United Kingdom labour law

The United Kingdom labour law involves the legal relationship between workers, employers and trade unions. Modern labour law developed during the late nineteenth century as contracts of employment were accompanied by a set of minimal rights and constraints on trade unions were lifted. The basic framework of UK labour law has remained steady for thirty years, deriving primarily from the Trade Union and Labour Relations (Consolidation) Act 1992, the Employment Rights Act 1996, the Employment Relations Act 1999 and the Equality Act 2010, supplemented by a set of European Directives, Statutory Instruments and case law of the UK and European courts. Compared to its Commonwealth and European counterparts, the UK requires only limited collective workplace participation, offers relative insecurity for employees, and gives employers broad flexibility to carry out dismissals, though compared to the United States, the UK is more protective.

Labour law can be analysed as either "individual labour law" or "collective labour law". Individual labour law involves basic rights of people at work. Under the National Minimum Wage Act 1998 every UK worker has the right to a minimum wage, no longer working hours than she consents to under the Working Time Regulations 1998, the right to leave for child care and the right to request flexible working patterns under the Employment Rights Act 1996. It has been acknowledged since the 1960s, and is now codified in the Equality Act 2010 that people should be judged by the content of their character, and not a progressively growing list of regulated characteristics such as colour, gender, sexuality, beliefs, disabilities or age. The Employment Rights Act 1996 adds that in the event of dismissal, working people have a minimum level of job security, so every employer must give reasonable notice after one month of work, backed by a sufficiently fair reason after one year of work, and with a redundancy payment after two years. Further rights arise if a company is taken over, triggering the Transfer of Undertakings (Protection of Employment) Regulations 2006. These hold that when an employer changes, employees' terms cannot be reduced, even to the point of dismissal, without a good economic, technical or organisational reason.

Scope of protection

ERA 1996 s 230

Ferguson v John Dawson & Partners (Contractors) Ltd [1976] 1 WLR 1213, Megaw LJ, declarations of employee status to be "wholly disregarded"

Calder v H Kitson Vickers & Sons (Engineers) Ltd [1988] ICR 232, 251, Ralph Gibson LJ says declarations are not conclusive, but relevant

Newnham Farms Ltd v Powell (2003) EAT/0711/01/MAA, employment contract arising from conduct

Montreal v Montreal Locomotive Works [1947] 1 DLR 161, Lord Wright, multiple factors for employment status

R v Negus (1873) LR 2 CP 34

Yewens v Noakes (1880) 6 QBD 530

Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497

Integration, economic reality

Cassidy v Minister of Health [1951] 2 KB 343

Stevenson, Jordan & Harrison v MacDonald v Evans [1952] 1 TLR 101

Beloff v Pressdram Ltd [1973] 1 All ER 241

Market Investigations Ltd v Minister for Social Security [1969] 2 QB 173

Lee Ting Sang v Chung Chi-Keung [1990] ICR 409

Hall v Lorimer [1994] IRLR 171

Lane v Shire Roofing Co (Oxford) Ltd [1995] IRLR 493

Mutuality of obligation

M Freedland, The Contract of Employment (1976) 21-22

Airfix Footwear Ltd v Cope [1978] ICR 1210

O'Kelly v Trusthouse Forte plc [1983] ICR 728

Nethermere (St Neots) Ltd v Gardiner [1984] ICR 612

Carmichael v National Power plc [1999] 1 WLR 2042

Clark v Oxfordshire HA [1998] IRLR 125

McMeechan v Secretary of State for Employment [1995] IRLR 461; [1997] IRLR 353

Consistent Group Ltd v Kalwak [2008] IRLR 505, obligations clause

Hall v Woolston Hall Leisure Ltd [2000] IRLR 578, dependent entrepreneur

Lemmerman v. A.T. Williams Oil Co., 350 S.E.2d 83 (1986)

Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497

Nethermere (St Neots) Ltd v Gardiner [1984] ICR 612

James v Greenwich LBC [2008] IRLR 302

Consistent Group v Kalwak [2008] EWCA Civ 430

Muschett v H M Prison Service [2010] IRLR 351

Lawrie-Blum v Land Baden-Wurttenberg [1986] ECR 2121, C-66/85

Wages and working time

While a central objective of collective bargaining has been to achieve a fair day's wage for a fair day's work, statute in the United Kingdom additionally fixes a minimum wage and sets outer limits on working time for virtually all workers. Workers do not need to show "mutuality of obligation" or any other requirement except that they personally perform work for a wage and is not a client. One curious exclusion, however, is a pupil barrister who in Edmonds v Lawson QC was held to not be "working" but be "conscientious in receiving instruction". From the Trade Boards Act 1909,the UK had set minimum wages according to the specific needs of different sectors of work. But this system was eroded through the 1980s and eventually repealed in 1993. To bring the United Kingdom back into compliance with basic standards in international law, the National Minimum Wage Act 1998 was introduced. The minimum wage takes effect in every worker's employment contract. Reset after annually after guidance from the Low Pay Commission, from 1 October 2010 it stood at £5.93 for over 21 year olds, £4.92 for 18-20 year olds, £3.64 for under 18 year olds finished with compulsory education and £2.50 for under 19 year olds or first year apprentices. The National Minimum Wage Regulations 1999 spell out the details of how the minimum wage should be calculated. This generally means the total pay received divided by the hours actually worked over an average of one month. This becomes more complicated is where a worker can stay at home but must answer phone calls, is allowed to rest or sleep during shifts, or must make herself available "on call" over a long period. Generally speaking, it is irrelevant whether one is at home or not. If a worker is given sleeping facilities and is not awake, the minimum wage need not be paid.And if a worker is "on call", then this time still counts at work if the worker is bound to stay within the vicinity of the workplace. However, an exception in regulation 28 allows an employer to agree with a worker what the hours worked actually are, if they would ordinarily be unmeasured. In Walton v Independent Living Organisation Ltd a worker who cared for a young epileptic lady had to be on call 24 hours a day, 3 days a week, but could do her own activities outside tasks such as going shopping, making meals and cleaning. Her company made an agreement with her that her tasks took 6 hours and 50 minutes a day, which resulted in her £31.40 allowance meeting the minimum wage. Certain deductions may be made including £4.51 per day for any accommodation the employer provides, though extra bills, such as for electricity, should not ordinarily be charged. The minimum wage can be enforced individually through an ERA 1996 section 13 claim for a shortfall of wages in a Tribunal. A worker may not be subjected to any detriment for enquiring, or requesting records or complaining about it. However, because many workers will not understand how to do this, or have the resources, a primary enforcement mechanism is through inspections and compliance notices issued by Her Majesty's Revenue and Customs. A remedy of up to 80 times the minimum wage is available to the worker and HMRC can enforce a penalty of twice the minimum wage per worker per day.

Child care and atypical working

While working time regulation, or enough pay to decide to work fewer hours, has been seen as an important way to achieve a balance between work and life, the number of rights regarding child care has been an autonomous and steadily growing group of compulsory terms' in employees contracts: for mothers historically but increasingly fathers or other guardians as well. Despite the commonly held perception of maternity leave creating a significant cost for business, particularly small business, the pay employers must give to new mothers for periods of maternity leave are covered by the government.A contract of employment can always be more generous, but the basic minimum is that a mother must compulsory leave at the time of child birth for two weeks. After that she has the right to 6 weeks' leave paid at 90 per cent of her ordinary salary. Then she has 20 weeks off at the statutory rate of pay, £123.06 per week in 2010. Then she may take additional but unpaid maternity leave for another 26 weeks.

Job security

Main articles: Reasonable notice, Unfair dismissal, Wrongful dismissal, and Layoff, and Job security

Compared to its European and Commonwealth counterparts, jobs in the UK are relatively insecure. The common law's approach was merely to enforce a contract as it was construed in its market context. Only from the Contracts of Employment Act 1963, as well as the Redundancy Payments Act 1965 and the Industrial Relations Act 1971 did UK workers gain three basic minimum right rights, now consolidated in the Employment Rights Act 1996, sections 86, 94 and 135. After one month's work an employee must have one week's notice before dismissal. After one year's work, the dismissal must be for a good business reason: it cannot be "unfair". And after two years' work, an employee should receive a redundancy payment, which like the notice period increases according to the number of years worked. All contracts may go beyond, and typically do go beyond, this bare minimum. All these rights have been conditioned by the courts' interpretation, so that because they cover "employees" their applicability depends on who the courts say is an "employee". What counts as a "fair" reason for dismissal is also subject to the courts' determination, albeit that an Employment Tribunal has a broad factual discretion which appellate courts seldom interfere with. When businesses restructure, whether an employee is redundant or has in fact been unfairly constructively dismissed is also open to interpretation, potentially meaning the difference between a minimal redundancy package and substantial compensation. The present structure was largely inspired by the Donovan Report 1968.

Wrongful dismissal

Under United Kingdom law, specifically section 95(1) of the Employment Rights Act 1996, three events can constitute "Dismissal". These events are where:-

The employer terminates the employee's employment contract with or without notice;

a time-limited contract expires and is not renewed

The employer's conduct (e.g. where the employer fundamentally breaches the employee's employment contract) allows the employee to terminate the contract without notice. This is popularly known as "Constructive Dismissal".

Dismissal can be "fair" or "unfair". An employee who has been unfairly dismissed has a right to statutory compensation and further compensation for financial loss sustained in consequence of the dismissal. Such questions are dealt with by employment tribunals.

Only those employees who have a year's continuity of service or who are dismissed for an automatically unfair reason may bring a claim for unfair dismissal.

For a dismissal to be "fair", an employer must give at least one potentially fair reason for the dismissal. Reasons recognised as being fair are stated in s.98(2) Employment Rights Act 1996:

relates to the capability or qualifications of the employee for performing work of the kind which he was employed by the employer to do,

relates to the conduct of the employee,

is retirement of the employee,

is that the employee was redundant,

Some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held,

is that the employee could not continue to work in the position which he held without contravention (either on his part or on that of his employer) of a duty or restriction imposed by or under an enactment.

Unfair dismissal

The claimant might dispute that the real reason was one of these and may, in particular, seek to argue that the reason related to a protected right. If they were to show that the reason did relate to a statutory protected right, rather than a potentially fair reason above, the dismissal would be automatically unfair. For instance, if an employee resigns due to not being paid their wages for a third week running, they may be able to succeed with a claim for automatically unfair constructive dismissal even without a year's service. A claimant dismissed in her first week of employment on grounds of pregnancy will almost certainly receive a substantial award. Where the respondent can show that such a potentially fair reason for dismissal did exist, however, the tribunal must then decide whether their action in dismissing fell within the range of responses that a reasonable employer might adopt. This is different from any opinion the tribunal might itself have about the fairness of a dismissal. There is no burden of proof on the question of fairness, it being a neutral question for the tribunal.

The employer must also follow the Statutory Dismissal Procedure (albeit with exceptions) which follows the standard three stage process i.e.:

Give a statement of grounds for action and invitation to meeting

Hold the meeting, confirm the decision in writing, note the right of appeal

If appealed, repeat step 2.

Failure to follow this process will result in an "automatically unfair dismissal". An Employment Tribunal will be required to make an award to the employee and increase this by a minimum of ten to fifty percent - irrespective of the "moral" arguments of their case. A dismissal for a pregnancy related reason is also an automatically unfair dismissal.

Johnson v Unisys Ltd [2003] 1 AC 518, damages arising from the manner of dismissal cannot be awarded in a claim for wrongful dismissal

Edwards v Chesterfield Royal Hospital NHS Foundation Trust [2010] EWCA Civ 571, damages for wrongful dismissal in failure to follow contractual disciplinary procedure

Bowater v Northwest London Hospitals NHS Trust [2011] EWCA Civ 63, Tribunal competently exercised its discretion in granting an unfair dismissal claim even though the employer regarded the employee's comments to a patient at work "lewd"

Workplace Relations Amendment Act 2005