Unfair Dismissal Essay

Unfair dismissal essay

Employment law is an area in which two – sometimes more – competing interests are at work. On one hand there is a need for the law to protect employees.

 

On the other, there is the need for business to operate effectively and be free from over cumbersome rules and regulations. The principles of employment law have been used to attempt to find the optimum balance between these two apposite camps. Given this fine balance it may be asserted that judges may use their own notions of justice in cases depending on which side they sympathise with. However, for a judge to pursue his or her notion of justice this requires flexibility in the interpretation and application of the law. In order to highlight that such flexibility exists and can be potentially exploited by a judge I will explore two areas of employment law. The first principles to be examined will be those applied to defining an ‘employee’ in which traditional contractual legal principles can be manipulated. The second principles will be those applied in unfair dismissal claims. Specifically, I will examine the range of reasonable responses test and show that this is an area in which the ability of the fact finder to pursue notions of justice is severely curtailed. The conclusion arrived at is that certain areas allow the pursuit of justice and others do not.

 

 

The problem

 

A raft of Conservative reforms have led to the gradual erosion of employees’ rights. An example is the increase of the qualifying length of service to two years,[i] which has significantly reduced the number of these claims.[ii] Reductions in funding, and hurdles in accessing legal aid, have also reconfigured the employer-employee balance of power.[iii] The ability to engage in trade union activities has also been constrained through onerous requirements contained in the Trade Union Act 2016. The temptation with faced with such injustice is for the individual fact finder to manipulate the law to serve a particular notion of what justice looks like in each individual case. The capacity for such flexibility is higher in at the Tribunal level where interpretation of evidence and findings of fact can potentially be tainted by personal bias. At the appeal court level, this can lead to accusations that judges are engaged in law making which is outside of their constitutional role. Lord Nicholls stated in Inco Europe Limited v First Choice Distribution[iv] that:

 

The courts are ever mindful that their constitutional role in this field is interpretative. They must abstain from any course which might have the appearance of judicial legislation. A statute is expressed in language approved and enacted by the legislature.

 

If the stimulus quotation in this paper is to be proven true, then it must be shown that employment law principles are constructed in such a way that they are malleable to the will and desire of each judge. In order to test the validity or otherwise of the statement, I begin with a consideration of the legal principles applied to defining an ‘employee’.

 

 

Employee

 

The meaning of ‘employee’ reveals a complicated story of common law vintage with judges fleshing out the statutory definition in section 230(1) of the Employment Rights Act 1996 that an employee is someone who has ‘entered into or works under a contract of employment.’ A contract of employment is further defined as a ‘contract of service or apprenticeship’.[v]  Being categorised as an employee results in several benefits. For example, an employee has the right not be unfairly dismissed.[vi] Employees can benefit from the minimum wage (although other ‘workers’ can also), statutory sick pay, maternity and paternity pay and redundancy pay.[vii]

 

No single test exists under the common law to ascertain if someone is an employee.[viii] A definition of the approach to be taken in evaluating employee status reveals potential for discretion. A series of cases have urged a move  away from a mechanical approach or tick box exercise.[ix] The objective of any assessment is to develop a picture, through the facts and circumstances, to ascertain the detail of the relationship to the employer.[x] Tribunals must then stand back and view this detailed picture to make an informed judgment based on the qualitative information.[xi] However, some cases have advocated that if an irreducible minimum of conditions exists then a contract of employment exists; (a) an individual undertakes to provide his or her own skill when performing a service and is remunerated for doing so (b) the individual is subject to a sufficient degree of control by the employer (c) mutuality of obligation in that an individual must complete work offered by the employer and the employer must pay the ‘employee’ and (d) other contract provisions imply a contract of employment.[xii] I will now consider requirements (a) and (c) in more detail as they are more relevant to the question posed in this paper.

 

Personal service

 

A person must agree to do the work themselves.[xiii] A promise to get someone else to do it is insufficient[xiv] and a genuine agreement to permit substitute performance means that the requirement of personal service is not met.[xv] It needs to be determined that it was each parties intention that an obligation to personally perform existed.[xvi] In answering this question the courts will take a purposive approach to contractual interpretation.[xvii] In doing so, the discretion of judges to imprint their personal will on a case is heightened.

 

In Autoclenz v Belcher the defendant company had inserted an express term allowing substitute performance. However, the court found that on a purposive approach, examining the circumstances as a whole, it was clear that this did not reflect the true agreement vis-à-vis both parties. As such, the term could be disregarded. At the centre of the Autoclenz judgment was the recognition that there was an inequality of bargaining power given that the two entities involved were not both commercial businesses. The law generally upholds those agreements which are signed.[xviii] Equally, the courts are slow to imply terms into a contract which contradict the express terms.[xix] Nevertheless, the Supreme Court held that the substitute performance term was not effective as (endorsing the judgment of the Court of Appeal that:[xx]

 

The circumstances in which contracts relating to work or services are concluded are very different from those in which commercial contracts between parties of equal bargaining power are agreed. I accept that frequently organisations which are offering work or requiring services are in a position to dictate the written terms which the other party is bound to accept.

 

The court further endorsed the finding of the lower court that ‘[e]mployment judges have a good knowledge of the world at work and a sense, derived from experience of what is real there and what is window-dressing.’[xxi] The court also stated that the conclusion the Tribunal arrived at was a perfectly tenable one on the evidence provided. This demonstrates the flexible nature of the process – the conclusion was a ‘tenable’ one but the court does not insist that it was absolutely clear on the evidence. This shows the flexibility of this area of law which opens up the possibility of introducing judicial discretion and demonstrates how legal principles can be manipulated to potentially arrive at a just outcome.

 

If judicial discretion is introduced, the next question is to ask is how we recognise a decision has been made to marry up with a judge’s pursuit of what they consider justice. It is difficult if not impossible to ascertain the exact subjective intent of a judge. However, there are many plausible explanations that support the thesis that the judgment shows a pursuit of justice. Elwes, for example, notes that the public interest is served by the judgment as employee status means that more tax revenue can be collected from companies.[xxii]

 

Mutuality of Obligation

 

There must be an irreducible minimum of obligation for both parties.[xxiii] The position where there is no obligation on either side is not complicated – in such circumstances there is no mutuality. The more difficult question is to ascertain what level of mutuality is required to show mutuality. From the employee perspective, there must be an obligation to accept work given.[xxiv] The situation with the employer is more problematic. An employer is under a duty to provide work and pay or at least provide a retainer to someone during periods of no work.[xxv]

 

Problems with mutuality arise when the type of work is not traditional. Many people operate under less conventional working arrangements. For example, people work on trawlers and rigs, work as home tutors. These arrangements may involve bursts of work followed by delays before a next job or shift. The gaps between jobs might prove to be an obstacle to employee status. However, the injustice of this has been remedied in several cases where judges have implied an umbrella contract into such arrangements to prevent a break in the contract. In Cornwall CC v Prater[xxvi]  a home tutor had no obligation to take on work but when assigned to a job she had to stay in position until completion. The court held that during each assignment the claimant was an employee as there was mutuality of obligation but no umbrella contract was in place which would serve to connect the various assignments. A possible loss of employee status was the natural result of an application of legal principles in this area. However, the Tribunal interpreted the gaps between jobs as only temporary cessations and therefore continuity was preserved. Employee status was therefore granted. The judgment is notable as it signalled an appetite within the judiciary to assign worker status to what looked like a casual working relationship.[xxvii]

 

Recent case law in this area, including the Autoclenz judgment indicates a new ‘jurisprudential development of a more flexible, purposive outlook towards the question of who is an employee’.[xxviii] The position of atypical workers has been greatly enhanced also. However, it should be noted that a symptom of our common law legal terrain is that a different court can alter the trajectory of apparent reform or progress. In Carmichael v National Power[xxix] the court was asked to apply a similar approach to continuity as evidenced in Prater. The House of Lords did not do so and noted that Prater was founded on an overly progressive interpretation of s. 212(3)(b) of the ERA 1996. What this shows is that the common law system, of which employment law is a component part, allows legal principles to be construed and applied in such a way so as to arrive at different outcomes. Fredman recognises that the courts have to deal with competing interests:[xxx]

 

…the courts (swing) between a contractual approach and one sensitive to the social policy aimed at distinguishing the genuinely independent from marginal worker… However, the dominant trend has been contractual and technical, displaying a distinct reluctance on the part of the courts to use the definition to achieve the social purpose for which it was intended.

 

While this rings true of the Carmichael decision, judgments like Prater show that motivations of social policy – arguably influenced by the individual desire of a judge – can promote a different result.

 

Unfair dismissal

 

The debate to this point has recognised that there are circumstances in employment law in which the law is flexible enough to promote or at least facilitate the pursuit of private notions of justice. However, there are particular areas of employment law where that flexibility is diminished. The most likely entry point for judicial discretion, and therefore potential for imbuing a decision with a personal notion of justice, in unfair dismissal claims is the assessment of the fairness of the dismissal.[xxxi] An employer must show that they have dismissed an employee due to, or primarily due, to one of several possible reasons including conduct,[xxxii] qualifications[xxxiii] or some other substantial reason.[xxxiv] If the employer can prove that dismissal was for one of these reasons, the tribunal well then assess the fairness of the dismissal by having regard to the reason given[xxxv] and the size and administrative resources of the undertaking and determine if the employer acted reasonably in treating this as a sufficient reason for dismissing the employee.[xxxvi] The assessment of fairness will also be tempered by considerations of the equity and substantial merits of the case.[xxxvii] It can be seen that the reasonableness of the employer is the prime consideration[xxxviii] and not any injustice which may have been inflicted upon the employee.[xxxix]

 

The tribunal of fact must take care not to simply substitute its views or judgement for that given by the employer.[xl] The test is much broader and asks whether a reasonable employer would have decided to dismiss an employee on the facts provided.[xli] In Vickers Ltd v Smith[xlii] an Employment Appeal Tribunal constructed the test in more certain terms that a dismissal would only be deemed unfair if the decision to dismiss was perverse. However, it is submitted that the modern approach is one based on a band of reasonable responses. In short, and approached in the negative, the test asks whether any reasonable employer would have dismissed.[xliii] If the answer is no, then the dismissal is unfair.

 

If one is to examine the words of the test and the statute only then there may be some capacity for introducing flexibility in the assessment of fairness. However, the band of reasonable responses test, which is an additional gloss to the legislation,[xliv] severely limits the amount of individual flexibility. According to Bennett, this is an unnecessary gloss on the legislation which ‘ignores what is fair to an employee and makes a finding of unfairness unlikely’.[xlv] The author further laments that the test does not ‘achieve the purpose of the legislation of having an impartial decision on the dismissal’.[xlvi] It has been lambasted by other commentators as a crude device which is guilty of ‘tying the hands of ETs by prohibiting their members from substituting their own judgment for that of the employer’.[xlvii] It is not surprising that notions of justice are not paramount in the test as the test involves looking at the reasonableness of the employer’s behaviour and not at whether the employee has suffered a wrong.[xlviii] This is surprising given the reference in section 98(4)(b) of the ERA 1996 relating to equity and merits of the case. Ignoring this reference, for Freer means that tribunals are denied the ‘opportunity to curb management prerogative and fully to consider the interests of employees or the public’. The pursuit of justice in these circumstances is limited.

 

Conclusion

 

The aim of this paper has been to explore whether judges have interpreted the principles of employment law to permit individual decisions on what constitutes justice to be made. Traditional contractual principles can be manipulated when dealing with ‘sham’ contracts and employee status. Finally, I have observed that there are circumstances in employment law where judges are limited in their discretion. The band of reasonable responses test relating to unfair dismissal severely curtails judicial discretion. Answering the stimulus quotation, the answer is that pursuit of justice is possible but not inevitable.

 

2499 words.

[i] Enterprise and Regulatory Reform Act 2013.

[ii] Charles Wynn-Evans, ‘Harsh But Fair: Newbound v Thames Water Utilities Ltd’ (2015) Industrial Law Journal 566, 567.

[iii] Hazel Green, ‘Do-it-Yourself Law: Access to Justice and the Challenges of Self-representation’ (2013) Civil Justice Quarterly 411, 412.

[iv] [2000] 1 WLR 586, 592.

[v] Employment Rights Act 1996, s. 230(2).

[vi] Employment Rights Act 1996, s. 230(1)

[vii] Gov.uk, ‘Employee Status’ available at https://www.gov.uk/employment-status/employee (accessed 6 January 2017).

[viii] Stevenson Jordan and Harrison Ltd v MacDonald and Evans [1952] 1 TLR 101, 111 (Denning LJ)

[ix] Hall (Inspector of Taxes v Lorimer [1994] IRLR 171.

[x] ibid.

[xi] ibid.

[xii] Autoclenz v Belcher [2011] IRLR 820.

[xiii] Express and Echo Publications v Tanton [1999] IRLR 367.

[xiv] ibid.

[xv] ibid.

[xvi] Wright v Redrow Homes (Yorkshire) [2004] IRLR 720.

[xvii] Autoclenz (n 12).

[xviii] L’Estange v F Graucob Ltd [1934] 2 KB 394.

[xix] Equitable Life Assurance v Hyman [2002] 1 AC 408.

[xx] Autoclenz (n 4) [92].

[xxi] ibid [104].

[xxii] Sylvia Elwes, ‘Autoclenz v Belcher – Written Agreements and the Determination of Employment Status’ (2011) British Tax Review 527.

[xxiii] Autoclenz (n 12).

[xxiv] Cotswolds Development Construction v Williams [2006] IRLR 181.

[xxv] Clarke v Oxfordshire HA [1998] IRLR 125.

[xxvi] [2006] IRLR 362.

[xxvii] ACL Davies, ‘Casual Workers and Continuity of Employment’ (2006) 35(2) Industrial Law Journal 196, 200.

[xxviii] Amir Paz-Fuchs and Anja Eleveld, ‘Workfare Revisited’ (2016) Industrial Law Journal 29, 34.

[xxix] [2000] IRLR 43.

[xxx] S Fredman, ‘Labour Law in Flux: the Changing Composition of the Workforce’ (1997) 24(4) Industrial Law Journal 337, 340.

[xxxi] Employment Rights Act 1996 s. 98(1)(a).

[xxxii] Employment Rights Act 1996 s. 98(2).

[xxxiii] ibid.

[xxxiv] ibid.

[xxxv] Employment Rights Act 1996, s. 98(4).

[xxxvi] ibid.

[xxxvii] Employment Rights Act 1996, s. 98(4)(b).

[xxxviii] Polkey v AE Dayton Services Ltd [1988] AC 344.

[xxxix] ibid.

[xl] Post Office v Foley, HSBC Bank plc (formerly Midland Bank plc) v Madden [2001] 1 All ER 550.

[xli] Iceland Frozen Foods Ltd v Jones [1983] ICR 17; British Gas plc v McCarrick [1991] IRLR 305.

[xlii] [1977] IRLR 11.

[xliii] ibid.

[xliv] Stephen Taylor and Astra Emir, Employment Law: an Introduction (4th edn, OUP 2015) 146.

[xlv] Cited in Taylor ibid.

[xlvi] ibid.

[xlvii] Tor Brodtkorb, ‘Employee Misconduct and UK Unfair Dismissal Law; Does the Range of Reasonable Responses Test Require Reform?’ (2010) International Journal of Law and Management 429, 435.

[xlviii] ibid.