with basic standards in international law
, the National Minimum Wage Act 1998
was introduced. The minimum wage takes effect in every worker's contract. Workers do not need to show "mutuality of obligation" or any other requirement except that they personally perform work for a wage and is not a client. One curious exclusion, however, is a pupil barrister who in Edmonds v Lawson QC
was held to not be "working" but be "conscientious in receiving instruction". The minimum wage rate is reset annually after guidance from the Low Pay Commission, and on 1 October 2011 it stood at £6.08 for over 21 year olds, £4.98 for 18-20 year olds, £3.68 for under 18 year olds finished with compulsory education and £2.60 for under 19 year olds or first year apprentices. The National Minimum Wage Regulations 1999 spell out the details of how the minimum wage should be calculated. Total pay received is divided by the hours actually worked over an average "pay reference period" of one month. This definition has given rise to litigation in cases where a worker can stay at home but must answer phone calls, is allowed to rest or sleep during shifts, or must make herself available "on call" over a long period. Generally speaking, it is irrelevant whether one is at home or not. If a worker is given sleeping facilities and is not awake, the minimum wage need not be paid. And if a worker is "on call", then this time still counts at work if the worker is bound to stay within the vicinity of the workplace. However, an exception in regulation 28 allows an employer to agree with a worker what the hours worked actually are, if they would ordinarily be unmeasured. In Walton v Independent Living Organisation Ltd
a worker who cared for a young epileptic lady had to be on call 24 hours a day, 3 days a week, but could do her own activities outside tasks such as going shopping, making meals and cleaning. Her company made an agreement with her that her tasks took 6 hours and 50 minutes a day, which resulted in her £31.40 allowance meeting the minimum wage. Certain deductions may be made including £4.51 per day for any accommodation the employer provides, though extra bills, such as for electricity, should not ordinarily be charged. The minimum wage can be enforced individually through an ERA 1996 section 13 claim for a shortfall of wages in a Tribunal. A worker may not be subjected to any detriment for enquiring, or requesting records or complaining about it. However, because many workers will not understand how to do this, or have the resources, a primary enforcement mechanism is through inspections and compliance notices issued by Her Majesty's Revenue and Customs
. A remedy of up to 80 times the minimum wage is available to the worker and HMRC can enforce a penalty of twice the minimum wage per worker per day.
The Working Time Regulations 1998
set limits on working time, and implement the basic requirements of the Working Time Directive
. Its most concrete measure is, again following basic rights in international law, mandating a minimum period of 28 days, or four full weeks, in paid holidays for all workers each year (though this includes public holidays
). There is no qualifying period for this, or any other working time right, because beyond the importance of the law in seeking to strike a balance between work and life, sufficient periods of rest and leisure are seen as a critical element of workers health and safety. Nor is it possible for an employer to give a worker "rolled up holiday pay", for instance an additional 12.5% in a wage bill, in lieu of taking actual holidays. The employer must make sure the worker does in fact take paid holidays, and if the worker has not done so and the job terminates, the employer must give an additional payment for the unused holiday entitlement. Where a person works at night, she may only do 8 hours in any 24 hour period on average, or simply 8 hours at most is dangerous. Moreover every worker must receive at least 11 consecutive hours of rest in a 24 hour period, and in every day workers must have at least a 20 minute break in any 6 hour period. The most controversial and widely known provisions in the working time laws, however, concern the maximum working week. Under the Directive, this is 48 hours. Although people in the United Kingdom work the longest hours on average in Europe, and among the longest in the world, highest work related stress and absentee rates, successive UK governments have remained sceptical about the maximum working week's merit. The maximum does not apply to anyone who is self-employed or who can set their own hours of work, as it is aimed to protect workers who possess less bargaining power and autonomy over the way they do their jobs. Nevertheless, all UK workers may "opt out" of the 48 hour week by individually signing an opt out form. Theoretically a worker may always change her mind after having opted out, without suffering any detriment. If the employer has not got the worker to opt out, then the 48 hour week is not a rigid maximum, but is taken as an average over 17 weeks. The same rules have developed as for the minimum wage, regarding "on call" time, so that people with jobs involving long periods where they must make themselves available, but not necessarily be active, are regarded as working if they are bound to remain awake and close to their workplace. This created a significant problem for junior doctors, where the culture has typically been in all European countries that very long hours are expected. The European Court of Justice
's decision in Landeshauptstadt Kiel v Jaegar that junior doctors' on call time was working time led a number of countries to exercise the same "opt out" derogation as the UK, albeit limited to medical practice. The Health and Safety Executive
is the UK body charged with enforcing the working time laws, though it has purposively taken a "light touch" approach to enforcement.
. Then she may take additional but unpaid maternity leave for another 26 weeks. She must tell the employer 15 weeks before the date of the expected birth, in writing if the employer requests it. Except insofar as they administer the payments, employers do not bear most costs of maternity leave as they are reimbursed by the government according to their size and national insurance contributions. Along with different forms of leave, mothers have the right to not suffer any professional detriment or dismissal while they are absent, and should be able to return to the same job after 26 weeks, or another suitable job after 52 weeks.
For fathers, the position is less generous. To redress the balance between how much of child raising each partner bears, under the Additional Paternity Leave Regulations 2010 it will be possible for a women to transfer up to 26 weeks of her leave entitlements to her male partner. Otherwise the Paternity and Adoption Leave Regulations 2002 state that a man is entitled to a minimum of just 2 weeks off, at the statutory rate of pay. Both parents may also benefit from "parental leave" provisions in the MPLR 1999, passed after the Parental Leave Directive. Until a child turns 5, or a disabled child turns 18, parents can take up to 13 weeks unpaid leave. Unless there is another collective agreement in place, employees should give 21 days notice, no more than 4 weeks in a year, at least 1 week at a time, and the employer can postpone the leave for 6 months if business would be unduly disrupted. Otherwise similar provisions apply on employees not suffering detriment or dismissal and having a right to their previous jobs back. "Emergency leave" is, under ERA 1996 section 57A, available for employees to deal with birth or a child's issues at school, as well as other emergencies such as dependents' illness or death, so long as the employee informs the employer as soon as reasonably practicable. In Qua v John Ford Morrison Solicitors
Cox J emphasised that there is no requirement to deliver daily updates.
Beyond the period around child birth, after EA 2002, employees gained the right to request flexible working patterns for the purpose of caring for a child under the age of 6, or a disabled child under age 18. The right to make the request is contained in ERA 1996 section 80F, and despite the fact that employers may decline the request, statistics show that under the obligation to consider, employers grant requests in 80 per cent of cases. An employee must make the request in writing, the employer must reply in writing, and can only decline the request on the basis of a correct fact assessment, and within 8 grounds listed in section 80G, which generally concern business and organisational necessity. In Commotion Ltd v Rutty
a toy warehouse assistant was refused a reduction to part time work because, according to the manager, everyone needed to work full time to maintain "team spirit". The Employment Appeal Tribunal ruled that because "team spirit" was not one of the legitimate grounds for refusal, Mrs Rutty should get compensation, which is set at a maximum of 8 weeks' pay.
contributions, and private, or "personal pensions" which individuals may arrange for themselves. After the Pensions Act 2008
, and due to begin in October 2012, every "jobholder" (defined as a worker, age 16 to 75, with wages between £5,035 and £33,540) must be automatically enrolled by the employer in an occupational pension scheme, unless they choose to opt out. In order to reduce the administrative complexity, a new non-departmental trust fund called the National Employment Savings Trust is established as a cheaper public competitor, able to take advantage of significant economies of scale
, compared to existing fund manager options on the private pension market. Employers will be required to set aside their jobholders' wages at an agreed percentage, and negotiate how much they will give in contributions, if anything. Outside this "public option", it has typically been up to the employer often in negotiation with the trade union, to establish a trust fund for pension schemes, however there has not yet been any legal duty on employers to do so, leaving most people with nothing but the state pension. However, when there is a pension in place as a result of a term in the jobholder's employment contract
, the employer is under a duty to inform their staff about how to make the best of their pension rights. Moreover, workers must be treated equally, on grounds of gender or otherwise, in their pension entitlements. Where occupational pensions exist, the employer typically acts as a trustee
and creates a board of trustees, or contracts with a trust corporation, to oversee the management of the workforce's pension savings. Following the Goode Report of 1993 on pensions, it has been a requirement that the pension trust members have the right to "codetermine" the pension management by having a vote to elect a minimum of one third of the trustees, or corporation directors, either directly or through their trade union. Often member nominated trustees are one half of the scheme, and the Secretary of State has the power by regulation, as yet unused, to increase the minimum up to one half. Trustees are charged with the duty to manage the fund in the best interests of the beneficiaries, in a way that reflects their preferences, by investing the savings in company shares, bond
s, real estate
or other financial products.
While there are minimum standards for worker participation in the management of any occupational pension, the terms of people's pensions may be very different particularly regarding who bears the risk
of workers having a long life after retirement. Increasingly, "defined benefit" plans (or "final salary" schemes) where the employer pays a fixed sum however long the former worker lives and thus averages out the risk between different workers, have been scrapped. The contrasting system is a "defined contribution" plan, where individual workers simply retire with a pension that is as much as the contributions they made, meaning that if they live longer than they plan, they run the risk of being left with only the state pension. Some schemes combine elements of each. The rate of decline in defined benefit plans has been rate consistent with the decline in trade union membership, and increasing mobility of the labour market. Defined benefit plans also attract more regulation, as many employers have not necessarily actually kept aside money from "contributions" shown workers' pay slips, since the employer simply pays the final salary out when the time comes. This problem, revealed in early 1990s scandals like the Robert Maxwell
scandal, led to the introduction of requirements for minimum funding, and also taking out insurance in the event that a company goes insolvent, and the pension fund is in deficit. This system is overseen by the Pensions Regulator, which also takes general complaints about the activities of trustees or management. In addition, there exists a Pensions Ombudsman
who may hear complaints and take informal action against employers who fall short of their statutory duties.
While an enforceable charter of employment rights guarantee a minimum of workplace decency, like a minimum wage, the most important right to achieve conditions beyond the minimum, like a living wage
, is the right to participate in a firm's management. Increasingly the UK is legalising and codifying its systems of collective labour relations, with rights to information, consultation (on redundancies, business restructuring and management generally) and participation (so far, in pension management and health and safety committees) in workplace and company affairs. Trade union
s, organised largely by contract
, have the aim of improving their members' terms and conditions. They must follow a democratic internal structure, and members cannot be excluded without good reason or discriminated against by their employers. Although information, consultation and participation rights are not bound to a trade union, especially where none exists in the workplace, unions often organise the workforce's collective voice. Where statutory rights to participation and consultation run out, collective bargaining
by unions is the most potent form of influence workers can have against their employers, as a counterweight in companies to the interests of directors
and shareholders. Since 1999, unions can follow a complex statutory procedure which will eventually mandate that employers recognise and bargain with them. Collective agreement
s will typically set a transparent scale of pay and working hours, or terms like pensions, training and workplace facilities, with a system to update terms and conditions as the business environment changes. The ability to bargain rests on the final resort of industrial action. Just as management, typically with the objective of increasing profits, has the power to make workers redundant, so an official trade union is protected by law in its ability to call a strike. Industrial action must always be "in contemplation or furtherance of a trade dispute". Since the 1980s, there have also been strict requirements to ballot the workforce and warn the employer before, to not call sympathy strikes, and to take only passive action in picketing or protests.
doctrine, until the Trade Union Act 1871
. This Act abolished common law restrictions, but took an abstentionist stance to unions internal affairs. The structure of the unions were based in contract
and the rights of members depended on being able to show some proprietary
interest to be specifically enforced. This meant that the express terms of the union rule book can, like any contract, be supplemented with implied terms by the courts as strictly necessary to reflect the reasonable expectations of the parties, for instance, by implying the Electoral Reform Society
's guidance to say what happens in a tie break situation during an election when the union rules are silent. If there are irregular occurrences in the affairs of the union, for instance if negligence or mismanagement is alleged and a majority could vote on the issue to forgive them, then members have no individual rights to contest executive decision making. However, if a union's leadership acts ultra vires
, beyond its powers set out in the union constitution, if the alleged wrongdoers are in control, if a special supra-majority procedure is flouted, or a member's personal right is broken, the members may bring a derivative claim in court to sue or restrain the executive members. So in Edwards v Halliwell
a decision of the executive committee of the National Union of Vehicle Builders
to increase membership fees, which were set in the constitution and required a ⅔ majority vote, was able to be restrained by a claim from individual members because this touched both a personal right under the constitution and flouted a special procedure. The principle that the common law enforced a union's own rules, and that unions were free to arrange their affairs is reflected in the ILO Freedom of Association Convention, and article 11 of the European Convention on Human Rights
, subject to the requirement that regulations "necessary in a democratic society" may be imposed. Unions must have an executive body and that executive must, under TULRCA 1992 sections 46 to 56, be elected at least every five years, directly in a secret, equal postal vote of union members, and if irregularities are alleged, complaints can be taken up by the Trades Union Certification Officer
.
. Although shareholders typically are the only ones with votes in the company's general meeting to elect the board of directors
, the Companies Act 2006
section 168 defines only "members" as those with participation rights. Under section 112 a "member" is anybody who initially subscribes their name to the company memorandum, or is later entered on the members' register, and is not required to have contributed money as opposed to, for instance, work. Moreover under the European Company Statute
, businesses that reincorporate as a Societas Europaea may opt to follow the Directive for employee involvement. An SE may have a two-tiered board, as in German companies
, where shareholders and employees elect a supervisory board that in turn appoints a management board responsible for day to day running of the company. Or an SE can have a one tiered board, as every UK company, and employees and shareholders may elect board members in the desired proportion. An "SE" can have no fewer employee participation rights than what existed before, but for a UK company, there is likely to have been no participation in any case. In the 1977 Report of the committee of inquiry on industrial democracy
the Government proposed, in line with the new German Codetermination Act 1976, and mirroring an EU Draft Fifth Company Law Directive
, that the board of directors
should have an equal number of representatives elected by employees as there were for shareholders. But reform stalled, and was abandoned after the 1979 election
. Despite successful businesses like the John Lewis Partnership
and Waitrose
that are wholly managed and owned by the workforce, voluntary granting of participation is rare. Many businesses run employee share schemes, particularly for highly paid employees, however such shares seldom compose more than a small percentage of capital in the company, and these investments entail heavy risks for workers, given the lack of diversification
.
There are, however, direct participation rights in two key areas of workplace issues, albeit not dismissals or working time. First, the Health and Safety at Work Act 1974 section 2 requires that workers set up health and safety committees, which codetermine the workplace policy on health and safety issues. Second, the Pensions Act 2004
sections 241-243 state employees must be able to elect a minimum of one third of the management of their occupational schemes, as "member nominated trustee
s". This gives employees the ability, in principle to have a voice on how their pension money is invested in company shares, and also how the voting power attached to company shares is used. Outside these areas, however, participation at work is limited to information, consultation, collective bargaining and industrial action.
requires in section 419 that companies issue an annual report
, which must include details of how, under section 172, the business has fulfilled its duties to have regard to employees, people working down supply chains, the community, environment and long term performance. Such information can often be cursory, but may be useful for employees, and unions, in the use of their participation rights, or during collective bargaining. Consultation can sometimes encourage a change in employers' policy, even if employees' views are ultimately often ignored.
Under the Information and Consultation of Employees Regulations 2004, companies with more than fifty employees must inform their workforce about major economic issues in their enterprise, and should consult about major changes, particularly redundancies.
, fixed term
or agency work status. This ‘negative’ and fixed definition of equality stipulates which characteristics are generally to be disregarded in employment. It does not set out what positive characteristics are relevant, like unfair dismissal rules, or catch 'any other status', like the European Convention
. Unequal treatment on other grounds (eg one's football team) will only be unlawful if one can claim unfair dismissal
. A worker has generally to show that they were treated directly less favourably than another person who does not have their trait (eg sexuality or race), or that actions an employer applies to everyone have an indirectly disparate impact on people with their trait. Workers are also entitled to not suffer harassment
at work, and if they bring a claim they should not be victimised, or suffer any other disadvantage for trying. Direct discrimination can be justified if the employer showing a status is a "genuine occupational requirement". Indirect discrimination can be justified if there is “objective justification” for the rule, generally based on business necessity. Age discrimination is seen as a special case, so it may always be objectively justified. Equal pay between men and women has also, historically, been treated separately in law and follows differently worded legal requirements. The law on disability goes further than other categories by placing positive duties on employers to make reasonable adjustments to help disabled people. While UK and EU law presently only allow promotion of underrepresented groups if a candidate is equally qualified, there is an ongoing debate whether more “positive action
” measures should be implemented, particularly to tackle the gender pay gap. If discrimination is proven, it counts as automatically unfair conduct in a tribunal hearing, and entitles a worker to quit and or claim damages.
a chief inspector claimed that she was dismissed because the police force was sexist, and pointed to male chief inspectors who had not been treated unfavourably. The House of Lords
overturned a Tribunal
finding of sex discrimination because Ms Shamoon had had complaints made about her appraisal duties, and her chosen comparators had none. Generally there is, however, no need to point to an actual comparator, so a claimant can allege they were treated less favourably than a hypothetical person who does not share their trait would have been. The burden of proof is explicitly regulated so that claimants merely need to show a set of facts from which a reasonable tribunal could conclude there was discrimination, and need not show an intention to discriminate. Because the law aims to eliminate the mindset and culture of discrimination, it is irrelevant whether the person who was targeted was themselves a person with a protected characteristic, so that people who associate with or are perceived to possess a protected characteristic are protected too. In Coleman v Attridge Law a lady with a disabled child was abused by her employer for taking time off to care for the child. Even though Ms Coleman was not disabled, she could claim disability discrimination. And in English v Sanderson Blinds Ltd, a man who was from Brighton
and went to boarding school was teased for being gay. Even though he was married with children, he successfully claimed discrimination because of sexuality. An instruction by an employer to discriminate against customers or anyone else also violates the law.
Originally a sub-category of direct discrimination, harassment
is now an independent tort which requires no comparator. The Protection from Harassment Act 1997
, and now the Equality Act 2010 sections 26 and 40, define harassment as where a person's dignity
is violated, or the person is subject to an intimidating, hostile, degrading, humiliating or offensive environment. An employer will be liable for its own conduct, but also conduct of employees, or customers if this happens on 2 or more occasions and the employer could be reasonably expected to have intervened. In a straightforwardly unpleasant case, Majrowski v Guy's and St Thomas’s NHS Trust
a gay man was ostracised and bossed about by his supervisor from the very start of his work as a clinical audit co-ordinator. The House of Lords held the laws create a statutory tort, for which (unless a statute says otherwise) an employer is automatically vicariously liable. Under the Equality Act 2010 section 27, an employer must also ensure that once a complaint is brought by a worker, even if it proves ultimately to be unfounded, that worker should not be victimised. This means the worker should not be subject to anything that a reasonable person would perceive as deterimental. In St Helen’s MBC v Derbyshire the House of Lords held a council victimised female staff who were pursuing an equal pay claim when it sent letters warning (without much factual basis) that if the claim went ahead, the council would be forced to cut school dinners and make redundancies. A reasonable person would have regarded this as a detriment. By contrast, in Chief Constable of West Yorkshire Police v Khan
, where a sergeant with a pending race discrimination claim was denied a reference by the employer that he was suing, it was held this could not be considered victimisation because the Constabulary was only seeking to protect its legitimate interests and not prejudice its own future case in the discrimination hearings.
"Indirect" discrimination means an employer, without an objective justification, applies a neutral rule to all employees, but it puts one group at a particular disadvantage. The particular disadvantage must be related to the claimant's protected characteristic specifically, and not to a non-essential feature of it. In Ladele v Islington LBC a woman who refused to register gay civil partners, because she said her Christianity made her conclude homosexuality was wrong, was dismissed for not carrying out her duties. And in Eweida v British Airways plc a lady who wished to wear a cross claimed that BA's instruction to remove it was indirectly discriminatory against Christians. Both claims failed because it was held that neither antipathy towards homosexuals, nor crucifix jewellery are essential parts of the Christian religion. The question of particular disadvantage also typically relies on evidence of statistical impact between groups. For instance in Bilka-Kaufhaus GmbH v Weber von Hartz
an employer set up pensions only for full time workers, and not for part time workers. But 72 per cent of part time workers were women. So Frau Weber von Hartz was able to show that this rule put her, and women generally, at a particular disadvantage, and it was up to the employer to show there was an objective justification. Statistics
might be presented in a misleading way (eg a measure could affect twice as many women as men, but that is only because there is 2 women and 1 man affected in a workforce of 100). Accordingly the correct approach is to show how many people in the affected workforce group are put at an advantage, and then if there is a statistically significant number of people with a protected characteristic who are not advantaged, there must be an objective justification for the practice. In R (Seymour-Smith) v Secretary of State for Employment
the UK government's former rules on unfair dismissal
were alleged to be discriminatory. Between 1985 and 1999, the government had made the law so that people had to work for 2 years before they qualified for unfair dismissal (as opposed to 1 year presently), and this meant that there was a 4 to 8 per cent disparity between the number of men and women who qualified on dismissal for a tribunal claim. Following ECJ guidance, the House of Lords
held by a majority that this was a large enough disparity in coverage, which required justification by the government.
it was held that when a man was turned down for a job at a woman's clothing store, the excuse that a man should not operate women's change rooms was rejected. The shift allocation could have been changed around easily. Controversially, the European Court of Justice
has repeatedly said that it is within a member state's margin of discretion to say being male is a genuine occupational requirement for work in the military. This was even so, in Sirdar v The Army Board & Secretary of State for Defence for a lady who applied to work as a chef in the Royal Marines
, because the policy on "interoperability" meant every member had to be capable of combat. Cases involving religion are subject to a special provision, so that if a job's functions require adherence to an organisation's ethos, the organisation has an exemption from direct discrimination. In an action for judicial review
of the legislation, Richards J rejected that a faith school would be exempt in any way, rather than an actual religious establishment like a church. Even there, it was rejected that a gay person could be dismissed from a job as a cleaner or bookshop worker, if that was incompatible with the religious "ethos", because the ethos would not be a genuine requirement to carry out the job.
Indirect discrimination, after a neutral practice puts a member of a group at a particular disadvantage, is not made out if there is an "objective justification". In most cases, this can be justification based on business necessity. The ECJ, mostly in cases concerning sex discrimination under TFEU art 157, has held that an employer must show a "real need" for the practice that has disparate impact that is "unrelated" to the protected characteristic, should not involve "generalisations" rather than reasons specific to the workers in question, and budgetary considerations alone are not to be considered an "aim". Many of these judgments concerned employers who paid part time staff fewer benefits than full time staff, and given the particular disadvantage this caused women it was hard to justify. In equal pay claims based on gender, instead of "objective justification", the old terminology still used is that there must be a "genuine material factor", found in EA 2010 section 69. Despite different headings, the same underlying concepts are present as for objective justification, with the need to show a "legitimate aim" and that action is "proportionate" to such an aim. In Clay Cross (Quarry Services) Ltd v Fletcher
Lord Denning MR held that an employer could not justify paying a young man a higher wage than an older lady (who in fact trained him) on the basis that this was what the employer had to pay given the state of the job market. However, in Rainey v Greater Glasgow Health Board
the House of Lords held that women NHS prosthetists who were paid 40% less than men prosthetists in contracted through private practices had no claim, as it was shown necessary to attract their services. This was an organisational necessity. In Enderby v Frenchay Health Authority
the ECJ held that although a speech therapist being paid less than male counterparts could not be justified only on the ground that this resulted from different collective agreements, if a disparity came from market forces, this was an objective justification. It has, however, been emphasised that the legislation's purpose is to achieve equal pay, and not fair wages. So in Strathclyde RC v Wallace
the House of Lords held that women teachers who had to fill in for an absent male head master were not entitled to be paid the same during that time. This was a different job. It has also been asserted that collective agreements designed to incrementally make a transition to equal pay between jobs rated as equivalent cannot be justified, and can even result in liability for the union that concluded them.
Unlike other protected characteristics, under EA 2010 section 13(2), direct age discrimination is open to justification on the same principles, on the basis that everyone will go through the ageing process. This has meant, primarily, that older workers can reach a compulsory retirement age set either by the workplace or the government, on the basis that it is a legitimate way of sharing work between generations.
, it was held that the council had a duty to exempt a lady from competitive interviews for a new job. Mrs Archibald, previously a road sweeper, had lost the ability to walk after complications in surgery. Despite over 100 applications for grades just above a manual worker, in her submission, the employers were not looking past her history as a sweeper. The House of Lords held it could be appropriate, before such an ordeal, for a worker to fill an existing vacancy without a standard interview procedure. By contrast, in O’Hanlon v Revenue and Customs Commissioners the Court of Appeal rejected that it would be a reasonable adjustment, as Ms O'Hanlon was requesting after falling into clinical depression, for an employer to increase sick pay to full pay, after the expiry of a six month period that applied to everyone else. A reasonable adjustment should not be a disproportionate burden, with regard to an employer's resources, and fairness among staff.
For characteristics other than disability, "hard" positive discrimination, such as preference in contract terms, hiring and firing based on gender, race, sexuality, belief or age, or setting quotas for underrepresented groups in jobs, is unlawful throughout the European Union. The EU allows only for "soft" positive action, in contrast to the United States, where "affirmative action
", although contested, operates in many workplaces. In the case of hiring candidates for work, employers may select someone from an under-represented group, but only if that person has qualifications equal to competitors, with full consideration of the candidate's individual qualities. In Marschall v Land Nordrhein Westfalen
a male teacher failed to get a promotion, and a woman did. He complained that the school's policy, to promote women "unless reasons specific to an individual candidate tilt the balance in his favour", was unlawful. The ECJ held the school would not be acting unlawfully if it did in fact follow its policy. By contrast in Abrahamsson and Anderson v Fogelqvist
Göteborg University's policy was to hire a woman candidate unless "the difference between the candidates’ qualification is so great that such application would give rise to a breach of the requirement of objectivity". A male candidate, who was not hired over two less qualified women, was successful in claiming discrimination. In addition, according to Re Badeck’s application
legitimate positive action measures include quotas in temporary positions, in training, guaranteeing interviews to people with sufficient qualifications and quotas in representative, administrative or supervisory bodies. This approach, developed initially in ECJ case law, is now reflected in the Treaty on the Functioning of the European Union article 157(4) and was put into UK law in the Equality Act 2010 sections 157-158.
state that part time workers cannot, without objective justification, be treated less favourably than a comparable full time worker. Accordingly not just indirect discrimination, but also direct discrimination can be objectively justified, as it can for age. However, unlike the general scheme of the EA 2010, a worker cannot compare themselves to a hypothetical full time worker. While the law is generally effective at preventing people in the same workplace from being treated differently, part time workers across the UK economy remain underpaid compared to full time workers as a whole, because workplaces tend to be structurally segregated, often where women are working as part timers. One of the first leading cases, Matthews v Kent and Medway Fire Authority
, surprisingly involved male firefighters. Under regulation 2, a comparator must be under the "same type of contract" and doing "broadly similar work". It was held that even though part time firefighters did not do administrative work, their contracts were still broadly similar. The Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 formulate the test for a comparator in a similar way, except that they purport (unlike the Directive appears to suggest) to cover "employees" and not the broader group of "workers". In addition to a ban on less favourable treatment, without objective justification, regulation 8 stipulates that if an employee has a succession of fixed term contracts lasting over 8 years, they are to be treated as having a permanent contract.
The Agency Workers Regulations 2010 provide people protection against less favourable treatment when they arrive at work through an employment agency
. Here the regulation is again more limited, as agency workers are explicitly entitled merely to equal treatment in "basic working conditions", which is defined as their pay and their working time. However, an agency worker may, unlike part timers or fixed term employees, appeal to a hypothetical comparator. One consequence in the UK, however, is that this legislation left uncertain the position of agency workers protection by the job security, child care and other rights for employees in ERA 1996. While the dominant view is that an agency worker will always qualify as an employee when they work for a wage and are the more vulnerable party to the contract, the English Court of Appeal has issued conflicting judgments on whether an agency worker should have an unfair dismissal claim against the end-employer, the agency, or both or neither. Reflecting their vulnerable position, the regulation of agency work goes beyond discrimination, to place a set of duties on employment agents' operations and conduct. Found in the Employment Agencies Act 1973
and the Conduct of Employment Agencies and Employment Businesses Regulations 2003 agencies are generally prohibited from charging fees to prospective workers. Various other duties include being honest in their job advertising, keeping all information on jobseekers confidential and complying with all employment laws. Originally agencies had to have licenses, and under the oversight of the Employment Agency Standards Inspectorate
, risked losing their licenses if found to be acting in violation of the law. The Deregulation and Contracting Out Act 1994
removed the licensing requirement, but was partially reinstated for agencies in agricultural, shellfish and packing sectors through the Gangmasters (Licensing) Act 2004
. In response to the 2004 Morecambe Bay cockling disaster
this established another specific regulator, the Gangmasters Licensing Authority
, to enforce employment law in those areas.
Originating with the Contracts of Employment Act 1963
, the Redundancy Payments Act 1965 and the Industrial Relations Act 1971
UK workers have three principle job security rights, now consolidated in the Employment Rights Act 1996
, sections 86, 94 and 135. These statutory provisions override the old common law position that a dismissal would only be wrongful if it contravened the contract's express or implied terms. First, after one month's work an employee must have one week's notice
before dismissal. Second, after one year's work, the dismissal must be for a good business reason. If an Employment Tribunal is not convinced the dismissal is justified on grounds of an employee's capability, conduct, redundancy or another good reason, the dismissal will be "unfair
" and the employee will be awarded damages. A court may order that an employee should get her job back, but this is rare. Third, after two years' work and if dismissed, an employee is entitled to a redundancy
payment, which like the notice period increases according to the number of years worked. Contracts typically go beyond this bare minimum, but cannot go below. The UK has not yet ratified the ILO Termination of Employment Convention and compared to its European and Commonwealth counterparts, jobs in the UK are relatively insecure, particularly since workers have little formal mechanism, excluding pressure through collective bargaining, to challenge a management's decision about dismissals before they take place. When collective redundancies are proposed, however, EU law has introduced a requirement that employers consult on changes. EU law also introduced a rule that if a business is transferred, for instance, during a merger or acquisition, employees may not have their terms worsened or lose their jobs without a good economic, technical or organisational reason. If employees do lose their work, they may fall back on a minimal system of state insurance, funded primarily through income tax or National Insurance
, to collect a "jobseekers allowance", and may make use of public employment agencies to find employment again.
Lord Coleridge CJ held that a master mariner was entitled to a month's notice, though lower class workers could probably expect much less, "respectable" employees could expect more, and the period between wage payments would be a guide. Now the ERA 1996 section 86 prescribes that an employee should receive one week's notice before dismissal after one month's work, two weeks notice after two years' work, and so forth up to twelve weeks for twelve years. The employer can give payment of the weeks' wages instead of giving notice. Another important express term that may be broken could be the proper disciplinary procedure for disputes at work. If a contractual disciplinary procedure is not followed, the employee may claim damages for the time it would have taken and the potential that she would still be employed.
The requirements of notice and any disciplinary procedure do not apply if the employee was the one to have repudiated the contract, either expressly, or by conduct. As in the general law of contract
, if an employee's conduct is so seriously bad that it manifests to the reasonable person an intention to not be bound, then the employer may dismiss the employee without notice. But if the employer is not justified in making a summary dismissal, the employee has a claim under ERA 1996 section 13 for a shortfall in wages. The same principle, that a serious breach of contract gives the other side the option to terminate, also works in favour of employees. In Wilson v Racher
a gardener was bullied by his employer, the heir of Tolethorpe Hall
, and gave him a rude telling off for not picking up some string on the lawn. Mr Wilson, the gardener, told Mr Racher "get stuffed, go and shit yourself". The Court of Appeal held that the employer's attitude meant this breakdown in trust and confidence was his own doing, and because labour law no longer saw employment as a "czar-serf" relationship, Mr Wilson was in the right and was wrongfully dismissed. The remedy for breach of contract, following a long tradition that specific performance
should not result in draconian consequences or binding hostile parties to continue working together, is typically monetary compensation to put the claimant in the same position as if the contract had been properly performed.
The primary implied term that may be broken is mutual trust and confidence
. In Johnson v Unisys Ltd
the House of Lords held by 4 to 1 that damages for breach of mutual trust and confidence at the point of dismissal should not exceed the statutory limit on unfair dismissal claims, because otherwise the statutory limits (£63,500 in 2010) would be undermined. This meant a computer worker who became psychiatrically ill following a wrongful dismissal procedure could not claim the £400,000 at which damages could otherwise be quantified. However, if the breach occurs while the employment relationship subsists, that limit is inapplicable. So in Eastwood v Magnox Electric plc
, a school teacher who also suffered psychiatric injury, but as a result of harassment and victimisation while he still worked, could claim for a full measure of damages for the breach of mutual trust and confidence. In any event the limit is merely implied and depends on construction of the contract, so that it may be opted out of by express words providing for a higher sum, for example, by expressly providing for a disciplinary procedure. A notable absence of an implied term at common law historically (ie before the development of mutual trust and confidence) was that an employer would have to give any good reasons for a dismissal. This was recommended to be changed in the Donovan Report 1968, and it launched the present system of unfair dismissal.
sections 94 to 134A that governs the reasons for which a contract is terminated. The Industrial Relations Act 1971
, following the Donovan Report 1968, set up its structure. Under ERA 1996 section 94 any employee who is employed for over one year may claim for an Employment Tribunal (composed of a judge, an employer and an employee representative) to review the decision of their dismissal, and get a remedy if the dismissal was not "fair" within the meaning of the Act. An employee is only "dismissed" if the employer has decided to end the work relationship, or if they have constructively dismissed the employee through a serious breach of mutual trust and confidence. In Kwik-Fit (GB) Ltd v Lineham
Mr Lineham used the toilet at work after drinking at the pub, and in response to the manager rebuking him in front of other staff, he threw down his keys and drove off. He claimed he was dismissed, and the Tribunal agreed that at no time had Mr Lineham resigned. By contrast in Western Excavating (ECC) Ltd v Sharp
Mr Sharp walked off because the company welfare officer refused to let him collect holiday pay immediately. Although Mr Sharp was in financial difficulty, this was due to his absences, and so he was not justified in leaving, and not constructively dismissed. An employee is also not dismissed if the relationship is frustrated
. In Notcutt v Universal Equipment Co (London) Ltd
a man's heart attack meant he could no longer work. The employer paid no wages during the ordinary notice period, but was successful in arguing that the contract was impossible to perform and therefore void. This doctrine, applicable as a default rule in general contract law, is controversial since unlike commercial parties it will be rare that an employee has the foresight or ability to contract around the rule.
Once it is established that a dismissal took place, the employer must show that their reason for dismissing the employee was "fair". Dismissal on grounds of union membership, or any protected characteristic in the Equality Act 2010, will be automatically unfair. Otherwise the employer has the opportunity to show the dismissal is fair if it falls within five main categories listed in ERA 1996 section 98. The dismissal must have been because of the employee's capability or qualifications, conduct, because the employee was redundant, because continued employment would contravene a law, or "some other substantial reason". If the employer has an argument based on one of these categories, then the Tribunal evaluates whether the employer's actual decision fell within a "reasonable range of responses", ie that a reasonable employer could have acted the same way. Thus the review standard lies in between an outright perversity, or "Wednesbury unreasonableness
" test and a forthright reasonable person
test. It gives employers considerable latitude in the way they manage their workforce, as the Tribunal's job is not to substitute what it believes would have been fair, but only to intervene if a decision was arbitrary, harsh or contrary to acceptable business practice. There is also considerable room for Tribunals to assess the facts and come to their own conclusions, which can only be appealed on legal grounds, and not on their judgment of good workplace relations. For example, in a conduct case, HSBC Bank plc v Madden
, the Court of Appeal held that it was acceptable for a Tribunal to have decided that dismissing an employee for potential involvement in theft of credit cards was fair, even though an actual police investigation turned up no evidence. By contrast in Bowater v Northwest London Hospitals NHS Trust an employer argued a nurse who, while physically restraining a naked patient, said "It's been a few months since I have been in this position with a man underneath me" was lewd and deserved dismissal for her misconduct. The Tribunal said the dismissal was unfair and the Court of Appeal held the Tribunal had competently exercised its discretion in granting the unfair dismissal claim.
Partly because the courts take a deferential approach to the employer's substantive reasons for dismissal, they emphasise the importance of employers having a fair process. The Advisory, Conciliation and Arbitration Service Code of Practice (2009) explains that good industry practice for disciplinaries requires, among other things, written warnings, a fair hearing by people who have no reason to side against the employee, or with any manager involved in the dispute, and an the opportunity for union representation. Often a company handbook will include its own system, which if not followed will likely mean the dismissal was unfair. Nevertheless, in Polkey v AE Dayton Services Ltd
the House of Lords held that, in a case where a van driver was told he was redundant on the spot, if an employer can show the dismissal would be made regardless of whether a procedure was followed, damages can be reduced to zero. In the Employment Act 2002 Parliament made an abortive attempt to instil some kind of mandatory minimum procedure for everybody, but after complaints from unions and employers alike that it was merely encouraging a "tick-box" culture, it was repealed in the Employment Act 2008
. Now if the ACAS Code is not followed, and this is unreasonable, an unfair dismissal award can be increased by 25 per cent. Generally, under ERA 1996 sections 119 and 227, the principles for a "basic" unfair dismissal award is that, with a cap of £350 per week and a maximum of 20 weeks, an employee should receive 1 week's pay for each year employed if aged between 22 and 40, 1½ weeks if over 40 and ½ a week if under 22. By ERA 1996 section 123 the employee may also be entitled to a discretionary "compensatory" award, which should take into account the actual losses of the employee as just and equitable, based on loss of immediate and future wages, the manner of the dismissal and loss of future unfair dismissal protection and redundancy rights. This is capped, but usually increased in line with RPI
inflation, and in 2010 stood at £63,500. Much lower, the median award for unfair dismissal, without any element of discrimination, was £4903 in 2009-2010.
a toy company stopped giving its workers overtime. Some refused to work further, they were dismissed, and they claimed they were redundant. Lord Denning MR held they were not, because "nothing should be done to impair the ability of employers to reorganise their work force and their times and conditions of work so as to improve efficiency." Other courts have suggested the contract terms are irrelevant, and that the test should be purely based on the economic reality of diminished demand. If an employee is not dismissed for redundancy it may be that the dismissal falls within the "fair" ground of "some other substantial reason". In Hollister v National Farmers’ Union
a farmer's refusal to accept decreased pension entitlements, after a consultation process, was a "substantial" reason for dismissal. Provided employers give proper notice and have the right to terminate the contract by consent, it is possible to worsen terms without the employee being able to claim redundancy.
When compulsory redundancies are unavoidable and the employer must select among a group of workers, the procedure the employer follows must be procedurally fair, or the workforce will have an unfair dismissal claim. In Williams v Compair Maxam Ltd
Browne-Wilkinson J held that, in response to managers who had selected workers to lose their jobs based on personal preference, the proper steps should be to (1) give all warning possible (2) consult the union (3) agree objective criteria (4) follow those criteria, and (5) always check there if there is alternative employment rather than dismissal. Under ERA 1996 section 141 an employee should accept a reasonable offer for redeployment, and will lose entitlement to redundancy if she declines it. The Collective Redundancies Directive
, implemented in TULRCA 1992 section 188 also requires collective consultation with the union or other elected workforce representatives. If the employer fails to consult in good time it will be liable to pay a protective award to its staff.
it was held (albeit to protect the worker from draconian sanctions in the arcane Employers and Workmen Act 1875) that an employment contract could not transfer without the consent of the parties involved. Consequently, in a situation where company A sold its assets (including contracts) to company B, the employment relationship would sever and the only claim a worker would have for dismissal would be against company A. Particularly from the 1950s, the view was increasingly accepted across Europe that workers have something more than a personal right, and akin to a property right in their jobs. Just as the transfer of a freehold property between two landlords would not mean that a tenant could be evicted, the first Business Transfers Directive, passed in 1978 and updated in 2001 (often still referred to as the "Acquired Rights Directive"), required that a business transferee would have to provide a good economic, technical or organisational reason if they were either to not retain all previous employees, or wanted to make detrimental variations to their workers' contracts. This means that the new employer who is a transferee of a business through an asset sale is in no better position than would be a new owner who gained control of a business by buying out a company's shares: contractual variations require the employees' consent and dismissal rights remain as if it were the old employer. As implemented by the Transfer of Undertakings (Protection of Employment) Regulations 2006, a clear example where employees contracts transfer was in Litster v Forth Dry Dock. The House of Lords held that a purposive interpretation is to be given to the legislation so that where 12 dockworkers were sacked an hour before a business sale, their contracts remained in effect if the employees would still be there in absence of an unfair dismissal. This does not, however, mean that employees unfairly dismissed before a sale have a right to their jobs back, because national law's normal remedy remains with a preference for damages over specific performance. The same principle goes for any variation that works to the detriment of the employee. So the transferee employer may not (without a good business reason) for example, try to impose a single new gardening clause or withdraw tenure, or the employee will have a claim for constructive dismissal.
An acute question for the TUPE Regulations, particularly in the years when the Conservative government was implementing a policy of shrinking the size of the public sector, was the extent they applied to jobs being outsourced
, typically by a public body, like a local council, or changed between businesses in a competitive tender process for public procurement. On this point a series of ECJ decisions came to the view that there could be a relevant transfer, covered by the Directive, even where there was no contractual link between a transferor and a transferee business, so long as the business entity retained its "identity". In turn the "identity" of a business would be determined by the degree to which the business' factors of production
remained the same before and after a sale. It could be that no employees were hired after an asset sale, but the sacked employees would still have a claim because all their old workplace and capital equipment was being used by the new employer. It is also relevant to what extent a business is capital or labour intensive. So in Oy Liikenne Ab v Liskojärvi the ECJ held that it was unlikely that 45 Helsinki
bus drivers' contracts were transferred, between the company that lost the contract and the new bus company that won it, even though 33 drivers were rehired, because "bus transport cannot be regarded as an activity based essentially on manpower". On the other hand, employees stand to benefit where a new employer offers old staff their jobs, the intention to rehire makes it more likely the court will deem there to be a transfer.
Often business transfers take place when a company has plunged into an insolvency
procedure. If a company enters liquidation, which aims to wind down the business and sell off the assets, TUPER 2006 regulation 8(7) states that the rules on transfer will not apply. The main objective, however, in an insolvency procedure particularly since the Cork Report and the Enterprise Act 2002
, is to effect rescues through the system of company administration
. An administrator's task under the Insolvency Act 1986
Schedule B1, paragraph 3, is either to rescue the company as a going concern, rescue the business typically by finding a suitable buyer and thus save jobs, or as a last resort put the company into liquidation. If employees are kept on after an administrator is appointed for more than 14 days, under paragraph 99 the administrator becomes responsible for adopting their contracts. The liability on contracts is limited to "wages and salaries". This includes pay, holiday pay, sick pay and occupational pension contributions, but has been held to not include compensation for unfair dismissal cases, wrongful dismissal, or protective awards for failure to consult the workforce before redundancies. If the business rescue does ultimately fail, then such money due employees achieves the status of "super priority" among different creditors' claims. The priority list in insolvency sees creditors with fixed security
(typically banks) get paid first, preferential creditors third, unsecured creditors up to a limit of £600,000 third, floating charge
holders (usually banks again) fourth, remaining debts to unsecured creditors (in the unlikely event that anything remains) fifth, "deferred debts" (typically to company insiders) sixth, and shareholders last. Among the preferential creditors, the insolvency practitioners' fees together with adopted contracts attain super-priority. Otherwise, employees wages and pensions still have preferential status, but only up to an £800 limit, a figure which has remained unchanged since 1986. Employees having priority among creditors, albeit not above fixed security holders, dates back to 1897, and is justified on the ground that employees are particularly incapable, unlike banks, of diversifying their risk, and forms one of the requirements in the ILO Protection of Workers' Claims (Employer's Insolvency) Convention. Often this limited preference is not enough, and can take a long time to realise. Reflecting the Insolvency Protection Directive under ERA 1996 section 166 any employee may lodge a claim with the National Insurance
Fund for outstanding wages. Under ERA 1996 section 182 the amount claimable is the same as that for unfair dismissal (£350 in 2010) for a limit of 8 weeks. If an employee has been unpaid for a longer period, she may choose the most beneficial 8 weeks. The Pensions Act 2004
governs a separate system for protecting pension claims, through the Pension Protection Fund
. This aims to fully insure all pension claims. Together with minimum redundancy payments, the guarantees of wages form a meagre cushion which requires more of a systematic supplementation when people remain unemployed.
Under the Equality Act 2006
, a new Equality and Human Rights Commission was established, subsuming specialist bodies from before. Its role is in research, promotion, raising awareness and enforcement of equality standards. For lawyers, the most important work of predecessors has been strategic litigation (advising and funding cases which could significantly advance the law) and developing codes of best practice for employers to use. Around 20,000 discrimination cases are brought each year to UK tribunals.
International
National Minimum Wage Act 1998
The National Minimum Wage Act 1998 creates a minimum wage across the United Kingdom, currently £6.08 per hour for workers aged 21 years and older, £4.98 per hour for workers aged 18–20...
, 28 paid holidays, and no longer working hours than one consents to under the Working Time Regulations 1998
Working Time Regulations 1998
The Working Time Regulations 1998 are a United Kingdom statutory instrument, which regulate the time that people in the UK may work. It is intended to implement the EU Working Time Directive 2003/88/EC. Firstly, it sets a default rule which, although one may controversially opt out of it, that...
, the right to leave for child care, and the right to request flexible working patterns under the Employment Rights Act 1996
Employment Rights Act 1996
The Employment Rights Act 1996 is a United Kingdom Act of Parliament passed by the Conservative government to codify the existing law on individual rights in UK labour law. Previous statutes, dating from the Contracts of Employment Act 1963, included the Redundancy Payments Act 1965, the...
. The Equality Act 2010 ensures people are judged by the content of their character, and not regulated characteristics such as race, gender, sexuality, beliefs, disabilities or age. The Employment Rights Act 1996
Employment Rights Act 1996
The Employment Rights Act 1996 is a United Kingdom Act of Parliament passed by the Conservative government to codify the existing law on individual rights in UK labour law. Previous statutes, dating from the Contracts of Employment Act 1963, included the Redundancy Payments Act 1965, the...
adds that, unless the employee repudiates the relationship, before a dismissal every employer must give reasonable notice after one month of work, backed by a sufficiently fair reason after one year of work, and with a redundancy payment after two years. If a company is taken over the Transfer of Undertakings (Protection of Employment) Regulations 2006 state that employees' terms cannot be worsened, including to the point of dismissal, without a good economic, technical or organisational reason.
Beyond individual rights, workers have the ability to participate in decisions about how their enterprise is managed through a growing set of statutory rights and the traditional models of collective bargaining
Collective bargaining
Collective bargaining is a process of negotiations between employers and the representatives of a unit of employees aimed at reaching agreements that regulate working conditions...
. Gradually, the number of "John Lewis
John Lewis Partnership
The John Lewis Partnership is an employee-owned UK partnership which operates John Lewis department stores, Waitrose supermarkets and a number of other services...
" style participatory institutions at work have grown, often mirroring European standards. Workers have the right to codetermine how their occupational pensions are managed under the Pensions Act 2004
Pensions Act 2004
The Pensions Act 2004 is an Act of the Parliament of the United Kingdom to improve the running of pension schemes.-Background:In the years following the introduction of the Pensions Act 1995, it was widely perceived that it was failing to offer the protection to pension scheme members that had...
, and how health and safety policies in the workplace are formulated under the Health and Safety at Work Act 1974. In larger firms with over 50 staff, workers must be informed and consulted about major economic developments, particularly about business difficulties. This is happens through a steadily increasing number of works council
Works council
A works council is a "shop-floor" organization representing workers, which functions as local/firm-level complement to national labour negotiations...
s, which usually must be requested by staff. The UK has not yet implemented earlier proposals
Report of the committee of inquiry on industrial democracy
The Report of the committee of inquiry on industrial democracy Cmnd 6706, also the Bullock Report for short, was a report proposing for a form of worker participation or workers' control, chaired by Alan Bullock...
, or followed the majority practice in the EU to require that employees have a vote for members' of their company's board of directors
Board of directors
A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...
. Collective bargaining
Collective bargaining
Collective bargaining is a process of negotiations between employers and the representatives of a unit of employees aimed at reaching agreements that regulate working conditions...
between trade unions and company management remains the UK's primary participatory model. Collective agreements are backed up by the threat of a strike which is lawful if "in contemplation or furtherance of a trade dispute". Since the early 1980s, industrial action has steadily decreased, as has membership of trade unions. The Trade Union and Labour Relations (Consolidation) Act 1992
Trade Union and Labour Relations (Consolidation) Act 1992
The Trade Union and Labour Relations Act 1992 is a UK Act of Parliament which regulates British labour law. The Act applies in full in England and Wales and in Scotland, and partially in Northern Ireland....
sets out rules for the constitution of trade unions, members' rights, the conditions to be fulfilled before strike action may be taken and the legal status of collective agreements.
History
Black Death
The Black Death was one of the most devastating pandemics in human history, peaking in Europe between 1348 and 1350. Of several competing theories, the dominant explanation for the Black Death is the plague theory, which attributes the outbreak to the bacterium Yersinia pestis. Thought to have...
. Given the shortage of workers and consequent price rises the Ordinance of Labourers 1349 and the Statute of Labourers 1351 attempted to suppress sources of wage inflation by banning workers organisation, creating offences for any able-bodied person that did not work, and fixing wages at pre-plague levels. Ultimately this led to the Peasants' Revolt
Peasants' Revolt
The Peasants' Revolt, Wat Tyler's Rebellion, or the Great Rising of 1381 was one of a number of popular revolts in late medieval Europe and is a major event in the history of England. Tyler's Rebellion was not only the most extreme and widespread insurrection in English history but also the...
of 1381, which was in turn suppressed and followed up with the Statute of Cambridge 1388, which banned workers from moving around the country. Yet conditions were improving as serfdom was breaking down. One sign was the beginning of the more enlightened Truck Acts
Truck Acts
Truck Acts is the name given to legislation that outlaws truck systems, which are also known as "company store" systems, or debt bondage. Such laws date back in Britain to the 15th century but have also been implemented in other countries.-History:...
, dating from 1464, that required that workers be paid in cash and not kind. In 1772 slavery
Slavery
Slavery is a system under which people are treated as property to be bought and sold, and are forced to work. Slaves can be held against their will from the time of their capture, purchase or birth, and deprived of the right to leave, to refuse to work, or to demand compensation...
was declared to be illegal in R v Knowles, ex parte Somersett, and the subsequent Slave Trade Act 1807 and Slavery Abolition Act 1833 enforced prohibition throughout the British Empire
British Empire
The British Empire comprised the dominions, colonies, protectorates, mandates and other territories ruled or administered by the United Kingdom. It originated with the overseas colonies and trading posts established by England in the late 16th and early 17th centuries. At its height, it was the...
. The turn into the nineteenth century coincided with the start of the massive boom in production. Gradually people's relationship to their employers moved from one of status - formal subordination and deference - to contract whereby people were formally free to choose their work. However, freedom of contract
Freedom of contract
Freedom of contract is the freedom of individuals and corporations to form contracts without government restrictions. This is opposed to government restrictions such as minimum wage, competition law, or price fixing...
did not, as the economist Adam Smith
Adam Smith
Adam Smith was a Scottish social philosopher and a pioneer of political economy. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations...
observed, change a worker's factual dependency on employers.
Industrial Revolution
The Industrial Revolution was a period from the 18th to the 19th century where major changes in agriculture, manufacturing, mining, transportation, and technology had a profound effect on the social, economic and cultural conditions of the times...
organised half the world's production across a third of the globe's surface and a quarter of its population. Joint Stock Companies
Joint Stock Companies Act 1856
The Joint Stock Companies Act 1856 was a consolidating statute, recognised as the founding piece of modern United Kingdom company law legislation.-Overview:...
, building railways, canals and factories, manufacturing household goods, connecting telegraphs, distributing coal, formed the backbone of the laissez faire model of commerce. Industrialisation also meant greater urbanisation, and inevitably miserable conditions in the factories. The Factory Acts
Factory Acts
The Factory Acts were a series of Acts passed by the Parliament of the United Kingdom to limit the number of hours worked by women and children first in the textile industry, then later in all industries....
dating from 1803 required minimum standards on hours and conditions of working children. But people were also attempting to organise more formally. Initially, trade unions were suppressed, particularly following the French Revolution
French Revolution
The French Revolution , sometimes distinguished as the 'Great French Revolution' , was a period of radical social and political upheaval in France and Europe. The absolute monarchy that had ruled France for centuries collapsed in three years...
of 1787 under the Combination Act 1799. The Master and Servant Act 1823 and subsequent updates stipulated that all workmen were subject to criminal penalties for disobedience, and calling for strikes was punished as an "aggravated" breach of contract
Breach of contract
Breach of contract is a legal cause of action in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other party's performance....
. But then the position was slowly liberalised and through the Trade Union Act 1871
Trade Union Act 1871
Trade Union Act 1871 was a Act of the Parliament of the United Kingdom which legalised trade unions for the first time in the United Kingdom.-Background:...
and the Conspiracy, and Protection of Property Act 1875 trade unions were legitimised. Toward the turn of the century, in Mogul Steamship Co Ltd v McGregor, Gow & Co
Mogul Steamship Co Ltd v McGregor, Gow & Co
Mogul Steamship Co Ltd v McGregor, Gow & Co [1892] AC 25 is an English tort law case concerning the economic tort of conspiracy to injure. A product of its time, the courts adhered to a laissez faire doctrine allowing firms to form a cartel, which would now be seen as contrary to the Competition...
, the House of Lords emphasised that businesses should be free to organise into trade associations in the same way that employees organised into unions. However, with growing unrest and industrial action the House of Lords changed its mind. At the turn of the century he notorious judgment of Taff Vale Railway Co v Amalgamated Society of Railway Servants, made unions liable in economic tort for the costs of industrial action
Industrial action
Industrial action or job action refers collectively to any measure taken by trade unions or other organised labour meant to reduce productivity in a workplace. Quite often it is used and interpreted as a euphemism for strike, but the scope is much wider...
. Although a combination of employers in a company could dismiss employees without notice, a combination of employees in a trade union were punished for withdrawing their labour. The case led trade unions to form a Labour Representation Committee, which then became the UK Labour Party, to lobby for the reversal of the law. After the United Kingdom general election, 1906
United Kingdom general election, 1906
-Seats summary:-See also:*MPs elected in the United Kingdom general election, 1906*The Parliamentary Franchise in the United Kingdom 1885-1918-External links:***-References:*F. W. S. Craig, British Electoral Facts: 1832-1987**...
a coalition government composed of the new Labour Party
Labour Party (UK)
The Labour Party is a centre-left democratic socialist party in the United Kingdom. It surpassed the Liberal Party in general elections during the early 1920s, forming minority governments under Ramsay MacDonald in 1924 and 1929-1931. The party was in a wartime coalition from 1940 to 1945, after...
and the Liberals, among whom David Lloyd George
David Lloyd George
David Lloyd George, 1st Earl Lloyd-George of Dwyfor OM, PC was a British Liberal politician and statesman...
and Winston Churchill
Winston Churchill
Sir Winston Leonard Spencer-Churchill, was a predominantly Conservative British politician and statesman known for his leadership of the United Kingdom during the Second World War. He is widely regarded as one of the greatest wartime leaders of the century and served as Prime Minister twice...
were rising stars, quickly passed the Trade Disputes Act 1906
Trade Disputes Act 1906
The Trade Disputes Act 1906 was an Act of the Parliament of the United Kingdom passed under the Liberal government of Sir Henry Campbell-Bannerman...
. This laid down the essential principle of collective labour law that any strike "in contemplation or furtherance of a trade dispute" is immune from civil law sanctions. Accompanying this, the government embarked on widespread social reform. The Old Age Pensions Act 1908 provided pensions for retirees. The Trade Boards Act 1909
Trade Boards Act 1909
The Trade Boards Act 1909 was a piece of social legislation passed in the United Kingdom in 1909. It provided for the creation of boards which could set minimum wage criteria that were legally enforceable...
created industrial panels to fix minimum wages. And the National Insurance Act 1911
National Insurance Act 1911
The National Insurance Act 1911 is an Act of Parliament of the United Kingdom. The Act is often regarded as one of the foundations of modern social welfare in the United Kingdom and forms part of the wider social welfare reforms of the Liberal Government of 1906-1914...
levied a fee to insure people got benefits in the event of unemployment.
Western Front (World War I)
Following the outbreak of World War I in 1914, the German Army opened the Western Front by first invading Luxembourg and Belgium, then gaining military control of important industrial regions in France. The tide of the advance was dramatically turned with the Battle of the Marne...
demanded the participation of every available person and resource. As women took over traditional "men's jobs" the Suffragette
Suffragette
"Suffragette" is a term coined by the Daily Mail newspaper as a derogatory label for members of the late 19th and early 20th century movement for women's suffrage in the United Kingdom, in particular members of the Women's Social and Political Union...
movement gained momentum. Before the war's conclusion, the Representation of the People Act 1918
Representation of the People Act 1918
The Representation of the People Act 1918 was an Act of Parliament passed to reform the electoral system in the United Kingdom. It is sometimes known as the Fourth Reform Act...
gave universal suffrage to men over age 21 and women over 28. A new beginning was promised by the victors to their people. The Versailles Treaty created the International Labour Organisation to draw up common standards between countries, for as it said, "peace can be established only if it is based on social justice
Social justice
Social justice generally refers to the idea of creating a society or institution that is based on the principles of equality and solidarity, that understands and values human rights, and that recognizes the dignity of every human being. The term and modern concept of "social justice" was coined by...
", and echoed the US Clayton Act 1914 in pronouncing that "labour should not be regarded merely as a commodity or an article of commerce". But the international system remained disjointed as the United States Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
withheld its approval to join the League of Nations
League of Nations
The League of Nations was an intergovernmental organization founded as a result of the Paris Peace Conference that ended the First World War. It was the first permanent international organization whose principal mission was to maintain world peace...
. Within the UK the postwar settlement was to make a home fit for heroes. Whitley Councils extended the Trade Boards Act 1909 system to Joint Industrial Councils that encouraged (non legally binding) fair wage agreements, while the Ministry of Labour
Ministry of Labour
The Ministry of Labour was a British civil service department established by the New Ministries and Secretaries Act 1916. It was renamed the Employment Department in 1988, and finally abolished in 1995...
actively organised and advised the growth of trade unions. This was based on a theory of collective bargaining, agreement or action, advocated by Sidney Webb and Beatrice Webb
Beatrice Webb
Martha Beatrice Webb, Lady Passfield was an English sociologist, economist, socialist and social reformer. Although her husband became Baron Passfield in 1929, she refused to be known as Lady Passfield...
in Industrial Democracy to remedy the inequality of bargaining power
Inequality of bargaining power
Inequality of bargaining power is a concept used in social sciences and humanities, particularly law and economics to denote the situation where freedom of contract ceases to be real and markets fail....
of workers. Without legal force
Legal abstentionism
Legal abstentionism is a term used in labour law and industrial relations to refer to the policy of a government to not regulate labour markets through statutory means, by relying heavily on minimum standards. This is said to be characteristic of the British industrial relations policy of the early...
behind collective agreements, the law remained in a state of collective laissez faire
Collective laissez faire
Collective laissez faire is a term in legal and economic theory used to refer to the policy of a government to leave trade unions and employers free to collectively bargain with one another, with limited government intervention and oversight...
, encouraging voluntarism
Voluntarism (action)
Voluntarism is sometimes used to mean the use of, or reliance on voluntary action to maintain an institution, carry out a policy, or achieve an end. In this context the word voluntary action means action based on free will, which in turn means action which is performed free from certain constraints...
for agreement and dispute settlement between industrial partners. The 1920s and 1930s were economically volatile. In 1926 a General Strike
1926 United Kingdom general strike
The 1926 general strike in the United Kingdom was a general strike that lasted nine days, from 4 May 1926 to 13 May 1926. It was called by the general council of the Trades Union Congress in an unsuccessful attempt to force the British government to act to prevent wage reduction and worsening...
against coal miners' pay cuts paralysed the country, though was broken by Winston Churchill
Winston Churchill
Sir Winston Leonard Spencer-Churchill, was a predominantly Conservative British politician and statesman known for his leadership of the United Kingdom during the Second World War. He is widely regarded as one of the greatest wartime leaders of the century and served as Prime Minister twice...
, by then the Chancellor of the Exchequer
Chancellor of the Exchequer
The Chancellor of the Exchequer is the title held by the British Cabinet minister who is responsible for all economic and financial matters. Often simply called the Chancellor, the office-holder controls HM Treasury and plays a role akin to the posts of Minister of Finance or Secretary of the...
. The Labour Party
Labour Party (UK)
The Labour Party is a centre-left democratic socialist party in the United Kingdom. It surpassed the Liberal Party in general elections during the early 1920s, forming minority governments under Ramsay MacDonald in 1924 and 1929-1931. The party was in a wartime coalition from 1940 to 1945, after...
had formed Parliamentary majorities in 1924 and 1929, but achieved little in the way of reform, particularly after the onset of the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
.
By the Second World War and the Labour government of Clement Attlee
Clement Attlee
Clement Richard Attlee, 1st Earl Attlee, KG, OM, CH, PC, FRS was a British Labour politician who served as the Prime Minister of the United Kingdom from 1945 to 1951, and as the Leader of the Labour Party from 1935 to 1955...
, trade union membership was well established and collective agreements covered over 80 per cent of the workforce. With the British Empire
British Empire
The British Empire comprised the dominions, colonies, protectorates, mandates and other territories ruled or administered by the United Kingdom. It originated with the overseas colonies and trading posts established by England in the late 16th and early 17th centuries. At its height, it was the...
in rapid dissolution, immigration from Commonwealth
Commonwealth
Commonwealth is a traditional English term for a political community founded for the common good. Historically, it has sometimes been synonymous with "republic."More recently it has been used for fraternal associations of some sovereign nations...
countries, and record levels of female workplace participation the character of Britain's workforce was changing fast. Though the common law was sometimes comparatively progressive, sometimes not, the first statutes to prohibit discrimination focused on gender and race emerged in the 1960s as the Civil Rights Act
Civil Rights Act of 1964
The Civil Rights Act of 1964 was a landmark piece of legislation in the United States that outlawed major forms of discrimination against African Americans and women, including racial segregation...
was passed in the United States. Discrimination in employment (as in consumer or public service access) was formally prohibited on grounds of race in 1965, gender in 1975, disability in 1995, sexual orientation and religion in 2003 and age in 2006. A complicated and inconsistent jamboree of Acts and statutory instruments was placed into a comprehensive code in the Equality Act 2010. Much discrimination law is now applicable throughout the European Union, to which the UK acceded in 1972. Although labour laws in the early European Treaties and case law were scant, the Social Chapter
Social Chapter
The Social Chapter is the chapter of the 1997 Treaty of Amsterdam covering social policy issues, such as promotion of employment and improved living and working conditions. Prior to the Treaty of Amsterdam the "Agreement on Social Policy" protocol of the 1992 Maastricht Treaty was known as the...
of the Maastricht Treaty
Maastricht Treaty
The Maastricht Treaty was signed on 7 February 1992 by the members of the European Community in Maastricht, Netherlands. On 9–10 December 1991, the same city hosted the European Council which drafted the treaty...
brought employment rights squarely into the EU's jurisprudence. Meanwhile, starting from the Contracts of Employment Act 1963
Contracts of Employment Act 1963
The Contracts of Employment Act 1963 was an Act of the Parliament of the United Kingdom which introduced the requirement to give reasonable notice before dismissal and written particulars of a contract of employment...
, workers gained a growing list of minimum statutory rights, such as the right to reasonable notice before a fair dismissal and a redundancy payment. Labour governments through the 1960s and 1970s were troubled by reform of the unwieldy trade union system. Despite producing reports such as In Place of Strife
In Place of Strife
In Place of Strife was a UK Government white paper written in 1969. It was a proposed act to alter the functionality of trade unions in the United Kingdom, but was never passed into law....
and the Report of the committee of inquiry on industrial democracy
Report of the committee of inquiry on industrial democracy
The Report of the committee of inquiry on industrial democracy Cmnd 6706, also the Bullock Report for short, was a report proposing for a form of worker participation or workers' control, chaired by Alan Bullock...
which would have made unions accountable to their members created more direct workplace participation, reform did not take place.
From 1979, a new Conservative government took a strongly sceptical policy to all forms of labour law and regulation. During the 1980s ten major Acts gradually reduced the autonomy of trade unions and the legality of industrial action. Reforms to the internal structure of unions mandated that representatives be elected and a ballot is taken before a strike, that no worker could strike in sympathetic secondary action
Secondary action
Secondary action is industrial action by a trade union in support of a strike initiated by workers in another, separate enterprise...
with workers with a different employer, and that employers could not run a closed shop
Closed shop
A closed shop is a form of union security agreement under which the employer agrees to hire union members only, and employees must remain members of the union at all times in order to remain employed....
system of requiring all workers to join the recognised union. The wage councils were dismantled. A public campaign against the merits of unions paralleled the decline of membership and collective agreement coverage to under 40 per cent. In addition, the government opted out of the EU Social Chapter
Social Chapter
The Social Chapter is the chapter of the 1997 Treaty of Amsterdam covering social policy issues, such as promotion of employment and improved living and working conditions. Prior to the Treaty of Amsterdam the "Agreement on Social Policy" protocol of the 1992 Maastricht Treaty was known as the...
in the Maastricht Treaty
Maastricht Treaty
The Maastricht Treaty was signed on 7 February 1992 by the members of the European Community in Maastricht, Netherlands. On 9–10 December 1991, the same city hosted the European Council which drafted the treaty...
. In 1997 the new Labour government brought the UK into the EU's Social Chapter, which has served as the source for most reform in UK law since that time. Domestic led reform was minimal. The National Minimum Wage Act 1998
National Minimum Wage Act 1998
The National Minimum Wage Act 1998 creates a minimum wage across the United Kingdom, currently £6.08 per hour for workers aged 21 years and older, £4.98 per hour for workers aged 18–20...
established a country-wide minimum wage, but did not attempt to reinvigorate the Wage Board system. The Employment Relations Act 1999 introduced a 60 page procedure requiring employers to compulsorily recognise and bargain with a union holding support among workers, though union membership remained at a level steadily declining below 30 per cent.
Employment rights and duties
UK labour law's primary concern, particularly under the Employment Rights Act 1996Employment Rights Act 1996
The Employment Rights Act 1996 is a United Kingdom Act of Parliament passed by the Conservative government to codify the existing law on individual rights in UK labour law. Previous statutes, dating from the Contracts of Employment Act 1963, included the Redundancy Payments Act 1965, the...
, is to ensure that every working person has a minimum charter of rights in their workplace. Traditionally it draws a divide between self employed people, who are free to contract
Freedom of contract
Freedom of contract is the freedom of individuals and corporations to form contracts without government restrictions. This is opposed to government restrictions such as minimum wage, competition law, or price fixing...
for any terms they wish, and employees, whose employers are responsible for complying with labour laws. UK courts and statutes, however, use a number of different terms for different rights, including "worker", "employee", "jobholder", "apprentice" or someone with an "employment relation". A "worker" is entitled to a minimum wage
Minimum wage
A minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labour. Although minimum wage laws are in effect in a great many jurisdictions, there are differences of opinion about...
of £5.92 per hour, 28 statutory minimum days of holiday and a formal right to opt out of working over 48 hours a week, enrolment in a pension plan, not to mention the right to equal treatment and anti-discrimination that also apply to consumers and public services. An "employee" has all those rights, and also a safe system of work, the right to a written contract of employment, time off for pregnancy or child care, reasonable notice before a fair dismissal and a redundancy payment, and the duty to contribute to the National Insurance
National Insurance
National Insurance in the United Kingdom was initially a contributory system of insurance against illness and unemployment, and later also provided retirement pensions and other benefits...
fund and pay income tax
Income tax
An income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...
. The scope of the terms "worker", "employee", and others, are more or less left to the courts to construe according to the context of its use in a statute. English courts view an employment contract as involving a relation of mutual trust and confidence
Mutual trust and confidence
Mutual trust and confidence is a phrase used in English law, particularly with reference to contracts in UK labour law, to refer to the obligations owed in an employment relationship between the employer and the worker....
, which allows them to develop and enlarge the remedies available for workers and employers alike when one side acts out of bad faith
Bad faith
Bad faith is double mindedness or double heartedness in duplicity, fraud, or deception. It may involve intentional deceit of others, or self deception....
.
Scope of protection
As yet, the UK has not consolidated a single statutory definition of the people to whom employment rights and duties apply. Statute and case law, both domestic and European, use 2 main definitions (employee and worker), and approximately 3 other minor types (jobholder, apprentice, and someone with an employment relation). The EU does have one consolidated definition of a ‘worker’, which is someone who has a contract for work in return for a wage, and also stands as the more vulnerable party to the contract. This reflects the kernel of classical labour law theory, that an employment contract is one infused with “inequality of bargaining powerInequality of bargaining power
Inequality of bargaining power is a concept used in social sciences and humanities, particularly law and economics to denote the situation where freedom of contract ceases to be real and markets fail....
”, and stands as a justification for mandating additional terms to what might otherwise be agreed under a system of total freedom of contract
Freedom of contract
Freedom of contract is the freedom of individuals and corporations to form contracts without government restrictions. This is opposed to government restrictions such as minimum wage, competition law, or price fixing...
.
In the UK an ‘employee’ has all available rights (all the rights of a ‘worker’ but also child care, retirement and job security rights). The meaning is explicitly left to the common law under the main statute, the Employment Rights Act 1996
Employment Rights Act 1996
The Employment Rights Act 1996 is a United Kingdom Act of Parliament passed by the Conservative government to codify the existing law on individual rights in UK labour law. Previous statutes, dating from the Contracts of Employment Act 1963, included the Redundancy Payments Act 1965, the...
section 230, and has developed according to the classical 19th century contrast between a contract ‘of service’ and one ‘for services’. The government may also pass secondary legislation to include specific groups of people into the ‘employee’ category. While the classical test was that an employee was subject to a sufficient degree of ‘control’, new forms of work where people were had greater autonomy outside the factory to choose how to do their jobs, meant that, particularly from the mid-20th century, additional tests of employment were developed. Multiple factors, including how much one could said to be ‘integrated’ into the business, or whether one metaphorically wore the ‘badge’ of the organisation, were looked at, with a focus, it was said on ‘economic reality’ and form over substance. Multiple relevant factors would include how much the employee was ‘controlled’, if they owned their tools, if they had the chance of profit and bore the risk of loss. But in the late 1970s and 1980s, some courts began to speak of a new test of ‘mutuality of obligation’. One view of this was merely that workers exchanged work for a wage. Another view stated that the employment relationship had to be one where there was an ongoing obligation to offer and accept work. This led to cases where employers, typically of people on low wages and little legal understanding, pleaded that they had only hired a person on a casual basis and thus should not be entitled to the major job security rights. However the leading case, Autoclenz Ltd v Belcher
Autoclenz Ltd v Belcher
Autoclenz Ltd v Belcher [2011] is a significant UK labour law case decided by the Supreme Court of the United Kingdom, concerning the scope of statutory protection of rights for working individuals...
decided by a unanimous Supreme Court in 2011, brought the definition of an employment contract in line with that in used in the EU. Confirming that employment contracts are one of a specific type, and separate from commercial agreements, Lord Clarke held that an exchange of work for a wage was essential, that what the private "true" intentions of the parties wanted was not as important as the reality, and that bargains took place in the context of an unequal bargaining relation. As he put it,
... the relative bargaining powerInequality of bargaining powerInequality of bargaining power is a concept used in social sciences and humanities, particularly law and economics to denote the situation where freedom of contract ceases to be real and markets fail....
of the parties must be taken into account in deciding whether the terms of any written agreement in truth represent what was agreed and the true agreement will often have to be gleaned from all the circumstances of the case, of which the written agreement is only a part. This may be described as a purposive approachPurposive theoryPurposive theory is a theory of statutory interpretation that holds that common law courts should interpret legislation in light of the purpose behind the legislation. Purposive theory stands in contrast to textualism or statutory derogation, two other prominent common law interpretation...
to the problem. If so, I am content with that description.
This meant that a group of car valeters, although described in their contracts as being self employed, with a right to substitute another person to do their work, and professed to have no obligation to undertake work, were entitled to a minimum wage and paid leave. The contract terms could be disregarded because they did not represent the reality of the situation. In addition, a ‘worker’ is defined in ERA 1996 section 230 as someone with a contract of employment or who personally performs work and is not a client or a customer. This concept has greater scope, and protects more people, than does the term ‘employee’. This class of person is entitled to a safe system of work, a minimum wage
Minimum wage
A minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labour. Although minimum wage laws are in effect in a great many jurisdictions, there are differences of opinion about...
and limits on working time, as well as discrimination and trade union rights, but not job security, child care and retirement rights. This concept thus reaches up to protect people who are quasi-self employed professionals, albeit not so vulnerable, such as a home cleaner, or music teacher who visits student homes, or a taxi cab driver wearing a firm’s logo.
Contract of employment
Once a person's work contract is categorised, the courts have specific rules for determining, beyond the statutory minimum charter of rights, what are its terms and conditions. Analogous rules for incorporation of terms, and implication terms exist as in the ordinary law of contract, however in Gisda Cyf v BarrattGisda Cyf v Barratt
Gisda Cyf v Barratt [2010] is a UK labour law case, concerning unfair dismissal governed by the Employment Rights Act 1996.-Facts:Gisda Cyf employed Ms Barratt. On 30 November 2006 a letter was sent to her that she was being summarily dismissed for gross misconduct, apparently misconduct at a...
, Lord Kerr emphasised that this process of construction is one that must be “intellectually segregated” from the general law of contract
English contract law
English contract law is a body of law regulating contracts in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries across the Commonwealth , and the United States...
, because of the relation of dependency an employee has. In this case, Ms Barratt was told her employment was terminated in a letter that she opened 3 days after its arrival. When, 3 months and 2 days after arrival, she lodged an unfair dismissal claim, the employer argued it was time barred on the ground that in ordinary contract law one is bound by a notice when a reasonable person would have read a message. The Supreme Court held that Ms Barratt was in time for a claim because she was only bound by the notice when she actually read it. The applicable in employment was different, given the purpose of employment law to protect the employee. From formation to termination, employment contracts are to be construed in the context of statutory protection of dependent workers.
The terms of employment are all those things promised to an employee when work begins, so long as they do not contravene statutory minimum rights. In addition, terms can be incorporated by reasonable notice, for instance by referring to a staff handbook in a written employment agreement, or even in a document in a filing cabinet next to the staff handbook. While without express wording they are presumed not binding between the union and employer, a collective agreement may give rise to individual rights. The test applied by the courts is to ask loosely whether its terms are ‘apt’ for incorporation, and not statements of ‘policy’ or ‘aspiration’. Where the collective agreement’s words are clear, a "last in first out" rule was held to potentially qualify, but another clause purporting to censure compulsory redundancies was held to sound like it was binding ‘in honour’ only.
In addition to statutory rights, expressly agreed terms and incorporated terms, the contractual hallmark of the employment relation is the series of standardised implied terms (or terms implied in law) that accompany it. In addition to individualised implied terms that the courts construe to reflect the reasonable expectations of the parties, the courts have long held that employees are owed additional obligations, such as a safe system of work and payment of wages even when the employer has no work to offer. Reflecting more recent priorities, employers have also been recognised to have a duty to inform their employees of their workplace pension rights, although they have stopped short of requiring employers to give advice on qualifying for workplace disability benefits. The key implied term, however, is the duty of good faith
Good faith
In philosophy, the concept of Good faith—Latin bona fides “good faith”, bona fide “in good faith”—denotes sincere, honest intention or belief, regardless of the outcome of an action; the opposed concepts are bad faith, mala fides and perfidy...
, or “mutual trust and confidence”. This is a flexible concept that is applied in a broad variety of circumstances leading to remedies in damages or an injunction, such as to require employers do not act in an authoritarian manner, call employees names behind their back, treat workers unequally when upgrading pay, run the company as a front for international crime, or exercise discretion to award a bonus capriciously. There is tension among judges about the extent to which the core implied term of mutual trust and confidence can be 'contracted out of', with the House of Lords having held that the parties are "free" to do so, while others approach the question as a matter of construction of the agreement which is within exclusive judicial competence to define.
The second, and older hallmark of the employment contract is that employees are bound to follow their employers’ instructions while at work, so long as that does not contravene statute or their agreed terms. Every employment relation leaves the employer with a residue of discretion, historically expressed as the ‘master-servant’ relationship. Today, in practice, this leaves the employer with the ability to vary the terms of work in accordance with business need. The courts have allowed this to continue, so long as it does not contradict a contract’s express terms, which always require an employee’s consent, or renegotiation of a collective agreement. However, it has also been held that employers may insert ‘flexibility clauses’ allowing them to reserve the right to vary any contract term. The limits of the courts’ tolerance of such practices are evident if they touch procedures for accessing justice, or potentially if they would contravene the duty of mutual trust and confidence.
Health and safety
One of the principle terms that accompanies the employment relationship is that the employer will provide a "safe system of work". As the industrial revolution developed, accidents from a hazardous working environment were a front line target for labour legislation, as a series of Factories Acts, from 1802, required minimum standards in workplace cleanliness, ventilation, fencing machinery, not to mention restrictions on child labour and limits to the working day. These Acts typically targeted particular kinds of workplaces, such as mines, or textile mills, before the more generalised approach took hold now seen in the Factories Act 1961Factories Act 1961
The Factories Act 1961 is an Act of the Parliament of the United Kingdom. At the time of its passage, the Act consolidated much legislation on workplace health, safety and welfare in Great Britain. Though some of it remains in force, it has largely been superseded by the Health and Safety at Work...
. That applies to any workplace where an article is made or changed, or animals are kept and slaughtered. The Employer's Liability (Defective Equipment) Act 1969 made employers automatically liable for equipment with defects supplied by third parties. Because isolated employees lack the technical skill, time, training to litigate, such regulation's primary line of enforcement was through inspectors or agencies before matters went to court. Today the Health and Safety at Work etc. Act 1974, enforced by the Health and Safety Executive
Health and Safety Executive
The Health and Safety Executive is a non-departmental public body in the United Kingdom. It is the body responsible for the encouragement, regulation and enforcement of workplace health, safety and welfare, and for research into occupational risks in England and Wales and Scotland...
, is the main law. The HSE can delegate enforcement to local authorities, whose inspectors have the power to investigate and require changes to workplace systems. In addition, HSWA 1974 section 2 foresees that employees will set up their own workplace committees, elected by the employees and with the power to codetermine health and safety matters with management. Spelling out the general duties found in HSWA 1974, are a set of health and safety regulations
Health and safety regulations in the United Kingdom
In the United Kingdom there are many regulations relevant to health, safety and welfare at work. Many of these give effect to European Union directives.-Regulations made under the Health and Safety at Work etc. Act 1974:...
, which must also stay in line with the European-wide harmonised requirements of the Health and Safety Directive.
Vicarious liability in English law
Vicarious liability in English law is a doctrine of English tort law that imposes strict liability on employers for the wrongdoings of their employees. Generally, an employer will be held liable for any tort committed while an employee is conducting their duties...
for all actions of people acting for them in the "course of employment" whenever their actions have a "close connection" to the job, and even if it breaks an employer's rules. Only if an employee is on a "frolic of his own", and the employer cannot be said to have placed him in a position to cause harm, will the employer have a defence. Under the Employers’ Liability (Compulsory Insurance) Act 1969, employers must take out insurance for all injury costs, and insurance companies are precluded by law and practice from suing their employees to recover costs unless there is fraud. However, until the mid 20th century there were a series of major limitations. First, until 1937, if an employee was injured by a co-worker, the doctrine of common employment
Common employment
Common employment was an historical defence in English tort law that said workers implicitly undertook the risks of being injured by their co-workers, with whom they were in "common employment".-Development:...
, the employer could only be liable if it was shown they were personally liable by carelessness in selecting staff. The House of Lords changed this in Wilsons & Clyde Coal Co Ltd v English
Wilsons & Clyde Coal Co Ltd v English
Wilsons and Clyde Coal Ltd v English [1938] AC 57 is a UK labour law case concerning the employer's duty to provide a safe system of work for all its employees.-Facts:...
, holding an employer had a non-delegable duty of care for all employees. Lord Wright held there were "fundamental obligations of a contract of employment... for which employers are absolutely responsible". The second old restriction was that, until 1891, volenti non fit injuria
Volenti non fit injuria
Volenti non fit injuria is a common law doctrine which means that if someone willingly places themselves in a position where harm might result, knowing that some degree of harm might result, they will not be able to bring a claim against the other party in tort or delict...
meant workers were assumed to voluntarily accept the dangers of their work by agreeing to their contracts of employment. Only if an employee callously ignores clear directions of the employer will he be taken to have voluntarily assumed the risk, like in ICI Ltd v Shatwell
ICI Ltd v Shatwell
-Facts:Two shot firing brothers were injured because they ‘could not be bothered’ to take the mandatory precautions....
where an experience quarry shotfirer said he "could not be bothered" to wait 10 minutes before setting of a detonation, and blew up his brother. Third, even if a worker was slightly at fault, until 1945 such contributory negligence
Contributory negligence
Contributory negligence in common-law jurisdictions is defense to a claim based on negligence, an action in tort. It applies to cases where a plaintiff/claimant has, through his own negligence, contributed to the harm he suffered...
precluded the whole of the claim. Now the court will only reduce damages by the amount the employee contributed to their own injury. The fourth defence available to employers, which still exists, is ex turpi causa non oritur actio
Ex turpi causa non oritur actio
Ex turpi causa non oritur actio is a legal doctrine which states that a claimant will be unable to pursue a cause of action if it arises in connection with his own illegal act...
, that if the employee was engaged in any illegal activity they may not claim compensation for injuries. In Hewison v Meridian Shipping Services Pte Ltd
Hewison v Meridian Shipping Services Pte Ltd
Hewison v Meridian Shipping Services Pte Ltd [2002] is an English tort law case, concerning an employer's liability for an employee's illegal acts.-Facts:...
Mr Hewison concealed his epilepsy so that he could work offshore was technically guilty of illegally attempting to gain a pecuniary advantage by deception under the Theft Act 1968
Theft Act 1968
The Theft Act 1968 is an Act of the Parliament of the United Kingdom. It creates a number of offences against property in England and Wales.On 15 January 2007 the Fraud Act 2006 came into force, redefining most of the offences of deception.-History:...
section 16. After being struck in the head by a defective gangplank he suffered worse fits than before, but the Court of Appeal, by a majority, held his illegal act precluded any compensation.
The common law of tort also remains particularly relevant for the type of liability an employer has where there is scientific uncertainty about the cause of an injury. In asbestos disease
Asbestos and the law
This article concerns asbestos-related legal and regulatory issues. Litigation related to asbestos injuries and property damages has been claimed to be the longest-running mass tort in U.S. history...
cases, a worker may have been employed with at a number of jobs where he was exposed to asbestos, but his injury cannot with certainty be traced to any one. Although he may be able to sue all of them, a number may have already gone insolvent. In Fairchild v Glenhaven Funeral Services Ltd the House of Lords held that if any employer had materially increase the risk of harm to the worker, they could would be jointly and severally liable and could be sued for the full sum, leaving it up to them to seek contribution from others and thus the risk of other businesses' insolvency. For a brief period, in Barker v Corus the House of Lords then decided that employers would only be liable on a proportionate basis, thus throwing the risk of employers' insolvency back onto workers. Immediately Parliament passed the Compensation Act 2006
Compensation Act 2006
The Compensation Act 2006 is an Act of the Parliament of the United Kingdom, introduced in response to concerns about a growing compensation culture but conversely to ensure that the public received dependable service from claims management companies...
section 3 to reverse the decision on its facts. It has also been held in Chandler v Cape plc
Chandler v Cape plc
Chandler v Cape plc [2011] EWHC 951 is a UK company law and English tort law case concerning the availability of damages for a tort victim from a parent company, when the victim is harmed by the operations of a subsidiary company.-Facts:...
, in 2011, that even though a subsidiary company is the direct employer of a worker, a parent company will owe a duty of care. Thus shareholders may not be able to hide behind the corporate veil
Corporate veil in the United Kingdom
The corporate veil in the United Kingdom is a metaphorical reference used in UK company law for the concept that the rights and duties of a corporation are, as a general principle, the responsibility of that company alone...
to escape their obligations for the health and safety of the workforce.
Wages and working time
Since 1998, the United Kingdom has fixed a national minimum wage, and sets outer limits on working time for virtually all workers. Direct wage and working time regulation is a comparatively recent phenomenon, as it was traditionally left to collective bargaining to achieve "a fair day's wage for a fair day's workA fair day's wage for a fair day's work
A fair day's wage for a fair day's work is an objective of the labour movement, trade unions and other workers' groups, to increase pay, and adopt reasonable hours of work. It is a slogan and motto of the American Federation of Labor.-References:...
". The Truck Acts
Truck Acts
Truck Acts is the name given to legislation that outlaws truck systems, which are also known as "company store" systems, or debt bondage. Such laws date back in Britain to the 15th century but have also been implemented in other countries.-History:...
were the earliest wage regulations, requiring workment to be paid in money, and not kind. Now, the Employment Rights Act 1996
Employment Rights Act 1996
The Employment Rights Act 1996 is a United Kingdom Act of Parliament passed by the Conservative government to codify the existing law on individual rights in UK labour law. Previous statutes, dating from the Contracts of Employment Act 1963, included the Redundancy Payments Act 1965, the...
section 13 stipulates that employers can only dock employees’ wages (e.g. for missing stock) if the employee consented to deductions in writing. This, however, does not cover industrial action, so following ancient common law on part performance of work, employees who refused to 3 out of 37 hours a week in minor workplace disobendience, had their pay cut for the full 37. From the Trade Boards Act 1909
Trade Boards Act 1909
The Trade Boards Act 1909 was a piece of social legislation passed in the United Kingdom in 1909. It provided for the creation of boards which could set minimum wage criteria that were legally enforceable...
, the UK had set minimum wages according to the specific needs of different sectors of work. But this system was eroded through the 1980s and eventually repealed in 1993. To bring the United Kingdom back into compliance with basic standards in international law
International law
Public international law concerns the structure and conduct of sovereign states; analogous entities, such as the Holy See; and intergovernmental organizations. To a lesser degree, international law also may affect multinational corporations and individuals, an impact increasingly evolving beyond...
, the National Minimum Wage Act 1998
National Minimum Wage Act 1998
The National Minimum Wage Act 1998 creates a minimum wage across the United Kingdom, currently £6.08 per hour for workers aged 21 years and older, £4.98 per hour for workers aged 18–20...
was introduced. The minimum wage takes effect in every worker's contract. Workers do not need to show "mutuality of obligation" or any other requirement except that they personally perform work for a wage and is not a client. One curious exclusion, however, is a pupil barrister who in Edmonds v Lawson QC
Edmonds v Lawson QC
Edmonds v Lawson QC [2000] is a UK labour law case regarding the National Minimum Wage Act 1998 and who is not included. It held that pupil barristers are not included for the purposes of the Act.-Facts:...
was held to not be "working" but be "conscientious in receiving instruction". The minimum wage rate is reset annually after guidance from the Low Pay Commission, and on 1 October 2011 it stood at £6.08 for over 21 year olds, £4.98 for 18-20 year olds, £3.68 for under 18 year olds finished with compulsory education and £2.60 for under 19 year olds or first year apprentices. The National Minimum Wage Regulations 1999 spell out the details of how the minimum wage should be calculated. Total pay received is divided by the hours actually worked over an average "pay reference period" of one month. This definition has given rise to litigation in cases where a worker can stay at home but must answer phone calls, is allowed to rest or sleep during shifts, or must make herself available "on call" over a long period. Generally speaking, it is irrelevant whether one is at home or not. If a worker is given sleeping facilities and is not awake, the minimum wage need not be paid. And if a worker is "on call", then this time still counts at work if the worker is bound to stay within the vicinity of the workplace. However, an exception in regulation 28 allows an employer to agree with a worker what the hours worked actually are, if they would ordinarily be unmeasured. In Walton v Independent Living Organisation Ltd
Walton v Independent Living Organisation Ltd
Walton v Independent Living Organisation Ltd [2003] is a UK labour law case regarding the National Minimum Wage Act 1998.-Facts:Miss Julie Walton was a care worker, who looked after Miss E Jones, who had epilepsy but was a relatively easy client. She did washing, ironing, shopping and meals. Miss...
a worker who cared for a young epileptic lady had to be on call 24 hours a day, 3 days a week, but could do her own activities outside tasks such as going shopping, making meals and cleaning. Her company made an agreement with her that her tasks took 6 hours and 50 minutes a day, which resulted in her £31.40 allowance meeting the minimum wage. Certain deductions may be made including £4.51 per day for any accommodation the employer provides, though extra bills, such as for electricity, should not ordinarily be charged. The minimum wage can be enforced individually through an ERA 1996 section 13 claim for a shortfall of wages in a Tribunal. A worker may not be subjected to any detriment for enquiring, or requesting records or complaining about it. However, because many workers will not understand how to do this, or have the resources, a primary enforcement mechanism is through inspections and compliance notices issued by Her Majesty's Revenue and Customs
Her Majesty's Revenue and Customs
Her Majesty's Revenue and Customs is a non-ministerial department of the UK Government responsible for the collection of taxes and the payment of some forms of state support....
. A remedy of up to 80 times the minimum wage is available to the worker and HMRC can enforce a penalty of twice the minimum wage per worker per day.
The Working Time Regulations 1998
Working Time Regulations 1998
The Working Time Regulations 1998 are a United Kingdom statutory instrument, which regulate the time that people in the UK may work. It is intended to implement the EU Working Time Directive 2003/88/EC. Firstly, it sets a default rule which, although one may controversially opt out of it, that...
set limits on working time, and implement the basic requirements of the Working Time Directive
Working Time Directive
The Working Time Directive is a European Union Directive, which creates the right for EU workers to a minimum number of holidays each year, paid breaks, and rest of at least 11 hours in any 24 hours; restricts excessive night work; and makes a default right to work no more than 48 hours per week....
. Its most concrete measure is, again following basic rights in international law, mandating a minimum period of 28 days, or four full weeks, in paid holidays for all workers each year (though this includes public holidays
Public holidays in the United Kingdom
Public holidays in the United Kingdom are the public holidays observed in some or all of the countries of the United Kingdom. Most businesses and non-essential services are closed on public holidays, although an increasing number of retail businesses do open on some of the public holidays.Although...
). There is no qualifying period for this, or any other working time right, because beyond the importance of the law in seeking to strike a balance between work and life, sufficient periods of rest and leisure are seen as a critical element of workers health and safety. Nor is it possible for an employer to give a worker "rolled up holiday pay", for instance an additional 12.5% in a wage bill, in lieu of taking actual holidays. The employer must make sure the worker does in fact take paid holidays, and if the worker has not done so and the job terminates, the employer must give an additional payment for the unused holiday entitlement. Where a person works at night, she may only do 8 hours in any 24 hour period on average, or simply 8 hours at most is dangerous. Moreover every worker must receive at least 11 consecutive hours of rest in a 24 hour period, and in every day workers must have at least a 20 minute break in any 6 hour period. The most controversial and widely known provisions in the working time laws, however, concern the maximum working week. Under the Directive, this is 48 hours. Although people in the United Kingdom work the longest hours on average in Europe, and among the longest in the world, highest work related stress and absentee rates, successive UK governments have remained sceptical about the maximum working week's merit. The maximum does not apply to anyone who is self-employed or who can set their own hours of work, as it is aimed to protect workers who possess less bargaining power and autonomy over the way they do their jobs. Nevertheless, all UK workers may "opt out" of the 48 hour week by individually signing an opt out form. Theoretically a worker may always change her mind after having opted out, without suffering any detriment. If the employer has not got the worker to opt out, then the 48 hour week is not a rigid maximum, but is taken as an average over 17 weeks. The same rules have developed as for the minimum wage, regarding "on call" time, so that people with jobs involving long periods where they must make themselves available, but not necessarily be active, are regarded as working if they are bound to remain awake and close to their workplace. This created a significant problem for junior doctors, where the culture has typically been in all European countries that very long hours are expected. The European Court of Justice
European Court of Justice
The Court can sit in plenary session, as a Grand Chamber of 13 judges, or in chambers of three or five judges. Plenary sitting are now very rare, and the court mostly sits in chambers of three or five judges...
's decision in Landeshauptstadt Kiel v Jaegar that junior doctors' on call time was working time led a number of countries to exercise the same "opt out" derogation as the UK, albeit limited to medical practice. The Health and Safety Executive
Health and Safety Executive
The Health and Safety Executive is a non-departmental public body in the United Kingdom. It is the body responsible for the encouragement, regulation and enforcement of workplace health, safety and welfare, and for research into occupational risks in England and Wales and Scotland...
is the UK body charged with enforcing the working time laws, though it has purposively taken a "light touch" approach to enforcement.
Child care and time off
Rights to leave from work to care for children have important consequences for career advancement and gender equality. The major right, which goes beyond the minimum set by the Pregnant Workers Directive, is a mix of paid and unpaid maternity leave. A contract of employment can always be and often is more generous. Otherwise, the minimum right to paid maternity leave arises for women employees after 26 weeks work, though the right to unpaid leave has no qualifying period. Under the Maternity and Parental Leave, etc Regulations 1999 mothers must take compulsory leave at the time of child birth for two weeks. After that comes a right to 6 weeks' leave paid at 90 per cent of ordinary salary. Then is 20 weeks leave paid at a rate set by statute, which was £123.06 per week in 2010. This has to be at least the same level as statutory sick payStatutory sick pay
In the United Kingdom Statutory Sick Pay is paid by their employer to all employees who are sick for a period longer than 4 consecutive days but less than 28 weeks. The first 3 days of sickness are called waiting days...
. Then she may take additional but unpaid maternity leave for another 26 weeks. She must tell the employer 15 weeks before the date of the expected birth, in writing if the employer requests it. Except insofar as they administer the payments, employers do not bear most costs of maternity leave as they are reimbursed by the government according to their size and national insurance contributions. Along with different forms of leave, mothers have the right to not suffer any professional detriment or dismissal while they are absent, and should be able to return to the same job after 26 weeks, or another suitable job after 52 weeks.
For fathers, the position is less generous. To redress the balance between how much of child raising each partner bears, under the Additional Paternity Leave Regulations 2010 it will be possible for a women to transfer up to 26 weeks of her leave entitlements to her male partner. Otherwise the Paternity and Adoption Leave Regulations 2002 state that a man is entitled to a minimum of just 2 weeks off, at the statutory rate of pay. Both parents may also benefit from "parental leave" provisions in the MPLR 1999, passed after the Parental Leave Directive. Until a child turns 5, or a disabled child turns 18, parents can take up to 13 weeks unpaid leave. Unless there is another collective agreement in place, employees should give 21 days notice, no more than 4 weeks in a year, at least 1 week at a time, and the employer can postpone the leave for 6 months if business would be unduly disrupted. Otherwise similar provisions apply on employees not suffering detriment or dismissal and having a right to their previous jobs back. "Emergency leave" is, under ERA 1996 section 57A, available for employees to deal with birth or a child's issues at school, as well as other emergencies such as dependents' illness or death, so long as the employee informs the employer as soon as reasonably practicable. In Qua v John Ford Morrison Solicitors
Qua v John Ford Morrison Solicitors
Qua v John Ford Morrison Solicitors [2003] ICR 482 is a UK labour law case concerning emergency leave to care for children.-Facts:Mrs Qua was absent for 17 days, because of her young son’s medical problems...
Cox J emphasised that there is no requirement to deliver daily updates.
Beyond the period around child birth, after EA 2002, employees gained the right to request flexible working patterns for the purpose of caring for a child under the age of 6, or a disabled child under age 18. The right to make the request is contained in ERA 1996 section 80F, and despite the fact that employers may decline the request, statistics show that under the obligation to consider, employers grant requests in 80 per cent of cases. An employee must make the request in writing, the employer must reply in writing, and can only decline the request on the basis of a correct fact assessment, and within 8 grounds listed in section 80G, which generally concern business and organisational necessity. In Commotion Ltd v Rutty
Commotion Ltd v Rutty
Commotion Ltd v Rutty [2006] IRLR 171 is an Employment Appeal Tribunal case in which an employer, who denied its staff flexible working time, was found in breach of the Employment Rights Act 1996 for failing to have any lawful reason.-Facts:...
a toy warehouse assistant was refused a reduction to part time work because, according to the manager, everyone needed to work full time to maintain "team spirit". The Employment Appeal Tribunal ruled that because "team spirit" was not one of the legitimate grounds for refusal, Mrs Rutty should get compensation, which is set at a maximum of 8 weeks' pay.
- Instituto nazionale della providenza social v Bruno [2010] IRLR 890, part time workers and occupational pensions
- Apprenticeships, Skills, Children and Learning Act 2009Apprenticeships, Skills, Children and Learning Act 2009The Apprenticeships, Skills, Children and Learning Act 2009 is an Act of the Parliament of the United Kingdom. It alters the law relating to education....
(c 22)
Occupational pensions
Occupational pension schemes are one of the three pillars of pension provision in the UK, in addition to the state pension administered by the government based on National InsuranceNational Insurance
National Insurance in the United Kingdom was initially a contributory system of insurance against illness and unemployment, and later also provided retirement pensions and other benefits...
contributions, and private, or "personal pensions" which individuals may arrange for themselves. After the Pensions Act 2008
Pensions Act 2008
The Pensions Act 2008 is an Act of the Parliament of the United Kingdom. The principal change brought about by the Act is that all workers will have to opt out of an occupational pension plan of their employer, rather than opt in...
, and due to begin in October 2012, every "jobholder" (defined as a worker, age 16 to 75, with wages between £5,035 and £33,540) must be automatically enrolled by the employer in an occupational pension scheme, unless they choose to opt out. In order to reduce the administrative complexity, a new non-departmental trust fund called the National Employment Savings Trust is established as a cheaper public competitor, able to take advantage of significant economies of scale
Economies of scale
Economies of scale, in microeconomics, refers to the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit...
, compared to existing fund manager options on the private pension market. Employers will be required to set aside their jobholders' wages at an agreed percentage, and negotiate how much they will give in contributions, if anything. Outside this "public option", it has typically been up to the employer often in negotiation with the trade union, to establish a trust fund for pension schemes, however there has not yet been any legal duty on employers to do so, leaving most people with nothing but the state pension. However, when there is a pension in place as a result of a term in the jobholder's employment contract
Employment contract
A contract of employment is a category of contract used in labour law to attribute right and responsibilities between parties to a bargain.On the one end stands an "employee" who is "employed" by an "employer". It has arisen out of the old master-servant law, used before the 20th century...
, the employer is under a duty to inform their staff about how to make the best of their pension rights. Moreover, workers must be treated equally, on grounds of gender or otherwise, in their pension entitlements. Where occupational pensions exist, the employer typically acts as a trustee
Trustee
Trustee is a legal term which, in its broadest sense, can refer to any person who holds property, authority, or a position of trust or responsibility for the benefit of another...
and creates a board of trustees, or contracts with a trust corporation, to oversee the management of the workforce's pension savings. Following the Goode Report of 1993 on pensions, it has been a requirement that the pension trust members have the right to "codetermine" the pension management by having a vote to elect a minimum of one third of the trustees, or corporation directors, either directly or through their trade union. Often member nominated trustees are one half of the scheme, and the Secretary of State has the power by regulation, as yet unused, to increase the minimum up to one half. Trustees are charged with the duty to manage the fund in the best interests of the beneficiaries, in a way that reflects their preferences, by investing the savings in company shares, bond
Bond (finance)
In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...
s, real estate
Real estate
In general use, esp. North American, 'real estate' is taken to mean "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; an item of real property; buildings or...
or other financial products.
While there are minimum standards for worker participation in the management of any occupational pension, the terms of people's pensions may be very different particularly regarding who bears the risk
Risk
Risk is the potential that a chosen action or activity will lead to a loss . The notion implies that a choice having an influence on the outcome exists . Potential losses themselves may also be called "risks"...
of workers having a long life after retirement. Increasingly, "defined benefit" plans (or "final salary" schemes) where the employer pays a fixed sum however long the former worker lives and thus averages out the risk between different workers, have been scrapped. The contrasting system is a "defined contribution" plan, where individual workers simply retire with a pension that is as much as the contributions they made, meaning that if they live longer than they plan, they run the risk of being left with only the state pension. Some schemes combine elements of each. The rate of decline in defined benefit plans has been rate consistent with the decline in trade union membership, and increasing mobility of the labour market. Defined benefit plans also attract more regulation, as many employers have not necessarily actually kept aside money from "contributions" shown workers' pay slips, since the employer simply pays the final salary out when the time comes. This problem, revealed in early 1990s scandals like the Robert Maxwell
Robert Maxwell
Ian Robert Maxwell MC was a Czechoslovakian-born British media proprietor and former Member of Parliament , who rose from poverty to build an extensive publishing empire...
scandal, led to the introduction of requirements for minimum funding, and also taking out insurance in the event that a company goes insolvent, and the pension fund is in deficit. This system is overseen by the Pensions Regulator, which also takes general complaints about the activities of trustees or management. In addition, there exists a Pensions Ombudsman
Pensions Ombudsman
The Pensions Ombudsman is the official ombudsman institution responsible for investigating complaints regarding pensions in the United Kingdom. The Pensions Ombudsman is a non-departmental public body, and the holder is appointed by the Government, but acts independently after appointment. His...
who may hear complaints and take informal action against employers who fall short of their statutory duties.
Income tax and insurance
- UK tax history and Taxation in medieval EnglandTaxation in medieval EnglandTaxation in medieval England was the system of raising money for royal and governmental expenses. During the Anglo-Saxon period, the main forms of taxation were land taxes, although custom duties and fees to mint coins were also imposed. The most important tax of the late Anglo-Saxon period was the...
- Income Tax Act 1803 to fund the Napoleonic WarsNapoleonic WarsThe Napoleonic Wars were a series of wars declared against Napoleon's French Empire by opposing coalitions that ran from 1803 to 1815. As a continuation of the wars sparked by the French Revolution of 1789, they revolutionised European armies and played out on an unprecedented scale, mainly due to...
, repealed and then reintroduced by Robert PeelRobert PeelSir Robert Peel, 2nd Baronet was a British Conservative statesman who served as Prime Minister of the United Kingdom from 10 December 1834 to 8 April 1835, and again from 30 August 1841 to 29 June 1846...
in the Income Tax Act 1842Income Tax Act 1842The Income Tax Act 1842 was an Act of the Parliament of the United Kingdom, passed under the government of Robert Peel, which re-introduced an income tax in Britain, at the rate of 7 pence in the pound on all annual incomes greater than £150...
- National Insurance FundNational Insurance FundThe National Insurance Fund represents the funds of the National Insurance Scheme, set up by the British Government following World War II. In the Beveridge Report this was designed as part of a universal insurance system for all British people....
- Beveridge ReportBeveridge ReportThe Report of the Inter-Departmental Committee on Social Insurance and Allied Services, known commonly as the Beveridge Report was an influential document in the founding of the Welfare State in the United Kingdom...
- IR35IR35IR35 is a term used to denote United Kingdom tax legislation designed to tax "disguised employment" at a rate similar to employment. In this context, "disguised employees" means workers who receive payments from a client via an intermediary and whose relationship with their client is such that had...
, disguised employment - Income Tax (Earnings and Pensions) Act 2003 and Social Security Contributions (Intermediaries) Regulations 2000, SI 2000/727
- Income Tax Act 2007Income Tax Act 2007The Income Tax Act 2007 is an Act of the Parliament of the United Kingdom. It is the primary Act of Parliament concerning income tax paid by individual earners subject to the law of United Kingdom, and mostly replaced the Income and Corporation Taxes Act 1988.-Contents:*Part 1 Overview*Part 2...
, mostly replacing Income and Corporation Taxes Act 1988Income and Corporation Taxes Act 1988The Income and Corporation Taxes Act 1988, also known as ICTA, was the foremost United Kingdom Act of Parliament concerned with taxation until the Income Tax Act 2007 and the Corporation Tax Act 2010. ICTA was enacted in order to consolidate a number of earlier legislative provisions covering... - Income Tax (Earnings and Pensions) Act 2003
- Income Tax (Trading and Other Income) Act 2005Income Tax (Trading and Other Income) Act 2005The Income Tax Act 2005 is an Act of the Parliament of the United Kingdom.It restated certain legislation relating to income tax, with minor changes that were mainly intended "to clarify existing provisions, make them consistent or bring the law into line with well established practice." The Bill...
- Tax return (United Kingdom)Tax return (United Kingdom)In the United Kingdom, a tax return is a document that must be filed with the HM Revenue & Customs declaring liability for taxation. Different bodies must file different returns with respect to various forms of taxation...
include the P35 form filled out by employers for the employees' tax. In the PAYEPAYEPay as you earn or PAYE refers to a system of withholding of income tax from payments to employees. Amounts withheld are treated as advance payments of income tax due. They are refundable to the extent they exceed tax as determined on tax returns. PAYE may also refer to withholding of the...
series, a P60P60In the UK and the Republic of Ireland, a P60 is a statement issued to taxpayers at the end of a tax year. It is important a taxpayer does not destroy the P60 forms issued to them, as they form a vital part of the proof that tax has been paid.- Ireland :In Ireland, it details a taxpayer's taxable...
form from employers proving tax was paid at the end of the year, P45 a form when employment ceases recording tax up to the end of employment. P11DP11DForm P11D is a tax form filed by United Kingdom employers for each director and for each employee earning over £8500 per year, and sent to the tax office with which their PAYE scheme is registered. P11Ds are used to report benefits provided and expense payments made to employees by employers that...
is a form for employers to disclose expenses and benefits given to employees earning over £8500 that do not go through the payroll. Each person has an individual Tax code (PAYE). Similar abbreviations for forms are used for self-assessment and tax credits, eg S100 and TC600.
- Finance Act 2010 section 2 and Schedule 1, introducing the temporary bank payroll taxBank payroll taxThe bank payroll tax is a new tax that has been introduced in the United Kingdom. The tax comprises a rate of 50% applied to bank bonuses exceeding £25,000 and charged to the employing company. The tax was introduced via legislation in the Finance Act 2010 section 2 and Schedule 1...
- Working tax creditWorking tax creditThe Working Tax Credit is a state benefit in the United Kingdom made to people who work on a low income. It is a part of the current system of refundable tax credits introduced in April 2003 and is a means-tested social security benefit...
and Child tax creditChild tax creditA child tax credit is the name for tax credits issued in some countries that depends on the number of dependent children in a family. The credit may depend on other factors as well: typically it depends on income level. For example, in the United States, only families making less than $110K per...
, to be replaced by the Universal creditUniversal CreditThe Universal Credit is a proposed new benefit which will replace six of the main means-tested benefits and tax credits in the United Kingdom.-Background:...
in 2016 - Child benefitChild benefitChild benefit is a social security payment disbursed to the parents or guardians of children. Child benefit is means-tested in some countries.-Australia:...
, a weekly payment of over £20 a week for the first child, and over £13 a week for each additional child. Introduced by the Family Allowances Act 1945Family Allowances Act 1945The Family Allowances Act 1945 was an Act of Parliament in the United Kingdom. It came into operation from August 6, 1946, and was the first law to provide child benefit in the United Kingdom....
, followed by the Family Allowances and National Insurance Act 1952 and the Family Allowances Act and National Insurance Act 1956
- Pension tax simplification in 2004, simplified the taxes applied to pensions. It abandoned the retirement annuity planRetirement annuity planA retirement annuity plan is a UK pension plan designed to build a lump sum for retirement. Part of the lump sum must be used to buy an annuity and part can be taken a tax free lump sum....
that had existed from the Income and Corporation Taxes Act 1970Income and Corporation Taxes Act 1970The Income and Corporation Taxes Act 1970 was an Act of Parliament passed by the Parliament of the United Kingdom which was repealed in 1992.-Section 226 plans:...
s 226 contracts and ICTA 1988 s 620
Workplace participation
While an enforceable charter of employment rights guarantee a minimum of workplace decency, like a minimum wage, the most important right to achieve conditions beyond the minimum, like a living wage
Living wage
In public policy, a living wage is the minimum hourly income necessary for a worker to meet basic needs . These needs include shelter and other incidentals such as clothing and nutrition...
, is the right to participate in a firm's management. Increasingly the UK is legalising and codifying its systems of collective labour relations, with rights to information, consultation (on redundancies, business restructuring and management generally) and participation (so far, in pension management and health and safety committees) in workplace and company affairs. Trade union
Trade union
A trade union, trades union or labor union is an organization of workers that have banded together to achieve common goals such as better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members and negotiates labour contracts with...
s, organised largely by contract
English contract law
English contract law is a body of law regulating contracts in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries across the Commonwealth , and the United States...
, have the aim of improving their members' terms and conditions. They must follow a democratic internal structure, and members cannot be excluded without good reason or discriminated against by their employers. Although information, consultation and participation rights are not bound to a trade union, especially where none exists in the workplace, unions often organise the workforce's collective voice. Where statutory rights to participation and consultation run out, collective bargaining
Collective bargaining
Collective bargaining is a process of negotiations between employers and the representatives of a unit of employees aimed at reaching agreements that regulate working conditions...
by unions is the most potent form of influence workers can have against their employers, as a counterweight in companies to the interests of directors
Directors' duties
Directors' duties are a series of statutory, common law and equitable obligations owed primarily by members of the board of directors to the corporation that employs them. It is a central part of corporate law and corporate governance...
and shareholders. Since 1999, unions can follow a complex statutory procedure which will eventually mandate that employers recognise and bargain with them. Collective agreement
Collective agreement
A collective agreement or collective bargaining agreement is an agreement between employers and employees which regulates the terms and conditions of employees in their workplace, their duties and the duties of the employer...
s will typically set a transparent scale of pay and working hours, or terms like pensions, training and workplace facilities, with a system to update terms and conditions as the business environment changes. The ability to bargain rests on the final resort of industrial action. Just as management, typically with the objective of increasing profits, has the power to make workers redundant, so an official trade union is protected by law in its ability to call a strike. Industrial action must always be "in contemplation or furtherance of a trade dispute". Since the 1980s, there have also been strict requirements to ballot the workforce and warn the employer before, to not call sympathy strikes, and to take only passive action in picketing or protests.
Trade unions
Much like corporations, until the Combination Act 1825 trade unions were regarded as criminal, or at best as quasi-legal organisations, subjected to the restraint of tradeRestraint of trade
Restraint of trade is a common law doctrine relating to the enforceability of contractual restrictions on freedom to conduct business. In an old leading case of Mitchell v Reynolds Lord Smith LC said,...
doctrine, until the Trade Union Act 1871
Trade Union Act 1871
Trade Union Act 1871 was a Act of the Parliament of the United Kingdom which legalised trade unions for the first time in the United Kingdom.-Background:...
. This Act abolished common law restrictions, but took an abstentionist stance to unions internal affairs. The structure of the unions were based in contract
English contract law
English contract law is a body of law regulating contracts in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries across the Commonwealth , and the United States...
and the rights of members depended on being able to show some proprietary
English property law
English property law refers to the law of acquisition, sharing and protection of wealth in England and Wales. Property law can refer to many things, and covers many areas. Property in land is the domain of the law of real property. The law of personal property is particularly important for...
interest to be specifically enforced. This meant that the express terms of the union rule book can, like any contract, be supplemented with implied terms by the courts as strictly necessary to reflect the reasonable expectations of the parties, for instance, by implying the Electoral Reform Society
Electoral Reform Society
The Electoral Reform Society is a political pressure group based in the United Kingdom which promotes electoral reform. It is believed to be the oldest organisation concerned with electoral systems in the world.-Aims:...
's guidance to say what happens in a tie break situation during an election when the union rules are silent. If there are irregular occurrences in the affairs of the union, for instance if negligence or mismanagement is alleged and a majority could vote on the issue to forgive them, then members have no individual rights to contest executive decision making. However, if a union's leadership acts ultra vires
Ultra vires
Ultra vires is a Latin phrase meaning literally "beyond the powers", although its standard legal translation and substitute is "beyond power". If an act requires legal authority and it is done with such authority, it is...
, beyond its powers set out in the union constitution, if the alleged wrongdoers are in control, if a special supra-majority procedure is flouted, or a member's personal right is broken, the members may bring a derivative claim in court to sue or restrain the executive members. So in Edwards v Halliwell
Edwards v Halliwell
Edwards v Halliwell [1950] 2 All ER 1064 is a UK labour law and UK company law case about the internal organisation of a trade union, or a company, and litigation by members to make an executive follow the organisation's internal rules.-Facts:...
a decision of the executive committee of the National Union of Vehicle Builders
National Union of Vehicle Builders
The National Union of Vehicle Builders was a trade union in the United Kingdom. It merged with the Transport and General Workers' Union in 1972.-See also:* List of trade unions* Transport and General Workers' Union* TGWU amalgamations...
to increase membership fees, which were set in the constitution and required a ⅔ majority vote, was able to be restrained by a claim from individual members because this touched both a personal right under the constitution and flouted a special procedure. The principle that the common law enforced a union's own rules, and that unions were free to arrange their affairs is reflected in the ILO Freedom of Association Convention, and article 11 of the European Convention on Human Rights
European Convention on Human Rights
The Convention for the Protection of Human Rights and Fundamental Freedoms is an international treaty to protect human rights and fundamental freedoms in Europe. Drafted in 1950 by the then newly formed Council of Europe, the convention entered into force on 3 September 1953...
, subject to the requirement that regulations "necessary in a democratic society" may be imposed. Unions must have an executive body and that executive must, under TULRCA 1992 sections 46 to 56, be elected at least every five years, directly in a secret, equal postal vote of union members, and if irregularities are alleged, complaints can be taken up by the Trades Union Certification Officer
Trades Union Certification Officer
The Trades Union Certification Officer was established in the United Kingdom by Act of Parliament in 1975.-Responsibilities:The Certification Officer is responsible for:* maintaining a list of trade unions and employers' associations...
.
- Members rights against the union: exclusion, disputes and political donations
- Bridlington Principles and TUC, Disputes Principles and Procedures (2000)
- ASLEF v United Kingdom [2007] ECHR 184
- Esterman v NALGO [1974] ICR 625
- Members rights to not suffer detriment from the employer
- Gayle v Sandwell and West Birmingham Hospitals NHS Trust [2011] EWCA Civ 924, Mummery LJ, a tribunal had not erred in finding that a worker given a final written warning which was not for the sole purpose of a penalty for trade union activities, was not a detriment under TULRCA 1992 s 146.
- Members rights to time off for recognised union duties
Participation
Direct participation rights in UK companies operate on a limited legal scope. In 19 out of 27 EU member states employees have participation rights, including the election of members of the boards of directors, and binding votes on decisions about individual employment rights, like dismissals, working time and social facilities or accommodation. At board level, UK company law allows for any desired measure of employee participation, including alongside shareholders in the general meeting and on the board of directorsBoard of directors
A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...
. Although shareholders typically are the only ones with votes in the company's general meeting to elect the board of directors
Board of directors
A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...
, the Companies Act 2006
Companies Act 2006
The Companies Act 2006 is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law. It had the distinction of being the longest in British Parliamentary history: with 1,300 sections and covering nearly 700 pages, and containing 16 schedules but it has since...
section 168 defines only "members" as those with participation rights. Under section 112 a "member" is anybody who initially subscribes their name to the company memorandum, or is later entered on the members' register, and is not required to have contributed money as opposed to, for instance, work. Moreover under the European Company Statute
European Company Statute
The Council Regulation on the Statute for a European Company is an EU Regulation containing the rules for a public EU company, called a Societas Europaea, or "SE". An SE can register in any member state of the European Union, and transfer to other member states. , at least 702 registrations have...
, businesses that reincorporate as a Societas Europaea may opt to follow the Directive for employee involvement. An SE may have a two-tiered board, as in German companies
German company law
German company law is an influential legal regime for companies in Germany. The primary form of company is the public company or Aktiengesellschaft . The private company with limited liability is known as a Gesellschaft mit beschränkte Haftung...
, where shareholders and employees elect a supervisory board that in turn appoints a management board responsible for day to day running of the company. Or an SE can have a one tiered board, as every UK company, and employees and shareholders may elect board members in the desired proportion. An "SE" can have no fewer employee participation rights than what existed before, but for a UK company, there is likely to have been no participation in any case. In the 1977 Report of the committee of inquiry on industrial democracy
Report of the committee of inquiry on industrial democracy
The Report of the committee of inquiry on industrial democracy Cmnd 6706, also the Bullock Report for short, was a report proposing for a form of worker participation or workers' control, chaired by Alan Bullock...
the Government proposed, in line with the new German Codetermination Act 1976, and mirroring an EU Draft Fifth Company Law Directive
Draft Fifth Company Law Directive
The Draft Fifth Company Law Directive is a European Union proposal for a Directive, primarily aimed to implement a right of employees to vote for the boards of directors in large companies...
, that the board of directors
Board of directors
A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...
should have an equal number of representatives elected by employees as there were for shareholders. But reform stalled, and was abandoned after the 1979 election
United Kingdom general election, 1979
The United Kingdom general election of 1979 was held on 3 May 1979 to elect 635 members to the British House of Commons. The Conservative Party, led by Margaret Thatcher ousted the incumbent Labour government of James Callaghan with a parliamentary majority of 43 seats...
. Despite successful businesses like the John Lewis Partnership
John Lewis Partnership
The John Lewis Partnership is an employee-owned UK partnership which operates John Lewis department stores, Waitrose supermarkets and a number of other services...
and Waitrose
Waitrose
Waitrose Limited is an upmarket chain of supermarkets in the United Kingdom and is the food division of the British retailer and worker co-operative the John Lewis Partnership. Its head office is in Bracknell, Berkshire, England...
that are wholly managed and owned by the workforce, voluntary granting of participation is rare. Many businesses run employee share schemes, particularly for highly paid employees, however such shares seldom compose more than a small percentage of capital in the company, and these investments entail heavy risks for workers, given the lack of diversification
Diversification (finance)
In finance, diversification means reducing risk by investing in a variety of assets. If the asset values do not move up and down in perfect synchrony, a diversified portfolio will have less risk than the weighted average risk of its constituent assets, and often less risk than the least risky of...
.
There are, however, direct participation rights in two key areas of workplace issues, albeit not dismissals or working time. First, the Health and Safety at Work Act 1974 section 2 requires that workers set up health and safety committees, which codetermine the workplace policy on health and safety issues. Second, the Pensions Act 2004
Pensions Act 2004
The Pensions Act 2004 is an Act of the Parliament of the United Kingdom to improve the running of pension schemes.-Background:In the years following the introduction of the Pensions Act 1995, it was widely perceived that it was failing to offer the protection to pension scheme members that had...
sections 241-243 state employees must be able to elect a minimum of one third of the management of their occupational schemes, as "member nominated trustee
Member nominated trustee
A member nominated trustee is a term in UK law that refers to a person appointed by employees, or members of an occupational pension plan, in accordance with the Pensions Act 2004 sections 241-242....
s". This gives employees the ability, in principle to have a voice on how their pension money is invested in company shares, and also how the voting power attached to company shares is used. Outside these areas, however, participation at work is limited to information, consultation, collective bargaining and industrial action.
Information and consultation
Formal, and individual information and consultation rights have been a recent development, mostly deriving from EU law. Domestically, the Companies Act 2006Companies Act 2006
The Companies Act 2006 is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law. It had the distinction of being the longest in British Parliamentary history: with 1,300 sections and covering nearly 700 pages, and containing 16 schedules but it has since...
requires in section 419 that companies issue an annual report
Annual report
An annual report is a comprehensive report on a company's activities throughout the preceding year. Annual reports are intended to give shareholders and other interested people information about the company's activities and financial performance...
, which must include details of how, under section 172, the business has fulfilled its duties to have regard to employees, people working down supply chains, the community, environment and long term performance. Such information can often be cursory, but may be useful for employees, and unions, in the use of their participation rights, or during collective bargaining. Consultation can sometimes encourage a change in employers' policy, even if employees' views are ultimately often ignored.
Under the Information and Consultation of Employees Regulations 2004, companies with more than fifty employees must inform their workforce about major economic issues in their enterprise, and should consult about major changes, particularly redundancies.
- European Works Council Directive 2009/38/EC
- S Laulom, 'The Flawed Revision of the European Works Council Directive (2010) 39(2) Industrial Law Journal 202-208.
- Stewart v Moray Council [2006] IRLR 592.
- Boulting v Association of Cinematograph, Television and Allied Technicians [1963] 2 QB 606
- Joint Industrial CouncilJoint Industrial CouncilA Joint Industrial Council or National Joint Industrial Council , known as a Whitley Council in some fields, especially white-collar and government, is a statutory council of employers and trade unions established in the United Kingdom and elsewhere...
Collective bargaining
- ECHR article 11, freedom of association
- R (NUJ) v CAC [2005] IRLR 28 (CA)
- R (Kwik-Fit) v CAC [2002] EWCA Civ 512
- Fullerton Petitioner [2001] IRLR 572
Industrial action
- Economic torts
- Trade Disputes Act 1906Trade Disputes Act 1906The Trade Disputes Act 1906 was an Act of the Parliament of the United Kingdom passed under the Liberal government of Sir Henry Campbell-Bannerman...
- Right to strike
- TULRCA 1992 s 244, meaning of trade dispute
- Secondary action
- Picketing
- Balloting
Equality
The principle that people should be judged according to the content of their character, and not another irrelevant status, is fundamental to UK and EU law. The Equality Act 2010 reaches beyond employment, into access to private and public services, but in the field of work it largely reflects three major EU Equality Directives and case law, which like former UK legislation were particularly inspired by the US Civil Rights Act 1964. As it stands, the UK requires equal treatment based on ten major grounds. Beyond the absolute prohibition of discrimination against trade union members, the EA 2010 combats discrimination based on gender (including pregnancy), race, sexuality (including marital status), belief, disability and age. This is supplemented by milder regulation in statutory instruments of discrimination against people in atypical work, who are often minorities, with part timePart-time Workers (Prevention of Less Favourable Treatment) Regulations 2000
The Part-time Workers Regulations 2000 is a UK labour law measure which requires that employers give people on part time contracts equal pay to people on full time contracts who do the same jobs. It implements EU Directive 97/81/EC, and forms part of the European Unions programme to combat...
, fixed term
Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002
Fixed Term Employees Regulations 2002 form a UK statutory instrument aimed to protect employees who have fixed term contracts...
or agency work status. This ‘negative’ and fixed definition of equality stipulates which characteristics are generally to be disregarded in employment. It does not set out what positive characteristics are relevant, like unfair dismissal rules, or catch 'any other status', like the European Convention
European Convention on Human Rights
The Convention for the Protection of Human Rights and Fundamental Freedoms is an international treaty to protect human rights and fundamental freedoms in Europe. Drafted in 1950 by the then newly formed Council of Europe, the convention entered into force on 3 September 1953...
. Unequal treatment on other grounds (eg one's football team) will only be unlawful if one can claim unfair dismissal
Unfair dismissal
Unfair dismissal is the term used in UK labour law to describe an employer's action when terminating an employee's employment contrary to the requirements of the Employment Rights Act 1996...
. A worker has generally to show that they were treated directly less favourably than another person who does not have their trait (eg sexuality or race), or that actions an employer applies to everyone have an indirectly disparate impact on people with their trait. Workers are also entitled to not suffer harassment
Harassment
Harassment covers a wide range of behaviors of an offensive nature. It is commonly understood as behaviour intended to disturb or upset, and it is characteristically repetitive. In the legal sense, it is intentional behaviour which is found threatening or disturbing...
at work, and if they bring a claim they should not be victimised, or suffer any other disadvantage for trying. Direct discrimination can be justified if the employer showing a status is a "genuine occupational requirement". Indirect discrimination can be justified if there is “objective justification” for the rule, generally based on business necessity. Age discrimination is seen as a special case, so it may always be objectively justified. Equal pay between men and women has also, historically, been treated separately in law and follows differently worded legal requirements. The law on disability goes further than other categories by placing positive duties on employers to make reasonable adjustments to help disabled people. While UK and EU law presently only allow promotion of underrepresented groups if a candidate is equally qualified, there is an ongoing debate whether more “positive action
Positive action
Positive action is a controversial term, roughly synonymous with affirmative action, used in identity politics currents to connote promotion of people based on belonging to non majority identity groups in the workplace, educational institutions and positions in society, purpotedly without...
” measures should be implemented, particularly to tackle the gender pay gap. If discrimination is proven, it counts as automatically unfair conduct in a tribunal hearing, and entitles a worker to quit and or claim damages.
Discrimination
UK and EU law divide discrimination into direct and indirect forms. Direct discrimination means treating a person of a protected trait less favourably than a comparable person who does not share that trait. This is an objective test, so that it is irrelevant what motive the employer had. Even if it was “positive” discrimination, in the sense that the purpose was to help an underprivileged group, this is still unlawful. The claimant's trait merely has to be the reason for the unfavourable treatment. An appropriate comparator is one who is the same in all respects except for the relevant trait, which is claimed as the ground for discrimination. For instance in Shamoon v Chief Constable of the Royal Ulster ConstabularyShamoon v Chief Constable of the Royal Ulster Constabulary
Shamoon v Chief Constable of the Royal Ulster Constabulary [2003] is a UK labour law case concerning the appropriate test for determining who is a comparator.-Facts:...
a chief inspector claimed that she was dismissed because the police force was sexist, and pointed to male chief inspectors who had not been treated unfavourably. The House of Lords
House of Lords
The House of Lords is the upper house of the Parliament of the United Kingdom. Like the House of Commons, it meets in the Palace of Westminster....
overturned a Tribunal
Tribunal
A tribunal in the general sense is any person or institution with the authority to judge, adjudicate on, or determine claims or disputes—whether or not it is called a tribunal in its title....
finding of sex discrimination because Ms Shamoon had had complaints made about her appraisal duties, and her chosen comparators had none. Generally there is, however, no need to point to an actual comparator, so a claimant can allege they were treated less favourably than a hypothetical person who does not share their trait would have been. The burden of proof is explicitly regulated so that claimants merely need to show a set of facts from which a reasonable tribunal could conclude there was discrimination, and need not show an intention to discriminate. Because the law aims to eliminate the mindset and culture of discrimination, it is irrelevant whether the person who was targeted was themselves a person with a protected characteristic, so that people who associate with or are perceived to possess a protected characteristic are protected too. In Coleman v Attridge Law a lady with a disabled child was abused by her employer for taking time off to care for the child. Even though Ms Coleman was not disabled, she could claim disability discrimination. And in English v Sanderson Blinds Ltd, a man who was from Brighton
Brighton
Brighton is the major part of the city of Brighton and Hove in East Sussex, England on the south coast of Great Britain...
and went to boarding school was teased for being gay. Even though he was married with children, he successfully claimed discrimination because of sexuality. An instruction by an employer to discriminate against customers or anyone else also violates the law.
Originally a sub-category of direct discrimination, harassment
Harassment
Harassment covers a wide range of behaviors of an offensive nature. It is commonly understood as behaviour intended to disturb or upset, and it is characteristically repetitive. In the legal sense, it is intentional behaviour which is found threatening or disturbing...
is now an independent tort which requires no comparator. The Protection from Harassment Act 1997
Protection from Harassment Act 1997
The Protection from Harassment Act 1997 is a piece of United Kingdom law which, among other things, criminalises and creates a right to protection from stalking and persistent bullying in the workplace.-Definition:...
, and now the Equality Act 2010 sections 26 and 40, define harassment as where a person's dignity
Dignity
Dignity is a term used in moral, ethical, and political discussions to signify that a being has an innate right to respect and ethical treatment. It is an extension of the Enlightenment-era concepts of inherent, inalienable rights...
is violated, or the person is subject to an intimidating, hostile, degrading, humiliating or offensive environment. An employer will be liable for its own conduct, but also conduct of employees, or customers if this happens on 2 or more occasions and the employer could be reasonably expected to have intervened. In a straightforwardly unpleasant case, Majrowski v Guy's and St Thomas’s NHS Trust
Majrowski v Guy's and St Thomas’s NHS Trust
Majrowski v Guy's and St Thomas’s NHS Trust [2006] is a UK labour law case holding that an employer will be vicariously liable for the harassment of an employee by another.-Facts:...
a gay man was ostracised and bossed about by his supervisor from the very start of his work as a clinical audit co-ordinator. The House of Lords held the laws create a statutory tort, for which (unless a statute says otherwise) an employer is automatically vicariously liable. Under the Equality Act 2010 section 27, an employer must also ensure that once a complaint is brought by a worker, even if it proves ultimately to be unfounded, that worker should not be victimised. This means the worker should not be subject to anything that a reasonable person would perceive as deterimental. In St Helen’s MBC v Derbyshire the House of Lords held a council victimised female staff who were pursuing an equal pay claim when it sent letters warning (without much factual basis) that if the claim went ahead, the council would be forced to cut school dinners and make redundancies. A reasonable person would have regarded this as a detriment. By contrast, in Chief Constable of West Yorkshire Police v Khan
Chief Constable of West Yorkshire Police v Khan
Chief Constable of West Yorkshire Police v Khan [2001] is a UK labour law case concerning the test for victimisation and the legitimate steps an employer can take after dismissed a person who is bringing a discrimination claim against them.-Facts:...
, where a sergeant with a pending race discrimination claim was denied a reference by the employer that he was suing, it was held this could not be considered victimisation because the Constabulary was only seeking to protect its legitimate interests and not prejudice its own future case in the discrimination hearings.
"Indirect" discrimination means an employer, without an objective justification, applies a neutral rule to all employees, but it puts one group at a particular disadvantage. The particular disadvantage must be related to the claimant's protected characteristic specifically, and not to a non-essential feature of it. In Ladele v Islington LBC a woman who refused to register gay civil partners, because she said her Christianity made her conclude homosexuality was wrong, was dismissed for not carrying out her duties. And in Eweida v British Airways plc a lady who wished to wear a cross claimed that BA's instruction to remove it was indirectly discriminatory against Christians. Both claims failed because it was held that neither antipathy towards homosexuals, nor crucifix jewellery are essential parts of the Christian religion. The question of particular disadvantage also typically relies on evidence of statistical impact between groups. For instance in Bilka-Kaufhaus GmbH v Weber von Hartz
Bilka-Kaufhaus GmbH v Weber von Hartz
Bilka-Kaufhaus GmbH v Weber von Hartz is an EU labour law case, relevant for UK labour law, that sets out the test for objective justification for indirect discrimination.-Facts:...
an employer set up pensions only for full time workers, and not for part time workers. But 72 per cent of part time workers were women. So Frau Weber von Hartz was able to show that this rule put her, and women generally, at a particular disadvantage, and it was up to the employer to show there was an objective justification. Statistics
Statistics
Statistics is the study of the collection, organization, analysis, and interpretation of data. It deals with all aspects of this, including the planning of data collection in terms of the design of surveys and experiments....
might be presented in a misleading way (eg a measure could affect twice as many women as men, but that is only because there is 2 women and 1 man affected in a workforce of 100). Accordingly the correct approach is to show how many people in the affected workforce group are put at an advantage, and then if there is a statistically significant number of people with a protected characteristic who are not advantaged, there must be an objective justification for the practice. In R (Seymour-Smith) v Secretary of State for Employment
R (Seymour-Smith) v Secretary of State for Employment
R v Secretary of State for Employment [2000] and is a landmark case in UK labour law and European labour law on the qualifying period of work before an employee accrues unfair dismissal rights...
the UK government's former rules on unfair dismissal
Unfair dismissal
Unfair dismissal is the term used in UK labour law to describe an employer's action when terminating an employee's employment contrary to the requirements of the Employment Rights Act 1996...
were alleged to be discriminatory. Between 1985 and 1999, the government had made the law so that people had to work for 2 years before they qualified for unfair dismissal (as opposed to 1 year presently), and this meant that there was a 4 to 8 per cent disparity between the number of men and women who qualified on dismissal for a tribunal claim. Following ECJ guidance, the House of Lords
House of Lords
The House of Lords is the upper house of the Parliament of the United Kingdom. Like the House of Commons, it meets in the Palace of Westminster....
held by a majority that this was a large enough disparity in coverage, which required justification by the government.
- TFEU art 157, equal pay and types of comparator
Justification
Harassment and victimisation cannot be justified, but in principle there are exceptions or justifications for all forms of direct and indirect discrimination. Apart from direct age discrimination which can also be objectively justified, the general rule for direct discrimination, elaborated in EA 2010 Schedule 9, is that an employer may be exempt if it can show that having a worker fit a particular description is a "genuine occupational requirement", so that the otherwise discriminatory practice pursues a legitimate aim and is applied proportionately. The test is stringent, so in Etam plc v RowanEtam plc v Rowan
Etam plc v Rowan [1989] IRLR 150 is a UK labour law case concerning discrimination, and genuine occupational requirements. It would now fall under the Equality Act 2010 Schedule 9.-Facts:Mr Rowan applied for a job in Etam plc’s women’s clothing shop...
it was held that when a man was turned down for a job at a woman's clothing store, the excuse that a man should not operate women's change rooms was rejected. The shift allocation could have been changed around easily. Controversially, the European Court of Justice
European Court of Justice
The Court can sit in plenary session, as a Grand Chamber of 13 judges, or in chambers of three or five judges. Plenary sitting are now very rare, and the court mostly sits in chambers of three or five judges...
has repeatedly said that it is within a member state's margin of discretion to say being male is a genuine occupational requirement for work in the military. This was even so, in Sirdar v The Army Board & Secretary of State for Defence for a lady who applied to work as a chef in the Royal Marines
Royal Marines
The Corps of Her Majesty's Royal Marines, commonly just referred to as the Royal Marines , are the marine corps and amphibious infantry of the United Kingdom and, along with the Royal Navy and Royal Fleet Auxiliary, form the Naval Service...
, because the policy on "interoperability" meant every member had to be capable of combat. Cases involving religion are subject to a special provision, so that if a job's functions require adherence to an organisation's ethos, the organisation has an exemption from direct discrimination. In an action for judicial review
Judicial review
Judicial review is the doctrine under which legislative and executive actions are subject to review by the judiciary. Specific courts with judicial review power must annul the acts of the state when it finds them incompatible with a higher authority...
of the legislation, Richards J rejected that a faith school would be exempt in any way, rather than an actual religious establishment like a church. Even there, it was rejected that a gay person could be dismissed from a job as a cleaner or bookshop worker, if that was incompatible with the religious "ethos", because the ethos would not be a genuine requirement to carry out the job.
Indirect discrimination, after a neutral practice puts a member of a group at a particular disadvantage, is not made out if there is an "objective justification". In most cases, this can be justification based on business necessity. The ECJ, mostly in cases concerning sex discrimination under TFEU art 157, has held that an employer must show a "real need" for the practice that has disparate impact that is "unrelated" to the protected characteristic, should not involve "generalisations" rather than reasons specific to the workers in question, and budgetary considerations alone are not to be considered an "aim". Many of these judgments concerned employers who paid part time staff fewer benefits than full time staff, and given the particular disadvantage this caused women it was hard to justify. In equal pay claims based on gender, instead of "objective justification", the old terminology still used is that there must be a "genuine material factor", found in EA 2010 section 69. Despite different headings, the same underlying concepts are present as for objective justification, with the need to show a "legitimate aim" and that action is "proportionate" to such an aim. In Clay Cross (Quarry Services) Ltd v Fletcher
Clay Cross (Quarry Services) Ltd v Fletcher
Clay Cross Ltd v Fletcher [1978] 1 WLR 1429 is a UK labour law case concerning sex discrimination, unequal pay, and the limits of justifications for it. It would now fall under the Equality Act 2010 sections 64 to 80.-Facts:...
Lord Denning MR held that an employer could not justify paying a young man a higher wage than an older lady (who in fact trained him) on the basis that this was what the employer had to pay given the state of the job market. However, in Rainey v Greater Glasgow Health Board
Rainey v Greater Glasgow Health Board
Rainey v Greater Glasgow Health Board [1987] IRLR 26 is a UK labour law case concerning the justifications for unequal pay.-Facts:Ms Rainey was a prosthetist. Men had been recruited from private practice, to the Board’s new prosthetic fitting service, which had previously been done by private...
the House of Lords held that women NHS prosthetists who were paid 40% less than men prosthetists in contracted through private practices had no claim, as it was shown necessary to attract their services. This was an organisational necessity. In Enderby v Frenchay Health Authority
Enderby v Frenchay Health Authority
Enderby v Frenchay Health Authority is an EU labour law, relevant for UK labour law, that concerns the justification test for unequal pay between men and women.-Facts:...
the ECJ held that although a speech therapist being paid less than male counterparts could not be justified only on the ground that this resulted from different collective agreements, if a disparity came from market forces, this was an objective justification. It has, however, been emphasised that the legislation's purpose is to achieve equal pay, and not fair wages. So in Strathclyde RC v Wallace
Strathclyde RC v Wallace
Strathclyde RC v Wallace [1998] 1 WLR 259 is a UK labour law case concerning indirect discrimination and equal pay.-Facts:Teachers wanted equal pay as head teachers when they had to ‘act up’ or fill in for the heads...
the House of Lords held that women teachers who had to fill in for an absent male head master were not entitled to be paid the same during that time. This was a different job. It has also been asserted that collective agreements designed to incrementally make a transition to equal pay between jobs rated as equivalent cannot be justified, and can even result in liability for the union that concluded them.
Unlike other protected characteristics, under EA 2010 section 13(2), direct age discrimination is open to justification on the same principles, on the basis that everyone will go through the ageing process. This has meant, primarily, that older workers can reach a compulsory retirement age set either by the workplace or the government, on the basis that it is a legitimate way of sharing work between generations.
- Sunday working, or time off for prayer
- Qualifications, experience, administration and/or market necessity?
Disability and positive action
According to Chacón Navas v Eurest Colectividades SA disabilities involve an impairment "which hinders the participation of the person concerned in professional life". Because treating disabled people equally based on ability to perform tasks could easily result in persistence of exclusion from the workforce, employers are bound to do as much as reasonably possible to ensure participation is not hindered in practice. Under the Equality Act 2010 sections 20 to 22, employers have to make "reasonable adjustments", for example in changing a workplace practice if it would create a disadvantage, changing physical features of a workplace, or providing auxiliary aids to work. More detailed examples are found in Schedule 8, and provided in guidance by the Equality and Human Rights Commission. In the leading case, Archibald v Fife CouncilArchibald v Fife Council
Archibald v Fife Council [2004] is a UK labour law case, concerning the Disability Discrimination Act 1995.-Facts:Mrs Archibald was employed as a road sweeper for Fife Council. She had surgery in 1999. Sadly there were complications. She lost the ability to walk and could no longer work. The...
, it was held that the council had a duty to exempt a lady from competitive interviews for a new job. Mrs Archibald, previously a road sweeper, had lost the ability to walk after complications in surgery. Despite over 100 applications for grades just above a manual worker, in her submission, the employers were not looking past her history as a sweeper. The House of Lords held it could be appropriate, before such an ordeal, for a worker to fill an existing vacancy without a standard interview procedure. By contrast, in O’Hanlon v Revenue and Customs Commissioners the Court of Appeal rejected that it would be a reasonable adjustment, as Ms O'Hanlon was requesting after falling into clinical depression, for an employer to increase sick pay to full pay, after the expiry of a six month period that applied to everyone else. A reasonable adjustment should not be a disproportionate burden, with regard to an employer's resources, and fairness among staff.
For characteristics other than disability, "hard" positive discrimination, such as preference in contract terms, hiring and firing based on gender, race, sexuality, belief or age, or setting quotas for underrepresented groups in jobs, is unlawful throughout the European Union. The EU allows only for "soft" positive action, in contrast to the United States, where "affirmative action
Affirmative action
Affirmative action refers to policies that take factors including "race, color, religion, gender, sexual orientation or national origin" into consideration in order to benefit an underrepresented group, usually as a means to counter the effects of a history of discrimination.-Origins:The term...
", although contested, operates in many workplaces. In the case of hiring candidates for work, employers may select someone from an under-represented group, but only if that person has qualifications equal to competitors, with full consideration of the candidate's individual qualities. In Marschall v Land Nordrhein Westfalen
Marschall v Land Nordrhein Westfalen
Marschall v Land Nordrhein Westfalen is an EU labour law and UK labour law case, concerning positive action.-Facts:Mr Marschall was a teacher. He applied for promotion and did not get it and a woman did. The school’s rules allowed for promotion of women ‘unless reasons specific to an individual...
a male teacher failed to get a promotion, and a woman did. He complained that the school's policy, to promote women "unless reasons specific to an individual candidate tilt the balance in his favour", was unlawful. The ECJ held the school would not be acting unlawfully if it did in fact follow its policy. By contrast in Abrahamsson and Anderson v Fogelqvist
Abrahamsson and Anderson v Fogelqvist
Abrahamsson and Anderson v Fogelqvist is an EU labour law and UK labour law case, concerning positive action.-Facts:Mr Anderson was slightly better qualified than his three female competitors for the post of Professor of Hydrospheric Science at the University of Göteborg...
Göteborg University's policy was to hire a woman candidate unless "the difference between the candidates’ qualification is so great that such application would give rise to a breach of the requirement of objectivity". A male candidate, who was not hired over two less qualified women, was successful in claiming discrimination. In addition, according to Re Badeck’s application
Re Badeck’s application
Re Badeck’s application is an EU labour law and UK labour law case, concerning positive action.-Facts:The First Minister and Attorney General of Hesse, CDU member Georg Badeck, wanted to review a Hesse law which set out a list of positive action measures for appointment to public office...
legitimate positive action measures include quotas in temporary positions, in training, guaranteeing interviews to people with sufficient qualifications and quotas in representative, administrative or supervisory bodies. This approach, developed initially in ECJ case law, is now reflected in the Treaty on the Functioning of the European Union article 157(4) and was put into UK law in the Equality Act 2010 sections 157-158.
Atypical work
Outside the Equality Act 2010, and the EU Directives that target discrimination based on a fixed status, the law has a series of measures, albeit weaker, to counteract discrimination against people who hold non-permanent contracts. An important reason for the trio of the Part-time Workers Directive, the Fixed-Term Work Directive and the Temporary and Agency Work Directive is that people doing such work often fall into the same groups as those seeking protection under the EA 2010. Each are implemented by domestic legislation, but have come under criticism for their restrictive nature. The Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000
The Part-time Workers Regulations 2000 is a UK labour law measure which requires that employers give people on part time contracts equal pay to people on full time contracts who do the same jobs. It implements EU Directive 97/81/EC, and forms part of the European Unions programme to combat...
state that part time workers cannot, without objective justification, be treated less favourably than a comparable full time worker. Accordingly not just indirect discrimination, but also direct discrimination can be objectively justified, as it can for age. However, unlike the general scheme of the EA 2010, a worker cannot compare themselves to a hypothetical full time worker. While the law is generally effective at preventing people in the same workplace from being treated differently, part time workers across the UK economy remain underpaid compared to full time workers as a whole, because workplaces tend to be structurally segregated, often where women are working as part timers. One of the first leading cases, Matthews v Kent and Medway Fire Authority
Matthews v Kent and Medway Fire Authority
Matthews v Kent & Medway Towns Fire Authority [2006] is a UK labour law case concerning discrimination of part time workers, and justifications.-Facts:Part and full time fire fighters were being paid differently...
, surprisingly involved male firefighters. Under regulation 2, a comparator must be under the "same type of contract" and doing "broadly similar work". It was held that even though part time firefighters did not do administrative work, their contracts were still broadly similar. The Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 formulate the test for a comparator in a similar way, except that they purport (unlike the Directive appears to suggest) to cover "employees" and not the broader group of "workers". In addition to a ban on less favourable treatment, without objective justification, regulation 8 stipulates that if an employee has a succession of fixed term contracts lasting over 8 years, they are to be treated as having a permanent contract.
The Agency Workers Regulations 2010 provide people protection against less favourable treatment when they arrive at work through an employment agency
Employment agency
An employment agency is an organization which matches employers to employees. In all developed countries there is a publicly funded employment agency and multiple private businesses which also act as employment agencies.-Public employment agencies:...
. Here the regulation is again more limited, as agency workers are explicitly entitled merely to equal treatment in "basic working conditions", which is defined as their pay and their working time. However, an agency worker may, unlike part timers or fixed term employees, appeal to a hypothetical comparator. One consequence in the UK, however, is that this legislation left uncertain the position of agency workers protection by the job security, child care and other rights for employees in ERA 1996. While the dominant view is that an agency worker will always qualify as an employee when they work for a wage and are the more vulnerable party to the contract, the English Court of Appeal has issued conflicting judgments on whether an agency worker should have an unfair dismissal claim against the end-employer, the agency, or both or neither. Reflecting their vulnerable position, the regulation of agency work goes beyond discrimination, to place a set of duties on employment agents' operations and conduct. Found in the Employment Agencies Act 1973
Employment Agencies Act 1973
Employment Agencies Act 1973 is a United Kingdom Act of Parliament and part of a wider body of UK agency worker law. It regulates the conduct of employment agencies which recruit and manage temporary and permanent labour. It applies to approximately 17,000 employment agencies operating in the UK...
and the Conduct of Employment Agencies and Employment Businesses Regulations 2003 agencies are generally prohibited from charging fees to prospective workers. Various other duties include being honest in their job advertising, keeping all information on jobseekers confidential and complying with all employment laws. Originally agencies had to have licenses, and under the oversight of the Employment Agency Standards Inspectorate
Employment Agency Standards Inspectorate
The Employment Agency Standards Inspectorate is a division of the Employment Relations Directorate, part of the Department for Business, Enterprise and Regulatory Reform, which is meant to oversee employment agencies operating in the United Kingdom...
, risked losing their licenses if found to be acting in violation of the law. The Deregulation and Contracting Out Act 1994
Deregulation and Contracting Out Act 1994
The Deregulation and Contracting Out Act 1994 is an Act of the Parliament of the United Kingdom. It introduced wide ranging measures aiming to cut government expenditure and bureaucracy...
removed the licensing requirement, but was partially reinstated for agencies in agricultural, shellfish and packing sectors through the Gangmasters (Licensing) Act 2004
Gangmasters (Licensing) Act 2004
The Gangmasters Act 2004 is an Act of the Parliament of the United Kingdom that regulates the agencies that place vulnerable workers in agricultural work, and the shellfish collecting and packing industries . It is the most recent plank of UK agency worker law...
. In response to the 2004 Morecambe Bay cockling disaster
2004 Morecambe Bay cockling disaster
The Morecambe Bay cockling disaster occurred on the evening of 5 February 2004 at Morecambe Bay in North West England, when at least 21 cockle pickers were drowned by an incoming tide off the Lancashire/Cumbrian coast....
this established another specific regulator, the Gangmasters Licensing Authority
Gangmasters Licensing Authority
The Gangmasters Licensing Authority is an agency in the United Kingdom regulating the supply of workers to the agricultural, horticultural and shellfish industries...
, to enforce employment law in those areas.
Free movement and immigration
- Treaty on the Functioning of the European Union
- Immigration to the United Kingdom since 1922Immigration to the United Kingdom since 1922Immigration to the United Kingdom of Great Britain and Northern Ireland since 1922 has been substantial, in particular from Ireland and the former colonies and other territories of the British Empire - such as India, Bangladesh, Pakistan, the Caribbean, South Africa, Kenya and Hong Kong - under...
- British nationality lawBritish nationality lawBritish nationality law is the law of the United Kingdom that concerns citizenship and other categories of British nationality. The law is complex because of the United Kingdom's former status as an imperial power.-History:...
- Commonwealth Immigrants Act 1962Commonwealth Immigrants Act 1962The Commonwealth Immigrants Act 1962 was an Act of the Parliament of the United Kingdom.Before the Act was passed, citizens of British commonwealth countries had extensive rights to migrate to the UK...
- Commonwealth Immigrants Act 1968
- Immigration Act 1971Immigration Act 1971The Immigration Act 1971 is an Act of the Parliament of the United Kingdom concerning immigration.The Act, as with the Commonwealth Immigrants Act 1962, and that of 1968, restricted immigration, especially primary immigration into the UK....
- Immigration Rules
- Indefinite leave to remainIndefinite leave to remainIndefinite leave to remain is an immigration status granted to a person who does not hold right of abode in the United Kingdom , but who has been admitted to the UK without any time limit on his or her stay and who is free to take up employment or study, without restriction...
- Leave to enterLeave to enterLeave to Enter is the technical term for someone granted entry to the United Kingdom by British immigration officers.According to the United Kingdom Border Agency, a person who is neither a British citizen nor a Commonwealth citizen with the right of abode nor a person who is entitled to enter or...
- UK Border AgencyUK Border AgencyThe UK Border Agency is the border control body of the United Kingdom government and part of the Home Office. It was formed on 1 April 2008 by a merger of the Border and Immigration Agency , UKvisas and the Detection functions of HM Revenue and Customs...
- Immigration to EuropeImmigration to EuropeImmigration to Europe increased from the 1980s onward, as a result of people from developing countries wanting to escape war, oppression, natural disasters or poverty. Some EU countries saw a dramatic growth in immigration after World War II until the 1970s. Most European nations today have...
- Illegal immigration to the United KingdomIllegal immigration to the United KingdomAlthough it is difficult to know how many people reside in the UK illegally, a Home Office study released in March 2005 estimated a population of between 310,000 and 570,000. Migration Watch UK has criticised the Home Office figures for not including the UK-born dependent children of unauthorised...
Job security
Contracts of Employment Act 1963
The Contracts of Employment Act 1963 was an Act of the Parliament of the United Kingdom which introduced the requirement to give reasonable notice before dismissal and written particulars of a contract of employment...
, the Redundancy Payments Act 1965 and the Industrial Relations Act 1971
Industrial Relations Act 1971
The Industrial Relations Act 1971 was an Act of the Parliament of the United Kingdom, since repealed. It was largely based on proposals outlined in the governing Conservative Party's manifesto for the 1970 general election...
UK workers have three principle job security rights, now consolidated in the Employment Rights Act 1996
Employment Rights Act 1996
The Employment Rights Act 1996 is a United Kingdom Act of Parliament passed by the Conservative government to codify the existing law on individual rights in UK labour law. Previous statutes, dating from the Contracts of Employment Act 1963, included the Redundancy Payments Act 1965, the...
, sections 86, 94 and 135. These statutory provisions override the old common law position that a dismissal would only be wrongful if it contravened the contract's express or implied terms. First, after one month's work an employee must have one week's notice
Notice
Notice is the legal concept in which a party is made aware of a legal process affecting their rights, obligations or duties. There are several types of notice: public notice , actual notice, constructive notice, and implied notice....
before dismissal. Second, after one year's work, the dismissal must be for a good business reason. If an Employment Tribunal is not convinced the dismissal is justified on grounds of an employee's capability, conduct, redundancy or another good reason, the dismissal will be "unfair
Unfair dismissal
Unfair dismissal is the term used in UK labour law to describe an employer's action when terminating an employee's employment contrary to the requirements of the Employment Rights Act 1996...
" and the employee will be awarded damages. A court may order that an employee should get her job back, but this is rare. Third, after two years' work and if dismissed, an employee is entitled to a redundancy
Layoff
Layoff , also called redundancy in the UK, is the temporary suspension or permanent termination of employment of an employee or a group of employees for business reasons, such as when certain positions are no longer necessary or when a business slow-down occurs...
payment, which like the notice period increases according to the number of years worked. Contracts typically go beyond this bare minimum, but cannot go below. The UK has not yet ratified the ILO Termination of Employment Convention and compared to its European and Commonwealth counterparts, jobs in the UK are relatively insecure, particularly since workers have little formal mechanism, excluding pressure through collective bargaining, to challenge a management's decision about dismissals before they take place. When collective redundancies are proposed, however, EU law has introduced a requirement that employers consult on changes. EU law also introduced a rule that if a business is transferred, for instance, during a merger or acquisition, employees may not have their terms worsened or lose their jobs without a good economic, technical or organisational reason. If employees do lose their work, they may fall back on a minimal system of state insurance, funded primarily through income tax or National Insurance
National Insurance
National Insurance in the United Kingdom was initially a contributory system of insurance against illness and unemployment, and later also provided retirement pensions and other benefits...
, to collect a "jobseekers allowance", and may make use of public employment agencies to find employment again.
Wrongful dismissal
Wrongful dismissal refers to a termination of employment which contravenes a contract's terms, whether expressly agreed or implied by the courts. This depends on construction of the contract, read in the context of the statutory charter of rights for employees in the ERA 1996. In the old common law cases, the only term implied by the courts regarding termination was that employers had to give reasonable notice, and what was "reasonable" essentially depended on the professional status of the employee. In Creen v WrightCreen v Wright
Creen v Wright LR 1 CPD 591 is an English contract law and labour law case concerning wrongful dismissal and the appropriate period of reasonable notice to be implied at common law in a contract of employment.-Facts:...
Lord Coleridge CJ held that a master mariner was entitled to a month's notice, though lower class workers could probably expect much less, "respectable" employees could expect more, and the period between wage payments would be a guide. Now the ERA 1996 section 86 prescribes that an employee should receive one week's notice before dismissal after one month's work, two weeks notice after two years' work, and so forth up to twelve weeks for twelve years. The employer can give payment of the weeks' wages instead of giving notice. Another important express term that may be broken could be the proper disciplinary procedure for disputes at work. If a contractual disciplinary procedure is not followed, the employee may claim damages for the time it would have taken and the potential that she would still be employed.
English contract law
English contract law is a body of law regulating contracts in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries across the Commonwealth , and the United States...
, if an employee's conduct is so seriously bad that it manifests to the reasonable person an intention to not be bound, then the employer may dismiss the employee without notice. But if the employer is not justified in making a summary dismissal, the employee has a claim under ERA 1996 section 13 for a shortfall in wages. The same principle, that a serious breach of contract gives the other side the option to terminate, also works in favour of employees. In Wilson v Racher
Wilson v Racher
Wilson v Racher [1974] ICR 428 is a UK labour law case concerning constructive dismissal. It serves as an example of an employer being found to have wrongfully dismissed an employee, because of the employer's own bad behaviour...
a gardener was bullied by his employer, the heir of Tolethorpe Hall
Tolethorpe Hall
Tolethope Hall in the parish of Little Casterton, Rutland, England, PE9 4BH is a country house near Stamford, Lincolnshire at . It is now the location of the Rutland Theatre of the Stamford Shakespeare Company....
, and gave him a rude telling off for not picking up some string on the lawn. Mr Wilson, the gardener, told Mr Racher "get stuffed, go and shit yourself". The Court of Appeal held that the employer's attitude meant this breakdown in trust and confidence was his own doing, and because labour law no longer saw employment as a "czar-serf" relationship, Mr Wilson was in the right and was wrongfully dismissed. The remedy for breach of contract, following a long tradition that specific performance
Specific performance
Specific performance is an order of a court which requires a party to perform a specific act, usually what is stated in a contract. It is an alternative to award/ for awarding damages, and is classed as an equitable remedy commonly used in the form of injunctive relief concerning confidential...
should not result in draconian consequences or binding hostile parties to continue working together, is typically monetary compensation to put the claimant in the same position as if the contract had been properly performed.
The primary implied term that may be broken is mutual trust and confidence
Mutual trust and confidence
Mutual trust and confidence is a phrase used in English law, particularly with reference to contracts in UK labour law, to refer to the obligations owed in an employment relationship between the employer and the worker....
. In Johnson v Unisys Ltd
Johnson v Unisys Ltd
Johnson v Unisys Limited [2001] is a leading UK labour law case on the measure of damages for unfair dismissal and the nature of the contract of employment.-Facts:...
the House of Lords held by 4 to 1 that damages for breach of mutual trust and confidence at the point of dismissal should not exceed the statutory limit on unfair dismissal claims, because otherwise the statutory limits (£63,500 in 2010) would be undermined. This meant a computer worker who became psychiatrically ill following a wrongful dismissal procedure could not claim the £400,000 at which damages could otherwise be quantified. However, if the breach occurs while the employment relationship subsists, that limit is inapplicable. So in Eastwood v Magnox Electric plc
Eastwood v Magnox Electric plc
Eastwood v Magnox Electric plc [2004] is a UK labour law case concerning damages for wrongful dismissal, which were held to not be limited if a breach of contract occurs during the performance of the contract, rather than at the point of termination....
, a school teacher who also suffered psychiatric injury, but as a result of harassment and victimisation while he still worked, could claim for a full measure of damages for the breach of mutual trust and confidence. In any event the limit is merely implied and depends on construction of the contract, so that it may be opted out of by express words providing for a higher sum, for example, by expressly providing for a disciplinary procedure. A notable absence of an implied term at common law historically (ie before the development of mutual trust and confidence) was that an employer would have to give any good reasons for a dismissal. This was recommended to be changed in the Donovan Report 1968, and it launched the present system of unfair dismissal.
Unfair dismissal
In contrast to "wrongful" dismissal, which is an action for unjustified breach of the terms of an employment contract, "unfair" dismissal is a claim based in the Employment Rights Act 1996Employment Rights Act 1996
The Employment Rights Act 1996 is a United Kingdom Act of Parliament passed by the Conservative government to codify the existing law on individual rights in UK labour law. Previous statutes, dating from the Contracts of Employment Act 1963, included the Redundancy Payments Act 1965, the...
sections 94 to 134A that governs the reasons for which a contract is terminated. The Industrial Relations Act 1971
Industrial Relations Act 1971
The Industrial Relations Act 1971 was an Act of the Parliament of the United Kingdom, since repealed. It was largely based on proposals outlined in the governing Conservative Party's manifesto for the 1970 general election...
, following the Donovan Report 1968, set up its structure. Under ERA 1996 section 94 any employee who is employed for over one year may claim for an Employment Tribunal (composed of a judge, an employer and an employee representative) to review the decision of their dismissal, and get a remedy if the dismissal was not "fair" within the meaning of the Act. An employee is only "dismissed" if the employer has decided to end the work relationship, or if they have constructively dismissed the employee through a serious breach of mutual trust and confidence. In Kwik-Fit (GB) Ltd v Lineham
Kwik-Fit (GB) Ltd v Lineham
Kwik-Fit Ltd v Lineham [1992] ICR 183 is a UK labour law case, concerning unfair dismissal, now governed by the Employment Rights Act 1996.-Facts:...
Mr Lineham used the toilet at work after drinking at the pub, and in response to the manager rebuking him in front of other staff, he threw down his keys and drove off. He claimed he was dismissed, and the Tribunal agreed that at no time had Mr Lineham resigned. By contrast in Western Excavating (ECC) Ltd v Sharp
Western Excavating (ECC) Ltd v Sharp
Western Excavating Ltd v Sharp [1978] ICR 221 is a UK labour law case, concerning unfair dismissal, now governed by the Employment Rights Act 1996.-Facts:...
Mr Sharp walked off because the company welfare officer refused to let him collect holiday pay immediately. Although Mr Sharp was in financial difficulty, this was due to his absences, and so he was not justified in leaving, and not constructively dismissed. An employee is also not dismissed if the relationship is frustrated
Frustration in English law
Frustration in English law is an English contract law doctrine, which acts as a device to set aside contracts where an unforeseen event either renders contractual obligations impossible, or radically changes the party's principal purpose for entering into the contract...
. In Notcutt v Universal Equipment Co (London) Ltd
Notcutt v Universal Equipment Co (London) Ltd
Notcutt v Universal Equipment Co Ltd [1986] ICR 414 is an English contract law and UK labour law case, concerning the frustration of an agreement.-Facts:Mr Notcutt had a heart attack. The doctor said it was unlikely he would ever work again...
a man's heart attack meant he could no longer work. The employer paid no wages during the ordinary notice period, but was successful in arguing that the contract was impossible to perform and therefore void. This doctrine, applicable as a default rule in general contract law, is controversial since unlike commercial parties it will be rare that an employee has the foresight or ability to contract around the rule.
Once it is established that a dismissal took place, the employer must show that their reason for dismissing the employee was "fair". Dismissal on grounds of union membership, or any protected characteristic in the Equality Act 2010, will be automatically unfair. Otherwise the employer has the opportunity to show the dismissal is fair if it falls within five main categories listed in ERA 1996 section 98. The dismissal must have been because of the employee's capability or qualifications, conduct, because the employee was redundant, because continued employment would contravene a law, or "some other substantial reason". If the employer has an argument based on one of these categories, then the Tribunal evaluates whether the employer's actual decision fell within a "reasonable range of responses", ie that a reasonable employer could have acted the same way. Thus the review standard lies in between an outright perversity, or "Wednesbury unreasonableness
Wednesbury unreasonableness
Associated Provincial Picture Houses v Wednesbury Corporation [1947] 1 KB 223 is an English law case which set down the standard of unreasonableness of public body decisions which render them liable to be quashed on judicial review...
" test and a forthright reasonable person
Reasonable person
The reasonable person is a legal fiction of the common law that represents an objective standard against which any individual's conduct can be measured...
test. It gives employers considerable latitude in the way they manage their workforce, as the Tribunal's job is not to substitute what it believes would have been fair, but only to intervene if a decision was arbitrary, harsh or contrary to acceptable business practice. There is also considerable room for Tribunals to assess the facts and come to their own conclusions, which can only be appealed on legal grounds, and not on their judgment of good workplace relations. For example, in a conduct case, HSBC Bank plc v Madden
HSBC Bank plc v Madden
HSBC Bank plc v Madden and Post Office v Foley [2000] is a UK labour law case, concerning unfair dismissal, now governed by the Employment Rights Act 1996.-Facts:...
, the Court of Appeal held that it was acceptable for a Tribunal to have decided that dismissing an employee for potential involvement in theft of credit cards was fair, even though an actual police investigation turned up no evidence. By contrast in Bowater v Northwest London Hospitals NHS Trust an employer argued a nurse who, while physically restraining a naked patient, said "It's been a few months since I have been in this position with a man underneath me" was lewd and deserved dismissal for her misconduct. The Tribunal said the dismissal was unfair and the Court of Appeal held the Tribunal had competently exercised its discretion in granting the unfair dismissal claim.
Partly because the courts take a deferential approach to the employer's substantive reasons for dismissal, they emphasise the importance of employers having a fair process. The Advisory, Conciliation and Arbitration Service Code of Practice (2009) explains that good industry practice for disciplinaries requires, among other things, written warnings, a fair hearing by people who have no reason to side against the employee, or with any manager involved in the dispute, and an the opportunity for union representation. Often a company handbook will include its own system, which if not followed will likely mean the dismissal was unfair. Nevertheless, in Polkey v AE Dayton Services Ltd
Polkey v AE Dayton Services Ltd
Polkey v AE Dayton Services Ltd [1987] is a UK labour law case, concerning unfair dismissal, now governed by the Employment Rights Act 1996.-Facts:...
the House of Lords held that, in a case where a van driver was told he was redundant on the spot, if an employer can show the dismissal would be made regardless of whether a procedure was followed, damages can be reduced to zero. In the Employment Act 2002 Parliament made an abortive attempt to instil some kind of mandatory minimum procedure for everybody, but after complaints from unions and employers alike that it was merely encouraging a "tick-box" culture, it was repealed in the Employment Act 2008
Employment Act 2008
The Employment Act 2008 is a Act of the Parliament of the United Kingdom which reformed a number of issues from random elements of UK labour law...
. Now if the ACAS Code is not followed, and this is unreasonable, an unfair dismissal award can be increased by 25 per cent. Generally, under ERA 1996 sections 119 and 227, the principles for a "basic" unfair dismissal award is that, with a cap of £350 per week and a maximum of 20 weeks, an employee should receive 1 week's pay for each year employed if aged between 22 and 40, 1½ weeks if over 40 and ½ a week if under 22. By ERA 1996 section 123 the employee may also be entitled to a discretionary "compensatory" award, which should take into account the actual losses of the employee as just and equitable, based on loss of immediate and future wages, the manner of the dismissal and loss of future unfair dismissal protection and redundancy rights. This is capped, but usually increased in line with RPI
Retail Prices Index (United Kingdom)
In the United Kingdom, the Retail Prices Index or Retail Price Index is a measure of inflation published monthly by the Office for National Statistics. It measures the change in the cost of a basket of retail goods and services.-History:...
inflation, and in 2010 stood at £63,500. Much lower, the median award for unfair dismissal, without any element of discrimination, was £4903 in 2009-2010.
Redundancy
An economic dismissal because of redundancy is a "fair" reason, but one that triggers a minimum statutory right to a redundancy payment. Under ERA 1996 section 162, a redundant employee who has been employed for over two years is entitled to one week's wages per year worked if aged between 22 and 40, one and a half weeks' pay if over 40 and half a week's pay if under 22. The upper limit is £240 per week. The meaning of redundancy under ERA 1996 section 139 is that diminished demand for the employee's labour was the reason for the dismissal. In situations where employees have lost their jobs, this may be straightforward. In cases where an employer uses its discretion practically to worsen the employees' position the answer may depend on the employees' contracts. In Lesney Products & Co v NolanLesney Products & Co v Nolan
Lesney Products & Co v Nolan [1977] ICR 235 is a UK labour law case concerning redundancy.-Facts:Lesney Products & Co removed its night shift and divided its day shift into two. The company still produced the same amount of products but it was no longer giving overtime to its workers...
a toy company stopped giving its workers overtime. Some refused to work further, they were dismissed, and they claimed they were redundant. Lord Denning MR held they were not, because "nothing should be done to impair the ability of employers to reorganise their work force and their times and conditions of work so as to improve efficiency." Other courts have suggested the contract terms are irrelevant, and that the test should be purely based on the economic reality of diminished demand. If an employee is not dismissed for redundancy it may be that the dismissal falls within the "fair" ground of "some other substantial reason". In Hollister v National Farmers’ Union
Hollister v National Farmers’ Union
Hollister v National Farmers’ Union [1979] ICR 542 is a UK labour law case concerning redundancy and unfair dismissal.-Facts:Mr Hollister, who worked in Cornwall under the National Farmers’ Union, refused to accept new contract terms which slightly increased pay but worsen pension entitlements. He...
a farmer's refusal to accept decreased pension entitlements, after a consultation process, was a "substantial" reason for dismissal. Provided employers give proper notice and have the right to terminate the contract by consent, it is possible to worsen terms without the employee being able to claim redundancy.
When compulsory redundancies are unavoidable and the employer must select among a group of workers, the procedure the employer follows must be procedurally fair, or the workforce will have an unfair dismissal claim. In Williams v Compair Maxam Ltd
Williams v Compair Maxam Ltd
Williams v Compair Maxam Ltd [1982] ICR 156 is a UK labour law case, concerning unfair dismissal, now governed by the Employment Rights Act 1996.-Facts:...
Browne-Wilkinson J held that, in response to managers who had selected workers to lose their jobs based on personal preference, the proper steps should be to (1) give all warning possible (2) consult the union (3) agree objective criteria (4) follow those criteria, and (5) always check there if there is alternative employment rather than dismissal. Under ERA 1996 section 141 an employee should accept a reasonable offer for redeployment, and will lose entitlement to redundancy if she declines it. The Collective Redundancies Directive
Collective Redundancies Directive
The Collective Redundancies Directive is an EU Directive concerning the procedures and warnings that any employer is under a duty to its workforce to follow if it finds it necessary to make more than 20 employees over 90 days .-External links:*...
, implemented in TULRCA 1992 section 188 also requires collective consultation with the union or other elected workforce representatives. If the employer fails to consult in good time it will be liable to pay a protective award to its staff.
- Jones v Associated Tunnelling Co Ltd [1981] IRLR 477 (EAT)
- United States of America v Nolan [2011] IRLR 84
Business transfers and insolvency
Another context in which the common law left workers particularly vulnerable was where the business for which they worked was transferred between one person and another. In Nokes v Doncaster Amalgamated Collieries LtdNokes v Doncaster Amalgamated Collieries Ltd
Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014 is a UK labour law case concerning the common law position before the Business Transfers Directive 2001 and TUPER 2006, and decided that a change in employer could not result in a burden being placed on an employee without his...
it was held (albeit to protect the worker from draconian sanctions in the arcane Employers and Workmen Act 1875) that an employment contract could not transfer without the consent of the parties involved. Consequently, in a situation where company A sold its assets (including contracts) to company B, the employment relationship would sever and the only claim a worker would have for dismissal would be against company A. Particularly from the 1950s, the view was increasingly accepted across Europe that workers have something more than a personal right, and akin to a property right in their jobs. Just as the transfer of a freehold property between two landlords would not mean that a tenant could be evicted, the first Business Transfers Directive, passed in 1978 and updated in 2001 (often still referred to as the "Acquired Rights Directive"), required that a business transferee would have to provide a good economic, technical or organisational reason if they were either to not retain all previous employees, or wanted to make detrimental variations to their workers' contracts. This means that the new employer who is a transferee of a business through an asset sale is in no better position than would be a new owner who gained control of a business by buying out a company's shares: contractual variations require the employees' consent and dismissal rights remain as if it were the old employer. As implemented by the Transfer of Undertakings (Protection of Employment) Regulations 2006, a clear example where employees contracts transfer was in Litster v Forth Dry Dock. The House of Lords held that a purposive interpretation is to be given to the legislation so that where 12 dockworkers were sacked an hour before a business sale, their contracts remained in effect if the employees would still be there in absence of an unfair dismissal. This does not, however, mean that employees unfairly dismissed before a sale have a right to their jobs back, because national law's normal remedy remains with a preference for damages over specific performance. The same principle goes for any variation that works to the detriment of the employee. So the transferee employer may not (without a good business reason) for example, try to impose a single new gardening clause or withdraw tenure, or the employee will have a claim for constructive dismissal.
An acute question for the TUPE Regulations, particularly in the years when the Conservative government was implementing a policy of shrinking the size of the public sector, was the extent they applied to jobs being outsourced
Outsourcing
Outsourcing is the process of contracting a business function to someone else.-Overview:The term outsourcing is used inconsistently but usually involves the contracting out of a business function - commonly one previously performed in-house - to an external provider...
, typically by a public body, like a local council, or changed between businesses in a competitive tender process for public procurement. On this point a series of ECJ decisions came to the view that there could be a relevant transfer, covered by the Directive, even where there was no contractual link between a transferor and a transferee business, so long as the business entity retained its "identity". In turn the "identity" of a business would be determined by the degree to which the business' factors of production
Factors of production
In economics, factors of production means inputs and finished goods means output. Input determines the quantity of output i.e. output depends upon input. Input is the starting point and output is the end point of production process and such input-output relationship is called a production function...
remained the same before and after a sale. It could be that no employees were hired after an asset sale, but the sacked employees would still have a claim because all their old workplace and capital equipment was being used by the new employer. It is also relevant to what extent a business is capital or labour intensive. So in Oy Liikenne Ab v Liskojärvi the ECJ held that it was unlikely that 45 Helsinki
Helsinki
Helsinki is the capital and largest city in Finland. It is in the region of Uusimaa, located in southern Finland, on the shore of the Gulf of Finland, an arm of the Baltic Sea. The population of the city of Helsinki is , making it by far the most populous municipality in Finland. Helsinki is...
bus drivers' contracts were transferred, between the company that lost the contract and the new bus company that won it, even though 33 drivers were rehired, because "bus transport cannot be regarded as an activity based essentially on manpower". On the other hand, employees stand to benefit where a new employer offers old staff their jobs, the intention to rehire makes it more likely the court will deem there to be a transfer.
Often business transfers take place when a company has plunged into an insolvency
UK insolvency law
United Kingdom insolvency law deals with the insolvency of firms and individuals in the United Kingdom. The important statutes are the Insolvency Act 1986, as amended by the Enterprise Act 2002, as well as the Company Director Disqualification Act 1986 and the Companies Act 2006.Insolvency is a...
procedure. If a company enters liquidation, which aims to wind down the business and sell off the assets, TUPER 2006 regulation 8(7) states that the rules on transfer will not apply. The main objective, however, in an insolvency procedure particularly since the Cork Report and the Enterprise Act 2002
Enterprise Act 2002
The Enterprise Act 2002 is an Act of the Parliament of the United Kingdom which made major changes to UK competition law with respect to mergers and also changed the law governing insolvency bankruptcy.-Structure:*Part 1 The Office of Fair Trading...
, is to effect rescues through the system of company administration
Administrator (law)
In law an administrator can be:* a person appointed by the court to handle the estate of someone who died without a will ....
. An administrator's task under the Insolvency Act 1986
Insolvency Act 1986
The Insolvency Act 1986 is an Act of the Parliament of the United Kingdom that provides the legal platform for all matters relating to personal and corporate insolvency in the UK.-History:...
Schedule B1, paragraph 3, is either to rescue the company as a going concern, rescue the business typically by finding a suitable buyer and thus save jobs, or as a last resort put the company into liquidation. If employees are kept on after an administrator is appointed for more than 14 days, under paragraph 99 the administrator becomes responsible for adopting their contracts. The liability on contracts is limited to "wages and salaries". This includes pay, holiday pay, sick pay and occupational pension contributions, but has been held to not include compensation for unfair dismissal cases, wrongful dismissal, or protective awards for failure to consult the workforce before redundancies. If the business rescue does ultimately fail, then such money due employees achieves the status of "super priority" among different creditors' claims. The priority list in insolvency sees creditors with fixed security
Security interest
A security interest is a property interest created by agreement or by operation of law over assets to secure the performance of an obligation, usually the payment of a debt. It gives the beneficiary of the security interest certain preferential rights in the disposition of secured assets...
(typically banks) get paid first, preferential creditors third, unsecured creditors up to a limit of £600,000 third, floating charge
Floating charge
A floating charge is a security interest over a fund of changing assets of a company or a limited liability partnership , which 'floats' or 'hovers' until conversion into a fixed charge, at which point the charge attaches to specific assets...
holders (usually banks again) fourth, remaining debts to unsecured creditors (in the unlikely event that anything remains) fifth, "deferred debts" (typically to company insiders) sixth, and shareholders last. Among the preferential creditors, the insolvency practitioners' fees together with adopted contracts attain super-priority. Otherwise, employees wages and pensions still have preferential status, but only up to an £800 limit, a figure which has remained unchanged since 1986. Employees having priority among creditors, albeit not above fixed security holders, dates back to 1897, and is justified on the ground that employees are particularly incapable, unlike banks, of diversifying their risk, and forms one of the requirements in the ILO Protection of Workers' Claims (Employer's Insolvency) Convention. Often this limited preference is not enough, and can take a long time to realise. Reflecting the Insolvency Protection Directive under ERA 1996 section 166 any employee may lodge a claim with the National Insurance
National Insurance
National Insurance in the United Kingdom was initially a contributory system of insurance against illness and unemployment, and later also provided retirement pensions and other benefits...
Fund for outstanding wages. Under ERA 1996 section 182 the amount claimable is the same as that for unfair dismissal (£350 in 2010) for a limit of 8 weeks. If an employee has been unpaid for a longer period, she may choose the most beneficial 8 weeks. The Pensions Act 2004
Pensions Act 2004
The Pensions Act 2004 is an Act of the Parliament of the United Kingdom to improve the running of pension schemes.-Background:In the years following the introduction of the Pensions Act 1995, it was widely perceived that it was failing to offer the protection to pension scheme members that had...
governs a separate system for protecting pension claims, through the Pension Protection Fund
Pension Protection Fund
The Board of the Pension Protection Fund is a Statutory Fund in the United Kingdom. It was created under the Pensions Act 2004. The Board of the PPF is a Statutory Corporation responsible for managing the Fund and for making payments to members....
. This aims to fully insure all pension claims. Together with minimum redundancy payments, the guarantees of wages form a meagre cushion which requires more of a systematic supplementation when people remain unemployed.
Unemployment
- Poor Law Amendment Act 1834Poor Law Amendment Act 1834The Poor Law Amendment Act 1834, sometimes abbreviated to PLAA, was an Act of the Parliament of the United Kingdom passed by the Whig government of Lord Melbourne that reformed the country's poverty relief system . It was an Amendment Act that completely replaced earlier legislation based on the...
and Royal Commission into the Operation of the Poor Laws 1832Royal Commission into the Operation of the Poor Laws 1832The 1832 Royal Commission into the Operation of the Poor Laws was a group set up to decide how to change the Poor Law systems in England and Wales. The group included Nassau Senior, a professor from Oxford University who was against the allowance system, and Edwin Chadwick, who was a Benthamite...
- National Insurance Act 1911National Insurance Act 1911The National Insurance Act 1911 is an Act of Parliament of the United Kingdom. The Act is often regarded as one of the foundations of modern social welfare in the United Kingdom and forms part of the wider social welfare reforms of the Liberal Government of 1906-1914...
and National InsuranceNational InsuranceNational Insurance in the United Kingdom was initially a contributory system of insurance against illness and unemployment, and later also provided retirement pensions and other benefits... - Karl MarxKarl MarxKarl Heinrich Marx was a German philosopher, economist, sociologist, historian, journalist, and revolutionary socialist. His ideas played a significant role in the development of social science and the socialist political movement...
, Das KapitalDas KapitalDas Kapital, Kritik der politischen Ökonomie , by Karl Marx, is a critical analysis of capitalism as political economy, meant to reveal the economic laws of the capitalist mode of production, and how it was the precursor of the socialist mode of production.- Themes :In Capital: Critique of...
(1867) and reserve army of labourReserve army of labourReserve army of labour is a concept in Karl Marx's critique of political economy. It refers basically to the unemployed in capitalist society. It is synonymous with "industrial reserve army" or "relative surplus population", except that the unemployed can be defined as those actually looking for... - Unemployment Act 1934Unemployment Act 1934The Unemployment Act 1934 was an Act of Parliament in the United Kingdom, reaching statue on 28 June 1934. It reduced the age at which a person entered the National Insurance scheme to 14 and made the claiming age 16 years. It also separated benefits earned by paying National Insurance and those...
- Great Depression in the United KingdomGreat Depression in the United KingdomThe Great Depression in the United Kingdom, also known as the Great Slump, was a period of national economic downturn in the 1930s, which had its origins in the global Great Depression...
- White Paper, Employment Policy (May 1944) Cmd 6527
- W Beveridge, Full Employment in a Free SocietyFull Employment in a Free SocietyFull Employment in a Free Society is a book by William Beveridge, author of the Beveridge Report.-Overview:The book begins with the thesis that because individual employers are not capable of creating full employment, it must be the responsibility of the state...
(1944) - A W Phillips (1958) 'The Relation between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861-1957, Economica
- Supplementary BenefitSupplementary BenefitSupplementary Benefit was a means-tested benefit in the United Kingdom, paid to people on low incomes, whether or not they were classed as unemployed. Introduced in November 1966, it replaced the earlier system of discretionary National Assistance payments and was intended to 'top-up' other...
, Statutory sick payStatutory sick payIn the United Kingdom Statutory Sick Pay is paid by their employer to all employees who are sick for a period longer than 4 consecutive days but less than 28 weeks. The first 3 days of sickness are called waiting days...
and Income SupportIncome SupportIncome support is an income-related means-tested benefit in the United Kingdom for people who are on a low income. Claimants of Income Support may be entitled to certain other benefits, for example, Housing Benefit, Council Tax Benefit and help with health costs... - Jobseekers Act 1995 (c 18) and Jobseeker's AllowanceJobseeker's AllowanceJobseeker's Allowance is a United Kingdom benefit, colloquially known as the dole . It is a form of unemployment benefit paid by the government to people who are unemployed and seeking work. It is part of the social security benefits system and is intended to cover living expenses while the...
and Jobcentre PlusJobcentre PlusJobcentre Plus was a government agency for working-age people in Great Britain. The agency was formed when the Employment Service, which operated Jobcentres, merged with the Benefits Agency, which ran social security offices, and was re-named Jobcentre Plus on 1 April 2002... - Jobseekers Act 1995 s 19, disparity in definitions on misconduct
- New Deal (United Kingdom)
- Youth unemployment in the United KingdomYouth unemployment in the United KingdomYouth unemployment in the United Kingdom is the level of unemployment among young people, typically defined as those aged 18–25. A related concept is graduate unemployment which is the level of unemployment among university graduates...
- Employment Act of 1946 and the Humphrey–Hawkins Full Employment Act of 1978 in the United States, and full employmentFull employmentIn macroeconomics, full employment is a condition of the national economy, where all or nearly all persons willing and able to work at the prevailing wages and working conditions are able to do so....
- Automatic stabilisers, effective aggregate demand, fiscal stimulus, natural rate of unemploymentNatural rate of unemploymentThe natural rate of unemployment is a concept of economic activity developed in particular by Milton Friedman and Edmund Phelps in the 1960s, both recipients of the Nobel prize in economics...
- Automatic stabilisers, effective aggregate demand, fiscal stimulus, natural rate of unemployment
- Public employment agency
- Employment Agencies Act 1973Employment Agencies Act 1973Employment Agencies Act 1973 is a United Kingdom Act of Parliament and part of a wider body of UK agency worker law. It regulates the conduct of employment agencies which recruit and manage temporary and permanent labour. It applies to approximately 17,000 employment agencies operating in the UK...
- Jobcentre PlusJobcentre PlusJobcentre Plus was a government agency for working-age people in Great Britain. The agency was formed when the Employment Service, which operated Jobcentres, merged with the Benefits Agency, which ran social security offices, and was re-named Jobcentre Plus on 1 April 2002...
- Income SupportIncome SupportIncome support is an income-related means-tested benefit in the United Kingdom for people who are on a low income. Claimants of Income Support may be entitled to certain other benefits, for example, Housing Benefit, Council Tax Benefit and help with health costs...
, means tested benefit for people on low incomes - Severe Disablement AllowanceSevere Disablement AllowanceSevere Disablement Allowance was a United Kingdom state benefit intended for those below the state pension age who cannot work because of illness or disability. It was replaced by Incapacity Benefit in April 2001, which itself was replaced by Employment and Support Allowance...
replaced by Incapacity benefitIncapacity benefitIncapacity Benefit is a United Kingdom state benefit that is paid to those below the State Pension age who cannot work because of illness or disability and have made National Insurance contributions. It is administered by Jobcentre Plus...
in 2001, replaced by Employment and Support AllowanceEmployment and Support AllowanceEmployment and Support Allowance is a UK Government State Benefit which replaced new claims for Incapacity Benefit and Income Support on the basis of incapacity for work for most claimants from 27 October 2008. Initially, claimants already receiving Incapacity Benefit continued to receive it as...
2008 - Housing BenefitHousing BenefitHousing Benefit is a means tested social security benefit in the UK that is intended to help meet Housing costs for rented accommodation. The primary legislation governing Housing Benefit is the Social Security Contributions and Benefits Act 1992. Operationally, the governing Regulations are...
Enforcement and tribunals
- Employment tribunalEmployment tribunalEmployment Tribunals are tribunal non-departmental public bodies in England and Wales and Scotland which have statutory jurisdiction to hear many kinds of disputes between employers and employees. The most common disputes are concerned with unfair dismissal, redundancy payments and employment...
- Employment Appeal TribunalEmployment Appeal TribunalThe Employment Appeal Tribunal is a tribunal non-departmental public body in England and Wales and Scotland, and is a superior court of record. Its primary role is to hear appeals from Employment Tribunals in England, Scotland and Wales...
- Industrial Tribunals
- Employment Rights (Dispute Resolution) Act 1998Employment Rights (Dispute Resolution) Act 1998The Employment Rights Act 1998 is a United Kingdom Act of Parliament which regulates UK labour law. The 1998 Act empowered the Advisory, Conciliation and Arbitration Service to create arbitration hearings as an alternative dispute resolution mechanism to the employment tribunals.-Overview:The...
- Employment Act 2002
- ACASAcasThe Advisory, Conciliation and Arbitration Service is a Crown non-departmental public body of the Government of the United Kingdom. Its purpose is to improve organisations and working life through the promotion and facilitation of strong industrial relations practice...
- Health and Safety ExecutiveHealth and Safety ExecutiveThe Health and Safety Executive is a non-departmental public body in the United Kingdom. It is the body responsible for the encouragement, regulation and enforcement of workplace health, safety and welfare, and for research into occupational risks in England and Wales and Scotland...
- Employment Agency Standards InspectorateEmployment Agency Standards InspectorateThe Employment Agency Standards Inspectorate is a division of the Employment Relations Directorate, part of the Department for Business, Enterprise and Regulatory Reform, which is meant to oversee employment agencies operating in the United Kingdom...
- Gangmasters Licensing AuthorityGangmasters Licensing AuthorityThe Gangmasters Licensing Authority is an agency in the United Kingdom regulating the supply of workers to the agricultural, horticultural and shellfish industries...
- Inland RevenueInland RevenueThe Inland Revenue was, until April 2005, a department of the British Government responsible for the collection of direct taxation, including income tax, national insurance contributions, capital gains tax, inheritance tax, corporation tax, petroleum revenue tax and stamp duty...
- Equality and Human Rights Commission
Under the Equality Act 2006
Equality Act 2006
The Equality Act 2006 is an Act of the Parliament of the United Kingdom covering the United Kingdom. The 2006 Act is a precursor to the Equality Act 2010, which combines all of the equality enactments within Great Britain and provide comparable protections across all equality strands...
, a new Equality and Human Rights Commission was established, subsuming specialist bodies from before. Its role is in research, promotion, raising awareness and enforcement of equality standards. For lawyers, the most important work of predecessors has been strategic litigation (advising and funding cases which could significantly advance the law) and developing codes of best practice for employers to use. Around 20,000 discrimination cases are brought each year to UK tribunals.
International labour law
- Versailles Treaty 1919
- Right to Organise and Collective Bargaining Convention, 1949Right to Organise and Collective Bargaining Convention, 1949The Convention concerning the Application of the Principles of the Right to Organise and to Bargain Collectively or Right to Organise and Collective Bargaining Convention is an International Labour Organization Convention. It is one of 8 ILO fundamental conventions.- Ratifications:-External...
- ILO on Hours of Work Industry Convention, No 1 (1919) this required an 8 hour day and a 48 hour working week, but Great Britain did not ratify it.
- ILO 40 hour week Convention, No 51 (1936)
- ILO Convention on Holidays with Pay, No 52 (1936)
- GATT and World Trade Organisation
- Labour Standards in the World Trade Organisation
- Lawson v Serco Ltd [2006] UKHL 3, [2006] 1 All ER 823
- Duncombe v Secretary of State for Children, Schools and Families [2011] UKSC 36
See also
- Labour lawLabour lawLabour law is the body of laws, administrative rulings, and precedents which address the legal rights of, and restrictions on, working people and their organizations. As such, it mediates many aspects of the relationship between trade unions, employers and employees...
- Factory Acts
- Agency Workers DirectiveAgency Workers DirectiveThe EU Temporary and Agency Workers Directive is an EU Directive agreed in November 2008 which seeks to guarantee those working through employment agencies equal pay and conditions with employees in the same business who do the same work...
- United States labor lawUnited States labor lawUnited States labor law is a heterogeneous collection of state and federal laws. Federal law not only sets the standards that govern workers' rights to organize in the private sector, but also overrides most state and local laws that attempt to regulate this area. Federal law also provides more...
- Sherman Act of 1890 and Loewe v. LawlorLoewe v. LawlorLoewe v. Lawlor, is a United States Supreme Court case concerning the application of antitrust laws to labor unions. The Court's decision had the effect of outlawing secondary boycotts as violative of the Sherman Antitrust Act, in the face of labor union protests that their actions affected only...
, 208 U.S. 274 (1908) - Clayton Antitrust ActClayton Antitrust ActThe Clayton Antitrust Act of 1914 , was enacted in the United States to add further substance to the U.S. antitrust law regime by seeking to prevent anticompetitive practices in their incipiency. That regime started with the Sherman Antitrust Act of 1890, the first Federal law outlawing practices...
of 1914, labour is not a commodity - Norris – La Guardia Act of 1932
- National Labor Relations ActNational Labor Relations ActThe National Labor Relations Act or Wagner Act , is a 1935 United States federal law that limits the means with which employers may react to workers in the private sector who create labor unions , engage in collective bargaining, and take part in strikes and other forms of concerted activity in...
of 1935 (Wagner), protecting the right to organise and collectively bargain - Fair Labor Standards Act of 1938, minimum wage and overtime
- Labor Management Relations Act of 1947, no secondary action, closed shop, enforceable collective agreements
- Employment Act of 1946
- Labor Management Reporting and Disclosure Act of 1959, union elections, fiduciary duties of leaders
- Occupational Safety and Health ActOccupational Safety and Health ActThe Occupational Safety and Health Act is the primary federal law which governs occupational health and safety in the private sector and federal government in the United States. It was enacted by Congress in 1970 and was signed by President Richard Nixon on December 29, 1970...
of 1970, health and safety and whistleblowing - Employee Retirement Income Security Act of 1974, private pension minimum standards and fiduciary duties
- Federal Labor Relations Act of 1978, allowing public sector unions
- Humphrey–Hawkins Full Employment Act of 1978
- Family and Medical Leave Act of 1993Family and Medical Leave Act of 1993The Family and Medical Leave Act of 1993 is a United States federal law requiring covered employers to provide employees job-protected unpaid leave for qualified medical and family reasons. These reasons include personal or family illness, military service, family military leave, pregnancy,...
, 12 weeks unpaid parental leave after 12 months work over 50 employees
External links
National- List of prominent labour law cases on bailii.org.uk
- Employment rights guidance from direct.gov.uk
- http://www.dti.gov.uk/er/individual/unfair-pl712a.htm#top DBIS Employment Legislation - PL712 - Meaning of dismissal
- http://www.dti.gov.uk/er/individual/unfair-pl712c.htm#making DBIS Employment Legislation - PL712 - Making a complaint
International