Selected Employment Law Terms

Additional award—if the employers fail to reinstate or re-engage an employee whose unfair dismissal claim is successful, the employment tribunal may make an additional award of between 26 and 52 weeks' pay (from 1 February 2009 capped at £350 per week, a figure which rises annually in line with the Retail Prices Index).

Automatically unfair reasons—usually in an unfair dismissal claim the employment tribunal has to determine whether the dismissal is fair or unfair having regard, for example, to the size and administrative resources of the employers and equity and the substantial merits of the claim: s. 98(4), Employment Rights Act 1996. However, there is a growing list of reasons for dismissal where Parliament deems the dismissal to be unfair without recourse to s. 98(4). Examples include dismissal for being pregnant and for whistleblowing. Dismissals on these grounds are said to be for automatically unfair reasons.

Basic award—compensation for unfair dismissal comprises two elements, the basic award and the compensatory award (q.v.). The former consists of a sum of money (maximum from 1 February 2009 is £10,500, an amount that since 1999 has been increased annually in line with the Retail Prices Index) calculated according to a formula dependent on the age of the claimant, the number of years in continuous employment (to a maximum of 20) and the statutory maximum pay (currently £350) per week. From this quantum are deducted various sums.

'Break' clause—this is an express term in the contract of employment that permits the employers to terminate the contract without the employee having a legal remedy. For example, if the employee is employed under a fixed-term contract for five years, the contract cannot be lawfully terminated until the five years have elapsed (plus the notice period) and damages for wrongful dismissal (q.v.) would be based on that period; if, however, there is a break clause the employers may lawfully terminate the contract before the five years have elapsed.

Closed shop—for many years trade unions sought to reach agreement with managements that the latter would not employ workers who were not union members either before being taken on (a pre-entry closed shop) or shortly after being engaged (a post-entry closed shop). Unions saw such arrangements as protecting their membership base and many employers were sympathetic to the institution because disciplining of their work force could often be left to the recognized union. However, the Conservative governments of the 1980s and 1990s saw the closed shop as antithetical to the employers' right to manage, including their rights to hire and fire, and by 1990 they had made closed shops more or less impossible to maintain, though the institution has never been made illegal.

Collective agreement—this is a non-legally binding agreement between management and unions. Clauses from it e.g. on pay may be incorporated into the legally binding contract of employment.

Compensation in discrimination claims—unlike unfair dismissal's compensatory award (q.v.) compensation in discrimination cases covers both economic and non-economic loss (e.g. injury to feelings). Unlike in unfair dismissal there is no financial cap to compensation for claims involving discrimination but the Court of Appeal in Vento v Chief Constable of West Yorkshire [2003] ICR 318 laid down that compensation for injured feelings should normally fall within one of three bands: £15,000–£25,000 for the worst cases e.g. of harassment; £500–£5,000 for the least worst isolated acts of discrimination; and £5,000–£15,000 for the middle band. Sums of under £500 should not normally be awarded in order to mark the seriousness of even minor discrimination. Other remedies for discrimination are declarations and recommendations. Any one or more of these remedies may be awarded.

Compensatory award—in addition to the basic award (q.v.) of compensation employment tribunals also grant a compensatory award when compensation is the remedy to be awarded. The maximum amount from 1 February 2009 is £66,200. The quantum is derived by adding together sums due under various headings such as loss to the date of the hearing, future loss, loss of pension rights, loss of statutory rights, and loss of benefits such as a company car (see Norton Tool Co Ltd v Tewson [1973] 1 WLR 45 (NIRC)); only economic loss is recompensed: Dunnachie v Kingston upon Hull City Council [2005] 1 AC 226 (HL) (so, for example, no compensation is awarded for injured feelings; cf. discrimination law). From this quantum are deducted various sums including an amount representing the percentage likelihood that the claimant would have been dismissed in any case (the so-called 'Polkey' deduction named after the House of Lords' case in which the principle was enshrined: Polkey v AE Dayton Services Ltd [1988] AC 344) and an amount representing the percentage to which the claimant caused or contributed to his or her dismissal. Once the quantum is calculated in this way, then the statutory cap is applied.

Constructive dismissal—for the purposes of statute when the employers act in such a way that they breach a fundamental express or implied term of the contract of employment, the employee may elect to treat the contract as at an end. If he or she does so within a reasonable time, the employers are said to have constructively dismissed the employee. The same applied when there is an anticipatory breach of contract. The principal authority is Western Excavating (ECC) Ltd v Sharp [1978] QB 761 (CA). At common law the same concept is expressed by the term 'repudiation' but over time the common law term is being replaced by 'constructive dismissal'.

Continuous employment—for the purposes of some statutory claims the claimant must have been continuously employed for a certain length of time. For example, there is a qualifying period of two years' continuous employment for redundancy payments. There are laws found in the Employment Rights Act 1996 that tell the tribunal how to calculate continuous employment, and do so even in certain circumstances whether or not there is a contract in existence, e.g. when a woman is absent from work because of pregnancy. When continuity is broken, the employee has to restart building up the weeks of continuous employment. Time spent on industrial action does not break continuity but the time does not count towards the calculation of whether the employee has or has not satisfied the qualifying period. The concept of continuity of employment is also important when calculating redundancy payments (q.v.) and the basic award (q.v.) for unfair dismissal.

Discrimination—since 2006 England and Wales have had six so-called strands of discrimination: sex (from 1975) (including gender reassignment (1999)), race (1976), disability (1995), religion or belief including lack of belief (2003), sexual orientation (2003), and age (2006). These strands share several characteristics but there are differences among them. Generally speaking there are four types of discrimination—
• direct discrimination: this is where the employers treat the worker (e.g. on the grounds of sex) less favourably than they do treat or would treat another similarly situated worker. This type of discrimination cannot be justified by the employers except in relation to discrimination on the ground of age. In respect of disability there is both direct discrimination and disability-related discrimination, but the government proposes to add indirect disability discrimination;
• indirect discrimination: the principal definition concerns the failure by the employers to justify a provision, criterion or practice. There are currently two different varieties of this form of racial discrimination but either type may be justified by the employers. There is as yet no form of indirect disability discrimination but the functional equivalent is the failure by the employers to make reasonable adjustments;
• harassment: most forms of this type of discrimination bear a common definition, the violation of the worker's dignity at work; and
• victimisation, which occurs when the employers treat the worker less favourably than they do treat or would treat an otherwise similarly situated worker on the grounds that she has brought a discrimination claim against them. For the purposes of racial discrimination only segregation is a fifth form of discrimination.

Economic torts—these torts if committed in contemplation or furtherance of a trade dispute (q.v.) do not give rise to trade union liability: s. 219, Trade Union and Labour Relations (Consolidation) Act 1992. These torts are: inducing breach of contract, interference with contract by unlawful means, intimidation, and conspiracy. Other torts, economic or otherwise, do not fall within s. 219.

Employment tribunals—these are the fora in which most employment law claims, e.g. discrimination, unfair dismissal, and redundancy payments, are heard. Since 1994 tribunals have also been entitled to hear claims relating to termination of contract, e.g. actions for wrongful dismissal when the claim is for under £25,000 (a sum which has not been increased in line with inflation) and any counterclaims by the ex-employers. The ordinary courts retain concurrent jurisdiction for claims under £25,000 and have exclusive jurisdiction above that amount. Claims for breach of contract during the running of the contract remain excluded for the jurisdiction of the employment tribunals, as are any claims involving restraint of trade covenants, confidentiality clauses, personal injury and accommodation. Appeal lies to the Employment Appeal Tribunal and thence to the Court of Appeal and the House of Lords.

Equal pay—workers of one gender may bring claims for pay equal to that of their comparators of the opposite gender under the provisions of the Equal Pay Act 1970. They must do so on one of three bases: 'like work' (i.e. the work is the same or is broadly similar), work rated as equivalent, and equal value. If the workers are successful at this point, the employers may have a defence of genuine material difference or genuine material factor. If the workers are successful, their contracts are deemed to include an equality clause that gives them the benefit of what their comparators have. It should be noted that while the statute is called the Equal Pay Act, it is not restricted to matters of pay but covers all contractual matters. If the issue is related to non-contractual matters such as promotion, the relevant statute is the Sex Discrimination Act 1975. In relation to differences in both contractual and non-contractual matters involving racial discrimination, the relevant statute is the Race Relations Act 1976.

Express terms—these are contractual obligations that the parties have agreed either in writing or orally.

Flexibility clause—this is a term in the contract of employment that permits the employers to move the employee to work other than that which she normally does.

Freedom of association—workers have, subject to various constraints, the freedom to join unions according to various international instruments including Art. 11 of the European Convention on Human Rights. English law is as may be expected more complicated: briefly, dismissal for belonging to an independent trade union is one of the automatically unfair reasons for unfair dismissal (q.v.). At least where not joining a trade union would result in dismissal (as in a closed shop, q.v.), workers have a right not to be members of trade unions.

Implied terms—these are contractual obligations that the parties have not expressly agreed. In employment law these clauses may arise on the facts of each individual contract (sometimes known as 'terms implied in fact') or from the fact that the contract is one of employment ('terms implied in law'). Examples of the latter include the employee's duty of faithful service and the employers' duty to pay wages.

Industrial action—this term comprises strikes and other forms of behaviour involved in conflicts at work. For the law relating to dismissal in connection with industrial action see ss. 237, 238, and 238A of the Trade Union and Labour Relations (Consolidation) Act 1992. Industrial action in response to a trade dispute (q.v.) may result in immunity from suit for trade unions.

Mobility clause—this is a term in the contract of employment that permits the employers to move the employee from her normal workplace to another. The clause may be express but may be implied.

Notice—at common law where there is an express term that stipulates that the employers may lawfully dismiss the employee by giving a period of notice of dismissal, that clause applies; if there is no express term, an implied notice clause of a reasonable length applies. How long is 'reasonable' depends on the facts. In addition statute (originally the Contracts of Employment Act 1963, now the Employment Rights Act 1996, s. 86) provides that employers must give employees a minimum period of notice. This minimum is one week when the employee has been employed for less than two years; it is one week for each year of employment between two and 12 years; and it is 12 weeks when the employee has been employed for more than 12 years. For example, the statutory minimum is seven weeks for an employee who has been employed for seven years and 12 weeks when the employee has been employed for 20 years. Where the contractual period is less than the statutory period, the latter applies; where it is less, the statutory minimum applies. This is part of the 'floor of rights' provided to employees by Parliament. It should be noted that (i) no notice need be provided by employers when the employee is summarily dismissed for 'cause'; and (ii) by statute the period of notice to be provided by an employee is one week but the contract may provide for a longer period.

Pregnancy—dismissal for being pregnant is one of the automatically unfair reasons (q.v.) for dismissal and constitutes sexual discrimination without the need to compare the woman against a similarly situated male.

Recognition—trade unions may seek to influence employers over many areas of working life such as pay. In order to reach collective agreements with management the union must be recognized by the employers for the purposes of collective bargaining. This type of recognition is voluntary. Since the Employment Relations Act 1999 there has been a separate statutory scheme for recognition via a body called the Central Arbitration Committee. The scheme is longwinded and if the union successfully completes the process, the outcome is recognition but only in respect of pay, hours and holidays. The Employment Relations Act 2004 specifically excluded pensions from 'pay'; however, at the time of writing the Government is considering whether or not to include pensions as one of the topics because over time negotiations about pensions have become commonplace in negotiations when recognition has been voluntary.

Redundancy payments—on redundancy (as defined in s. 139 of the Employment Rights Act 1996) the employers are liable to make a redundancy payment to each employee made redundant. The calculation of the amount is the same as that for the basic award (q.v.).

Re-engagement—this is one of the three possible remedies for unfair dismissal. It consists of the employment tribunal ordering the employers to take the employee back into employment but not into the same job she had before dismissal (that is reinstatement (q.v.)). The remedy involves putting the employee into a job of similar status. The tribunal will direct the nature of and remuneration in the new employment, the benefits the employee is to receive, and the date by which re-engagement must take place. If the employers refuse to comply with the order, the remedy is the additional award (q.v.).

Reinstatement—when the employment tribunal finds that the employers have unfairly dismissed the employee, they must consider first whether to reinstate the employee into the same job as he or she had before dismissal. If such an order is made, the tribunal will also order the employers to make up the pay loss between dismissal and reinstatement. If the employers do not comply with the order, the additional award (q.v.) is made.

Statutory discipline and dismissal procedures—by the Employment Act 2002 and the Employment Act 2002 (Dispute Resolution) Regulations 2004 (SI 2004/752) Parliament has laid down procedures which must be followed before disciplinaries and dismissals. These will be abolished from 6 April 2009 and replaced by a more flexible regime.

Statutory grievance procedures—by the Employment Act 2002 and the Employment Act 2002 (Dispute Resolution) Regulations 2004 (SI 2004/752) employees must go through the grievance procedure in relation to various claims before the claim may be brought in the Employment Tribunal. This procedure also applies to constructive dismissal (q.v.). These procedures will be abolished from 6 April 2009.

Trade dispute—economic torts (q.v.) committed by trade unions are not actionable if committed 'in contemplation or furtherance of a trade dispute', a phrase known as the 'golden formula'. The term 'trade dispute' is defined in s. 244(1) of the Trade Union and Labour Relations (Consolidation) Act 1992 as being:
a dispute between workers and their employer which relates wholly or mainly to one or more of the following:
• terms and conditions of employment, or the physical conditions in which any workers are required to work;
• engagement or non-engagement, or termination or suspension of employment or the duties of employment, of one or more workers;
• allocation of work ¼ ;
• matters of discipline;
• a worker's membership or non-membership of a trade union;
• facilities for officials of trade unions;
• machinery for negotiation or consultation, ¼ including recognition ¼

Trade union—in law a trade union is one which is an 'organisation, whether temporary or permanent, which consists wholly or mainly of workers of one or more descriptions, and whose principal purposes include the regulation of relations between workers and employers or employers' associations': s.1 (a), Trade Union and Labour Relations (Consolidation) Act 1992.

Transfer of undertakings—under law originally derived from the Acquired Rights Directive 1977 as amended, now the 2001 Directive of the same name, and transposed into English law by the Transfer of Undertakings (Protection of Employment) Regulations ('TUPE') 1981 (SI 1981/1794), now TUPE 2006 (SI 2006/246), employees' terms and conditions are protected on the transfer of an undertaking or part of one as a going concern from the transferor employers to the transferee employers. Continuity of employment (q.v.) is also preserved. Any amendment to the terms is prohibited, even if overall the change is to the employees' benefit: Daddy's Dance Hall [1988] ECR 739 (ECJ). A dismissal in connection with the transfer, whether by the transferors or the transferees, is automatically unfair unless the employers have an economic, technical, or organizational reason entailing changes in the work force, in which case TUPE deems the reason to be a dismissal for some other substantial reason (or for redundancy if the reason is one within the definition of redundancy found in s. 139 of the Employment Rights Act 1996); in that event the tribunal must determine whether the dismissal was fair or unfair in the usual way.

Unfair dismissal—this is a claim, first created in the Industrial Relations Act 1971 and now found in the Employment Rights Act 1996, brought by former employees against their former employers. It is based on the ex-employers' dismissal of the employee contrary to the rules laid down by Parliament as expanded on by the courts and tribunals. The remedies that the tribunal may award are reinstatement (q.v.), re-engagement (q.v.), and compensation comprising the basic award (q.v.) and the compensatory award (q.v.). However, only one of these remedies may be awarded and Parliament has instructed the tribunals to consider the remedy in the order stated (e.g. if the tribunal refuses to order reinstatement, it must then consider re-engagement).

Variation—employers may vary, i.e. change, their employees' contracts only with their consent (or that of their union), by having a flexibility clause that covers the variation, or by dismissal and re-engagement on new contracts. The last may be an unfair dismissal (q.v.). Simply notifying the employees of the change is not lawful; also not legal is merely consulting with the employees or their representatives.

Whistleblowing—the Public Interest Disclosure Act 1998 inserts new provisions into the Employment Rights Act 1996 to protect those who blow the whistle on the misdeeds of their employers. Dismissal in breach of these provisions is one of the automatically unfair reasons (q.v.) for unfair dismissal.

Working time—the Working Time Directive 1993 (93/104) was transposed into UK law by the Working Time Regulations 1998 (SI 1998/1833). In brief:
• the maximum hours of work per week are 48 averaged out over a 17-week reference period, but individuals may opt out from this protection;
• each person is entitled to four weeks paid holiday per year;
• special rules apply to young workers and to night workers.
The British Government is one of those that refuse to get rid of the opt out from the maximum hours of work per year; however, at the time of writing, there are proposals from it to extend the number of days of holiday per year to 28.

Written statement—the Employment Rights Act 1996, s. 1 provides that employers must provide their new employees who have at least one month's continuous employment (q.v.) with a written statement of their particulars of employment within eight weeks of their starting employment. This statement is sometimes known as a 's. 1 statement' and 'written particulars'. This is not the contract of employment (except when the employee signs the written statement as being the contract of employment), though a written contract of employment may constitute also the written statement. Any change to the particulars must be notified to the employee within four weeks.

Wrongful dismissal—this is a common law action for breach of contract resulting in the dismissal of the employee or the repudiation of the contract by the employers; 'wrongful' in this context means 'in breach of the law on notice' (q.v.); and the employers fail to prove that they had a sufficient 'cause' (justification/ reason) to dismiss in breach of contract. Traditionally the sole remedy is damages. Since 1994 actions for wrongful dismissal may be made in the Employment Tribunals provided that the claim is for less than £25,000.

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Oxford University Press, Online Resource Centre, Selected Employment Law Terms.

Selected Employment Law Terms