Category Archives: unfair dismissal

It’s the economy stupid!

Fear of employment law (which is used to sell employment law insurance) is not the same as the reality of employment law.   Tinkering with rules to alter people’s perceptions doesn’t really tackle the underlying problem of unemployment.

Changing the qualifying period of service?

The change from one to two year’s qualifying service for unfair dismissal claims   It seems  only about 1% of existing claims would have been affected by this change – not a big difference to employers.   Employees who have struggled into new or first time employment have a two-year wait for a full set of employment rights – a very big difference for them.

Is regulation causing unemployment?

The number of staff employed in US small businesses has been declining for years.  Their employment law is “dismiss when you want”.   How is employment law causing this?  There is a longer term trend a play regardless of employment laws themselves.  Similar patterns exist in the UK.

Show me the money

Late payments hit at an all time high.  If you can’t borrow from the bank or get an overdraft you can’t take on regular commitments.

This is how it works.

  • Our entrepreneur gets some new business worth £120,000 a year.  Champagne all round?  
  • Selling at narrow margins to compete –  gross profit is just 20% – or £24,000.  Beer all round?.

Entrepreneur  has to pay their own suppliers on time (or they won’t be re-supplied).  They need to take on a part-time worker as there is no slack in the existing workforce.   Brilliant – a person off the dole queue.

  • Let’s say that costs them £6,000 per year (including NI, to keep the example simple), and that they are not going to have other costs supporting this business – they can use their existing premises and overhead.
  • £18,000 trading profit on their extra turnover of £120,000 – coffee all round? 

Let’s assume their orders from the new client are evenly spaced across the year.  Let’s also assume that the big customer does not pay for 90 days (ask any small business about doing business with a big one!).

Because our client has to pay their supplier on delivery and their worker at the month end,  by the time they get paid their £10k for the month 1 shipment (in month 4), they’ve paid their supplier for four month’s shipments (4 x £8k = £32k) and the costs of 4 months of the new employee (£2k).

So, although the 4 months  profit is £6k, in cash terms they are £24k worse off (£34k total paid out to supplier and part-timer, £10k in from customer).  Tears all round?

Now, we all know the banks aren’t lending, so how do you handle it?  They can’t not pay their supplier, or they have nothing to sell to their customer.   So, at the very least, you can’t take on more staff since you have no way of paying them.

Increasingly businesses are using zero hours contracts, casual workers, and freelancers – anything to find a way to pay people ‘as an when’.  It is the logical thing to do in the circumstances.

I guess it would be too simple to get the big boys to pay up more quickly?  The late payment initiative is simply not working.  Until we fix this problem we are not going to see any real change in the unemployment figures.  

Annabel Kaye is Managing Director of Irenicon Ltd, a specialist employment law consultancy.
Tel: 08452 303050 Fax: 08452 303060
Website:  www.irenicon.co.uk
You can follow Annabel on
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Teacher claims ‘right to distribute pornography at work’

Miss Henderson worked as a mentor and leader for girls aged 11-16 who had barriers to learning, at inner city school in the London Borough of Hackney. She was sacked for gross misconduct after it was discovered that she had been using the school computers to download pornography and distribute it to her colleagues.

She denied that the material (which was explicitly pornographic) was inappropriate, arguing that it might be an enriching experience for the children to see this and from which they would suffer no harm. This argument did not convince the school who dismissed her.

She claimed that because the school had no explicit rule against teaching staff bringing pornography into school or viewing pornography at school, then she could not be disciplined for doing so. And she claimed that dismissing her was a breach of Article 10 of the European Convention on Human Rights – which protects freedom of expression.

The case made its way through tribunal and employment appeal tribunal – both of which found in the school’s favour. How much did that cost in legal fees?

Employers often complain about pointless cases being brought against them in tribunal, but wasn’t the school a bit of a sitting duck? There was nothing in the contract or policies issued by the school the restricted the use of the internet in any way.

If you are an employer who wants to restrict what can be downloaded on your computers (for whatever reason) it is a cheaper and more effective option to issue a simple internet policy or set of rules.

If the school had had such a policy in place (and could show it was issued) they could have stopped this tribunal at a preliminary hearing and may be even have gone for costs against the claimant instead of spending vital money from the education budget on litigation.

A short clear internet usage policy would have done the trick!    

The picture is clipart posed by models and not of the real teacher or class

Christopher Head is director of specialist employment law consultancy Irenicon Ltd. One of Christopher’s key skills is drafting short but comprehensive employment contracts in plain English that put the employer in the driving seat with problem staff. http://www.irenicon.co.uk/ email: info@irenicon.co.uk tel: 08452 303050 (local rate caller number) fax: 08452 303060

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Filed under contract, employment law, employment tribunal, unfair dismissal

Unfair dismissal changes – fiddling while Rome burns

The government is considering increasing the qualifying period of service for unfair dismissal to two years.

In the 30 years I have been advising on employment law, the qualifying period of service for unfair dismissal has moved from six months, to one year, to two years (for small businesses) to one year.

When it was six months, managers waited until seven months to dismiss. When it was a year, they waited 13 months! Quite often the reason for dismissal existed for weeks or months before the unfair dismissal deadline passed. What would have been simple is made complicated by a few weeks’ delay. Why is this?

Business owners rarely get into business because they are great with staff. Normally they are great at something … that at some point involves having staff for that ‘something’ to reach more people and make more profit. Being human, we put off ‘difficult’ conversations until the last possible moment. Criticising someone’s performance at work, and especially dismissing them, is a difficult conversation for most managers and so it is likely to be avoided or put off.

Whatever the qualifying period of service, businesses can only thrive when they get the performance they are paying for. The critical skill for business owners is to find a way to motivate staff to perform to the right standards. But all too often, the ‘fear’ of employment law obscures the issue. We hear of entrepreneurs who decide not to have staff because of employment law. But nobody refuses to have customers because they don’t understand consumer law!

It is easy for advisors to sell ‘fear’ to small businesses – it encourages them to buy insurance policies, and to retain advisors. Awareness of risk is sensible – we can take reasonable measures to reduce it. But generating fear is counter-productive all round. When we start to act in accordance with our fear rather than the facts, then we get things like people refusing to go out at night for fear of violent crime, even though they are in an area of low crime.

A year is a fair amount of time to find out if someone can do a job. What do we expect to find out in two years that we don’t know in one? Employers need to face their fear of employment law, and make sure they know how to handle performance and other issues. Changing the qualifying period of service doesn’t make the issue go away. Managing people effectively is a key skill for the successful business. And despite what many people say (particularly those trying to get into your wallet), employment law is not to be feared. Use it wisely, and incorporate it into your management processes sensibly, and it is a business friend, not an enemy. And it doesn’t take a ton of paper or impossibly complicated procedures to get it right … those are the mistakes that come from not knowing, not from knowing.

The tragedy is that fear of employment law often encourages businesses to adopt unnecessarily complex procedures that cause rather than solve problems. And that fear often stops people from taking the sensible management action at an early stage that would pre-empt an employment law problems arising in the first place. Thirty years’ experience with our clients from the tiny business to the multinational makes it clear – you don’t avoid employment law problems by insuring, and fear is not a good teacher. You avoid employment law problems by knowing your ground and managing your business for profit.

 

Annabel Kaye is Managing Director of Irenicon Ltd, a specialist employment law consultancy. Tel: 08452 303050 Fax: 08452 303060 Website : www.irenicon.co.uk. You can follow Annabel on twitter – http://twitter.com/AnnabelKaye

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Reasonable People

We all use words to conduct our daily life.  If I could really see inside your head, I might find that what you associate with things such as ‘good’  or ‘wicked’ might be different to mine.  Many teenagers use ‘wicked’  to describe something they like!

English employment law tends to use  everyday words to describe some very specific concepts.     An employment tribunal judge  talking about ‘reasonable in the circumstances’ ( a key test of whether a dismissal is fair)  will not necessarily be using ‘reasonable’ in the same way as a typical manager.

I doubt whether anyone has woken up and thought:  “I will be unreasonable today and make decisions about my staff that make no sense whatsoever”.   However rational (or irrational) our thinking might be, we naturally tend to believe that our actions and decisions were ‘reasonable’.

Employers are often bewildered when employment tribunals don’t agree with them!    Many believe that tribunals are biased against them  (just as employees often believe the opposite).

This is because an employer’s personal interpretation of reasonable (whatever that might be) is not based on the same concepts as an employment tribunal’s.     A tribunal will be looking for a documented process to show how the decision made.  This may often include what alternatives were  considered and why they were rejected. 

Managers can be extraordinarily reluctant to go through this process – feeling that however  they arrived at their conclusion, it is a right one.   HR can be very keen to document the mechanics – e.g. the minutes of a meeting, who saw whom and when, but can be very reluctant to offer any challenge to a manager who is going down an eccentric or dangerous track.  As in any other decision making process, if the method of gathering data and evaluating it is defective, there is a very high chance the decision will be wrong.  Sometimes we all need someone to say – “Hey – pay attention to that, it could be important” or “Are you sure this is really the key issue?”

Tribunals do not look at whether a dismissal decision was right or wrong, but whether it was ‘within a range of reasonable responses’.  If the business can demonstrate a thoughtful process and can identify why other alternatives were not appropriate, it is rarely a problem to meet this test.  

Aligning your decision-making process with what the business needs, and adding in a fair degree of self-challenge at each stage, will allow you to make appropriate decisions for the business without undue fear of legal challenge.

Annabel Kaye is Managing Director of Irenicon Ltd, a specialist employment law consultancy.   Tel: 08452 303050  Fax: 08452 303060  Website : www.irenicon.co.uk.  You can follow Annabel on twitter – http://twitter.com/AnnabelKaye and check our regular articles and news throughout the autumn on our blog site – https://irenicon.wordpress.com/

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Filed under employment law, employment tribunal, unfair dismissal