Employment Status

Question:

I have engaged a worker who works for me on a regular basis but he pays his own tax and National Insurance contributions. Does that mean he is self-employed and so cannot take me to an employment tribunal if I terminate our arrangement at some stage in the future?

Answer:

Not necessarily. The tax and employment regimes are separate and do not have to give the same answer as to a worker's status. An employment tribunal will look at the realities of the relationship as a whole, taking into account a range of factors and making a balanced decision. The starting point is whether there are mutual obligations between you i.e. whether you are obliged to provide work for the worker (or to pay him for any work provided) and whether the worker is then obliged personally to perform a reasonable amount of the work you offer. The next factor to consider is whether you exercise a sufficient degree of control over the worker in terms of what he does and how and when he does it.

The Contract of Employment

Question:

Am I legally obliged to issue my staff with written contracts of employment?

Answer:

The law does not require you to issue your employees with a 'contract of employment' as such. Instead, you are under a statutory obligation to issue what is called a 'written statement of terms of employment' within two months of the start of their employment. The law sets out what the written statement must contain as an absolute minimum.

Pay

Question:

One of my employees has resigned but has refused to work her two weeks notice period as required by her contract of employment. In these circumstances, can I withhold her week’s accrued wages for the inconvenience she has caused me?

Answer:

It is only possible to make such a deduction if there is a clause in the employee’s contract of employment that allows you to deduct monies from the employee’s wages in such circumstances or the employee has signed a written agreement signifying her consent to the making of the deduction. Even if there is a clause, it must have been drafted in such a way that it represents a genuine pre- estimate of the loss or damage you could suffer as a result of the employee’s breach of contract and must not act as a penalty on the employee. Penalty clauses are unenforceable. If you do not have an appropriately drafted clause, your only option is to make a claim in the small claims court for the employee’s breach of contract. You can only claim damages for your actual financial loss. You cannot claim for inconvenience.

Disciplinary Practice and Procedure

Question:

I have given my employee numerous verbal warnings about his poor attendance record. He received a written warning three months ago and a final written warning a month ago. He has been late for work again three times this week. He has been employed for two years. Can I dismiss him now?

Answer:

There must be a fair hearing prior to the implementation of each stage of the written warnings procedure. You must not prejudge the situation. It would appear in this case that you have made no attempt to investigate the reasons for the employee’s lateness, nor have you given the employee the opportunity to prepare and then state his case at a formal disciplinary hearing before making your decision. He has simply been presented each time with a warning letter. Your procedure to date is therefore flawed. If you dismiss the employee now, it is likely to be an unfair dismissal. Not only that, if you fail to follow the statutory three-stage dismissal and disciplinary procedure (DDP) in effecting any dismissal, it will be automatically unfair, giving you no defence at all to an unfair dismissal claim.

Discrimination

Question:

I took on an employee six months ago. She has an attitude problem but I have tried to ignore it. However, she has come to me this morning and told me she is three months’ pregnant. Can I dismiss her for her bad attitude?

Answer:

The problem is you have no record of having discussed this employee’s attitude with her. You will therefore find it extremely difficult to prove that any dismissal had nothing to do with the employee’s pregnancy. In these circumstances, the employee would have a potential claim for sex discrimination and automatic unfair dismissal against you. You should address the issue of attitude with the employee and this should be dealt with as a disciplinary issue. If customers or other employees complain, make sure you ask them to put their complaints in writing.

Transfer of Undertakings

Question:

I am buying a printing business as a going concern to complement my publishing business. The vendor has three long-serving staff. I do not want them because I would like to recruit my own staff so that I can train them from scratch. Can I ask the vendor to dismiss them on the day before I take over the business? If not, can I make them redundant?

Answer:

This is not a redundancy situation. Where you buy a business as a going concern, the law states the employees in the business automatically become your employees from the time of the transfer on the same terms and conditions of employment as they currently enjoy with the vendor. Should you dismiss these employees or ask the vendor to dismiss them because of the impending purchase, it will be deemed to be an automatically unfair dismissal, unless you are able to show an economic, technical or organisational reason entailing changes in the workforce. In this case, there is no such reason. The fact that you would prefer to recruit your own staff is not a valid reason.

Unfair Dismissal

Question:

An employee walked out this morning saying that he was not coming back. He had had an argument with his line manager because his line manager told him his hours were going to be reduced with immediate effect due to financial difficulties. The employee has worked for us for three years. Should we do anything?

Answer:

It is not safe to leave the situation as it is in these circumstances. Where there has been no dismissal but you have acted so unreasonably as to force the employee to resign his position, the employee is entitled to act as if dismissed by you. This is known as constructive dismissal. In this case, the employee could argue you are in serious breach of contract in reducing his hours without his agreement. The fact you are in financial difficulties is of no real relevance. You should therefore contact the employee as a matter of urgency and ask him to come to see you so that you can resolve the problem. If it cannot be resolved amicably, the employee will need to raise a written grievance and then wait for 28 days before he can lodge employment tribunal proceedings.If a grievance is lodged, as a minimum you will need to follow the statutory grievance procedure (GP). You should also check the employee’s contract of employment to ensure you comply with any contractual grievance procedure (to the extent that this is not inconsistent with the GP).

Wrongful Dismissal

Question:

I have an employee who has been employed for five months. He was caught with his hands in the till by a fellow employee and has admitted theft at a formal disciplinary hearing. Can I dismiss him without notice or do I have to give him the contractual notice period of one week?

Answer:

Theft is clearly a gross misconduct offence. As such, based on the evidence you have gathered, you can now summarily dismiss him i.e. without notice. However, first ensure that the procedure you have followed to date complies with the statutory dismissal and disciplinary procedure (DDP) and always give the employee a right of appeal.

Redundancy

Question:

I need to make one of my employees redundant because orders are down and there is no sign of things improving. They are all good workers. I want to use last in first out because that seems the fairest way. Can I simply call the employee with the shortest service in to the office and give him his notice? He has two and a half years’ service and is aged 34. He earns £300 gross per week.

Answer:

Even though last in first out might appear to constitute a fair selection criterion, it is possible it may be indirectly discriminatory on the grounds of age if it has the result of selecting your youngest worker (because younger workers are more likely to have shorter service than older workers). If this is the case, then you would need to be able to objectively justify this criterion as a proportionate means of meeting a legitimate aim. You must also treat your employees fairly in the procedure you use prior to the final decision to dismiss. You should first consider whether there are any viable alternatives to redundancy. For example, could costs savings be made in other ways? Do any of your employees want to volunteer for redundancy? Is there any opportunity for redeployment? You should consult with all your employees collectively and the selected employee individually prior to the decision to dismiss being made. The consultation must be meaningful with a view to fully exploring the possibility of avoiding the dismissal. You should explain the economic need for the proposed redundancy and the selection criteria you propose to use. Consultation will involve a series of meetings and should last a minimum of a week.You should also ensure that your fair consultation procedure incorporates the statutory three-stage dismissal and disciplinary procedure (DDP), which will, amongst other matters, mean setting up the consultation meetings in writing and giving a right of appeal against any decision to make the employee redundant.

If the employee is eventually made redundant after you have followed the correct procedure, he will be entitled to a minimum of two weeks’ notice (although his contract of employment may provide for more) and a statutory redundancy payment of £580 (2 x £290 - the maximum weekly wage).

Miscellaneous

Question:

I run a chain of hairdressing salons. One of my employees left last month to set up her own salon and I have now found out she is stealing all my customers at that particular branch. It appears she must have printed out the customer list before she left. There is a clause in her contract stating she will not solicit my customers for 12 months after the termination of her employment. Can I do anything?

Answer:

You will first need legal advice on whether your clause is likely to be valid or not since it is a clause in restraint of trade. You will need to show you have a legitimate business interest to protect and that the clause is drafted no wider than is reasonably necessary for the protection of that interest. If the clause is reasonable, you can seek an injunction restraining the ex-employee from breaking the terms of her contract and damages for any loss you can prove has occurred as a result of that breach of contract.