Be Aware – October 2023
The Qualifying Time Period for Unfair Dismissal: Practical Implications
The amount of ‘continuous employment’ needed to qualify for the right to not be unfairly dismissed has often been one of the first elements of employment law which an incoming government changes upon being re-elected. Those familiar with employment law will recognise the somewhat predictable historical pattern of incoming Labour party governments lowering the time of continuous employment needed and incoming Conservative party governments conversely raising the time needed. The Labour party have recently released a ‘working paper’ stating that if they were to win the next general election in 2024, they would abolish the qualifying time period entirely from the 2-year period currently operating.
With this potential change only being hypothetical, it is a good time to revisit what the current law is regarding when an employee acquires the right to not be unfairly dismissed, as well as dismissals which are automatically unfair, no matter the time served by the employee.
What constitutes 2 years of continuous employment?
Since 2010 under the Conservative coalition government, an employee requires 2 years of continuous employment (s.108 ERA 1996) before they acquire the right to not be unfairly dismissed. Firstly, the person has to be an employee within the definition of s.230 of the Employment Rights Act as opposed to a worker (details of the difference can be found at: https://www.acas.org.uk/checking-your-employment-rights).
The next requirement is 2 years of ‘continuous employment’ from the date when the employee formally starts work which, on the surface, is quite an ambiguous term. In general terms, continuous employment means working for the same employer without a break as long as the employee is under an employment contract. This includes where there has been a transfer of undertakings or there has been a move for the employee between associated employers.
Measuring the 2 years of continuous service should be in line with s. 212 (1) of the ERA 1996. S.212 (1) says that any week where the employee’s relations with an employer are governed by an employment contract count towards the 2 years. This also includes part-time work too. Absence from work due to reasons such as holidays, sickness, maternity and/or paternity leave, adoption leave will not break continuous employment as long as the employment contract continues throughout these events. One notable exception is a week where an employee was on strike, which does not count as a week contributing to continuous employment but it does not ‘reset the clock’ either, it is just not counted (s.216 ERA 1996).
Automatically unfair dismissals where the 2-year period does not apply
There are approximately 60 ‘day 1 rights’ which employees acquire from the start of their employment and are automatically unfair reasons to dismiss. A dismissal on grounds related to trade union membership is automatically unfair, for example. The ERA 1996 s.180(3) lists a number of further automatically unfair reasons for dismissal which are exceptions to the 2-year rule including dismissal related to pregnancy, for maternity leave, and for enforcing the right to be paid the National Minimum Wage, to name but a few. Employers should also be wary that claims for discrimination, whistleblowing, and breach of contract could be made before 2 years of continuous employment too.
What does this mean in practical terms?
Essentially this means that employers are able to dismiss employees with less than 2 years’ service without a ‘fair’ reason for the dismissal and without a positive obligation to conduct a fair disciplinary procedure.
However, there are inherent risks if an employer decides not to conduct a fair disciplinary procedure or at the very least a meeting prior to dismissal, even for employees with less than 2 years’ service. A fair procedure has the obvious benefit of letting the employer inform the employee of their position in a controlled manner but also to afford the employee a chance to respond. For an employer, this may alert them to any potential hurdles in the form of the ‘day 1 rights’ mentioned earlier in this article or any potential discrimination claim. It also helps to show current employees that the employer is willing to hear out concerns and maintain a reputation that they care for their employees.
In any event, the employer still needs to abide by contractual or statutory notice periods to avoid wrongful dismissal claims (unless there is clear evidence of a gross misconduct issue).
Duty To Make Enquiries Of Disabled Job Applicant
Under the Equality Act 2010, where an employee has a disability, employers are under an obligation to make reasonable adjustments. It is important to note that this duty extends to potential employees. As such, where an applicant is disabled employers are under an obligation to make reasonable adjustments to the interview process. But how far does this duty extend?
In the case of AECOM Limited v Mallon [2023] EAT 104, the employer, AECOM Limited, put in place an online application process that required potential employees to complete a short form and submit their applications online. Mr Mallon contacted AECOM Limited by sending his CV and requesting to make the application orally because of his disability. AECOM Limited responded by email stating that he had to complete the application online, but that they could provide assistance submitting the form if necessary. AECOM Limited made enquiries as to which aspects of the form he was having trouble with. Crucially Mr Mallon did not elaborate as to the nature of his disability, but neither did AECOM Limited make any further enquiries and neither party telephoned the other to discuss the issues. Unknown to AECOM Limited, Mr Mallon suffered from dyspraxia and had difficulty creating the online account and completing the forms.
Mr Mallon was unsuccessful and subsequently issued a claim for disability discrimination.
The employment tribunal upheld Mr Mallon’s claim, based on the requirement to complete the online process. This was found to be a provision, criterion or practice (‘PCP’) that put Mr Mallon at a substantial disadvantage due to his disability. Whilst it was found that AECOM Limited didn’t have knowledge of the precise nature and extent of Mr Mallon’s disadvantage, they had been informed by Mr Mallon that completing an online form was problematic due to a disability., and therefore had constructive knowledge of the condition. AECOM Limited ought to have telephoned Mr Mallon and made further enquiries.
AECOM Limited appealed against the tribunal’s decision arguing, among other things, that the tribunal were incorrect in finding that it had constructive knowledge of the disadvantage to Mr Mallon. The appeal failed.
In conclusion
This case is a reminder that employers have a duty to be proactive when dealing with disabilities. AECOM Limited acted correctly, to a point, but crucially failed to fully appreciate the nature of Mr Mallon’s condition.
An employer cannot ‘turn a blind eye’. This is a point made clear in the EHRC Code which states at paragraph 6.19 that an employer must ‘do all they can reasonably be expected to do to find out whether’ an employee has a disability and is, or is likely to be, placed at a substantial disadvantage.
It is not incumbent upon an employer to make every enquiry where there is little or no basis for doing so. Reasonableness must entail a balance between the strictures of making enquiries, the likelihood of such enquiries yielding results and the dignity and privacy of the employee, as recognised by the EHRC Code.
The EHRC Code gives the example of an employee who has depression and cries at times at work: it is likely to be reasonable for the employer to discuss with the worker whether their crying is connected to a disability and whether a reasonable adjustment could be made to their working arrangements.
We would advise that as soon as an RMI member is aware that an employee or applicant believes they are at a disadvantage due to a medical condition that steps are taken to fully understand the nature of the condition and the disadvantage.
The Employment Relations (Flexible Working) Act 2023
The Employment Relations (Flexible Working) Act 2023 has successfully passed through Parliament. As its title suggests, there are several things it changes in the current flexible working regime.
Current position
As the law stands, employees can make a request for ‘flexible working’, such as flexitime, part-time, job sharing, homeworking after being employed for 26 weeks and they are limited to making one request every 12 months. An employee isn’t required to provide a reason for their request.
Employers are required to consider the request for flexible working but not required to grant it. Requests can be rejected for a number of reasons, including :-
- it will cost too much.
- you cannot reorganise the work among other staff.
- you cannot recruit more staff.
- there will be a negative effect on quality.
- there will be a negative effect on the business’s ability to meet customer demand.
- there will be a negative effect on performance.
- there’s not enough work for the employee to do when they’ve requested to work.
- there are planned changes to the business and thinks the request will not fit with these plans.
What will change?
Under the new Act
- employees will now be able to make 2 flexible working requests in any 12 month period.
- any flexible working requests have to be responded to within 2 months of receipt of a request unless the employee agrees to extend this period.
- employers are not able to refuse a request until they have ‘consulted’ with the employee; although what counts as consultation has not been defined and will likely be subject to ACAS guidance.
- Employees will no longer have to explain what effect they think agreeing to the request would have and how any such effect might be dealt with.
As the Bill passed through Parliament, there was discussion of the right to request flexible working being a right from day 1 of employment. This is not included in the current legislation. Whilst the Government has stated an intention to create further legislation to grant the right from day 1, they have not taken any steps to do so yet. As things stand today, the employee still has to wait 26 weeks before such a request can be made.
Recovering Training Costs From An Apprentice
“We receive funds towards training costs from the Apprenticeship Service (funded by the apprenticeship levy). Are there any specific rules that prevent an employer from recovering training costs from an apprentice?”
It is not unusual for an employer and an employee to enter into a training agreement whereby the employer invests in the employee by meeting external training costs on the understanding that the employer can claw back the training costs from the employee (on a sliding scale whereby the amount to be repaid reduces depending on the length of time that has passed since the completion of the course) if they leave the business. Provided that the repayment clause does not amount to a penalty clause (i.e. it does not seek to disproportionately punish the employee for leaving the business) then it may be enforceable.
However, an employer cannot take the same approach with an apprentice around the recovery of training costs from an apprentice if the apprentice leaves after the completion of their apprenticeship. The rules on apprenticeship funding are set out in the Department for Education ‘Apprenticeship funding rules 2023 to 2024 (“the Rules”):-
Paragraph 145 of the Rules (headed ‘Financial contributions by an apprentice’) states:-
“The provider or the employer must not ask the apprentice to contribute financially to the eligible costs of training, on-programme or end-point assessment. This includes both where the individual has completed the apprenticeship successfully or has left the programme early.
Costs include any co-investment or additional training and assessment costs above the funding band, that the employer has paid directly to the provider, where this is part of the agreed apprenticeship.”
Redundancy Calculation
“We are in the process of making an employee redundant. What is the correct calculation date for a calculating a week’s pay for the purposes of redundancy pay? How is a week’s pay calculating for an employee on a zero-hour contract and if the employee has been working fewer hours during the period leading up to termination will that affect their statutory redundancy payment?”
Calculating statutory redundancy pay
Under Section 162 of the Employment Rights Act 1996 (ERA 1996), a statutory redundancy payment is calculated by:-
- determining the employee’s number of complete years of continuous employment ending with the ‘relevant date’, and
- allowing the appropriate number of weeks for each year
- multiplying that total number of allowed weeks by the current figure for a week’s pay, calculated in the usual way, subject to the statutory cap, which is £643 per week from 6 April 2023
The relevant date
As a general rule, the ‘relevant date’ for these purposes will be the date on which employment is effectively terminated, except:-
- where the employee dies before notice given by the employer expires, in which case the relevant date is the date of the employee’s death, or
- where the employer terminates the employment contract and failed to give the required statutory minimum period of notice, in which case a later date will apply for two specific purposes only, namely:
- calculating the two years’ qualifying period for a statutory redundancy payment, and
- computing the length of service in calculating the amount of the redundancy payment
A week’s pay
For these purposes a week’s pay is calculated in accordance with s220-229 ERA 1996. he method of calculation varies depending on whether the employee has normal working hours or no normal working hours.
In the case of an employee on a zero hours contract who has no normal working hours, a week’s pay for these purposes is the amount of the employee’s average weekly remuneration in the period of 12 weeks ending:
- where the calculation date is the last day of a week, with that week, and
- otherwise, with the last complete week before the calculation date
Weeks in which no remuneration is earned (e.g. because the employee does not work every week or has been away on unpaid leave) do not count for the purposes of this calculation: instead, it is necessary to count only those weeks in which remuneration is earned, until 12 such weeks are taken into account. Weeks during which the employee was on maternity leave or other types of family-related leave and received less remuneration to be disregarded.
Business to Business contracts
“I regularly buy and sell vehicles from and to other businesses in England and Wales. I have been told that these are sold as seen and there are no liabilities or ability to claim of there is a fault is that correct.
It is correct that there are a number of differences between a business to business and a business to consumer transaction. What conditions apply will depend on the agreement between the parties.
In a business to business sale there is no protection at all.
That is not true. Whilst the Consumer Rights Act 2015 (CRA) replaced the Sale of Goods Act 1979 (SOGA) for business to consumer transactions, the SOGA continued to protect business to business transactions. The SOGA contains almost identical protections with regards as described, satisfactory quality and fit for purpose etc… and as such these will also be conditions of a business to business contract.
Where the SOGA differs is that these conditions can be excluded in a business to business transaction, and often are. You therefore have to decide when buying or selling a vehicle whether you wish to exclude the SOGA and where you want to sell vehicle sold as seen etc…that you have an express term within the agreement that exclude them.
The seller can exclude anything they like
That is not true. Whilst the courts are a lot less likely to interfere with the terms of a contract in a business to business transaction, this does not mean that it is the wild west and that anything goes. The Unfair Contract Terms Act 1977 (UCTA) sets a number of contractual clauses that are unenforceable.
- A business cannot exclude liability for death or personal injury due to their negligence
- A business can limit their liability for any damage caused due to their negligence, but only if the term itself is reasonable and sufficiently brought to the other party’s attention
- A business can limit their liability for any damage caused due to a misrepresentation on their part but only if the term itself is reasonable and sufficiently brought to the other party’s attention
What is reasonable will depend on what the court decides is reasonable ‘having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made.’.
When deciding what is reasonable the court will consider what or ought reasonably to have been known to the parties when the contract was made and will also consider
- the strength of the bargaining positions of the parties relative to each other,
- whether the customer received an inducement to agree to the term,
- whether the customer knew or ought reasonably to have known of the existence and the extent of the term,
- where the term excludes or restricts any relevant liability if some condition was not complied with, whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable;
It is important to note that it is for the party seeking to rely on the clause to prove that it is reasonable.
The seller is liable for anything within the first 6 months.
That is not true. This is correct under the CRA where a business contracts with a consumer, but in a business to business contract there is no such assumption. As such it will be for the purchaser to prove that the issue complained of was a fault and was more likely than not present at the time of sale.
If I wasn’t aware of a contractual term within the contract I can’t be bound by it.
That is not true. In a business to business transaction the court is far less likely than in a business to consumer transaction to interfere with the agreement. Where you have been provided with terms and conditions and have signed them the court will assume that you have read, understood and agreed to be bound by them and it will be very difficult to avoid them unless they are deemed unreasonable (see above).
The court is a little more likely to interpret a contract where there is no signature. However, refusing to sign a contract is not a bar to the terms being binding. If you receive terms and conditions and then continue to trade with a company the starting point for a court is that these terms will be binding.
Conclusion
Contractual disputes are complicated and will depend on the nature of the agreement and the extent of any contract. Where position ensure that all terms are in writing and never enter into an agreement without fully understanding the terms. Carefully document all conversations and to evidence all telephone calls, emails and letters for future reference.
Also, this advice is general in nature and will need to be tailored to any one particular situation. . The outcome of any contract dispute will depend on the facts of the case. As an RMI member you have access to the RMI Legal advice line, as well as a number of industry experts for your assistance. Should you find yourself in the situation above, contact us at any stage for advice and assistance as appropriate.
General Note
Don’t forget, this advice is general in nature and will need to be tailored to any one particular situation. As an RMI member you have access to the RMI Legal advice line, as well as a number of industry experts for your assistance. Should you find yourself in the situation above, contact us at any stage for advice and assistance as appropriate.
Motor Industry Legal Services
Motor Industry Legal Services (MILS) provides fully comprehensive legal advice and representation to UK motor retailers for one annual fee. It is the only law firm in the UK which specialises in motor law and motor trade law. MILS currently advises over 1,000 individual businesses within the sector as well as the Retail Motor Industry Federation (RMI) and its members.
