Legal Risks in ABC Ltd
The labour law of United Kingdom governs the relationship between employers and the employees. The minimum charter of employment right which is incorporated through various legislations, common law and regulations in the legal system support employment relations in UK. It is of utmost importance to address good practices in the area of employment law in order to ensure compliance and string employment relations. According to Feldacker and Hayes (2014) employee satisfaction has a direct effect on productivity of a business. On the other hand non compliance with legal provisions leads to financial as well as reputational losses for an organization. Therefore it is of utmost importance to incorporate best practices in the area of employment law. The primary legislations which deals with employment law in UK are as follows:
- Disability Discrimination Act 2005
- Employment Relation Act 2004
- Sex Discrimination Act 2005
- Equality Act 2010
- Employment Rights Act 1996
- Health & Safety at Work etc Act 1974
The first and foremost legal risk which arises in relation to rejecting the application made by Keenan is of Sex discrimination. The Equality Act 2010 under section 11 does not allow of any kind of discrimination with an employee or a potential employee based on gender within the work place. It has been clearly provided that Keenan is not being selected as she is a woman and presumably she would not be able to handle the sales teams who primarily constitutes of males. The rejection of the application made by Keenan can also violate section 13 of the Act which is direct discrimination. If Keenan would be able to prove that she has been treated less favorable because of her being a woman (protected characteristic) ABC ltd would be liable under the EA and one of the best examples of the situation had been provided in the case of James v Eastleigh Borough Council [1990] 2 AC 751.
The legal risk which would arise in rejecting the application made by Viscida would be in relation to race discrimination. Under the EA race is also one of the nine protected characteristics who cannot be treated less favorable than the others. Section 39 of the EA protects employee having protected characteristics from being discriminated in the process of recruitment, selection, promotion and dismissal. In the case of Northern Joint Police Board v Power [1997] IRLR 610 it had been provided by the court that discrimination on the grounds of Nationality accounted to Race discrimination. Therefore not selecting Viscida will enable him the chance of claiming race discrimination as he has immigrated from Milan in 1980. A few other cases where discrimination had been established was the case of Northern Joint Police Board v Power [1997] IRLR 610 and Boyce v British Airways [1997]. In these cases the court ruled that unfavorable treatment based on nationality accounts to discrimination.
Defenses Available for ABC Ltd
In the given situation it had been provided that the application made by David has been rejected as he ages around 61 years in spite of his good performance. He is presumed to retire as he has a ill wife who he needs to care for. This action of ABC ltd would subject them to the risk of age discrimination as under Section 5 of the EA unfavorable treatment because of one’s age account to discrimination.
In the given situation the application made by Mike have been selected by ABC ltd for the post of manager. Although there is not much legal risk in relation to employment law for selecting Mike, ABC can be liable under common law with respect to conflict of interest and working for the best interest of the company. Here Mike who has some personal relationships with the directors have been selected as the manager may cause legal actions against ABC by its shareholders for not acting in best interest of the company and favoring Mike personally.
The proposed policy in relation to varying the payment arrangements of the employees from fixed income to commission based income can result in the breach of employment contract. Under the Employment Rights Act 1996 the provisions relate to contract of employment are governed. The law in relation to employment contract is also governed by the provisions of common law where the parties cannot vary the terms of the contact without mutual consent. Way in which payment is made is a criteria for determining employment status also and employees are not paid on commission basis like independent contractors. Thus varying the payment structure which is a major change to the employment contract, without the consent of the employees would be a breach of employment contract.
Enacting a policy to dismiss the poorest performing employee periodically would directly lead to legal risk of unfair dismissal. Unfair dismissal in UK is dealt by the Employment Rights Act 1996. In the case of Orr v Milton Keynes Council [2011] EWCA Civ 62 it had been ruled that dismissal has to be fair by providing employees change to justify and amend performance. Making the employees put in extra hours may also lead to constructive dismissal as the employees may resign due to such policies.
The policy of forcing the employees to undergo fitness test regularly, make the overweight diet and forcing the smoker to join anti-smoking classes would be a direct violation of the human rights laws under the Human Rights Act 1998 as it would be an attempt to take away basic right of people to enjoy their life.
Employment Relations Issues in ABC Ltd
In this case the company have a few defenses which they can rely upon with respect to the legal risk of Sex discrimination. Under section 19(2) of the EA indirect discrimination can be justified by the employers if they are able to show that the act was a proportionate mean of achieving a legitimate aim. In the case of Porcelli v Strathclyde Regional Council [1986] ICR 564 it had been ruled that it is a defence against a discrimination claim where it can be established that the discrimination was due to a genuine requirement of the business. Therefore in this case ABC can argue that Keenan has not be selected as she being a women would find it difficult to entertain the clients and the business would be hampered as the male employees would not feel comfortable to work under her. However the case which would mount as a defence against keenan’s claim would not be strong as she has been a high performer and the requirement is not crucial to the post.
In this case the company can also rely upon the fact that less knowledge of English would not be sufficient for a sales manager to communicate with customer base of the company effectively. This justification can be covered by the defence of matching core requirements for the Job. However it has to be proved that the requirement is not crucial to the post which Viscida was to be appointed. The defence is available under section 9 of the EA. In the case of Etam plc v Rowan [1989] IRLR 150 and Lambeth LBC v Commission for Racial Equality [1990] ICR 768 it had been ruled by the court that occupational requirements are a defence to an act of discrimination. They can also claim a defense under section 23 of the EA if they can show that there was a material difference between the Viscida and Mike which made Mike being favored over Viscado. Therefore a strong case can be mounted by ABC against any claim by Viscida.
The reason why David has not been selected is that he has reached the age of 61 and the company is looking for someone who can be appointed for a long period as the manager. In addition Constant’s wife is ill and it can reasonably be argued that he would have to consider early retirement to take care of her. Thus ABC limited can argue against the claim of Constant by stating that it is a occupation requirement to appoint someone who can continue for a long peiod. However the case mounted against Constant’s claim may not be strong as mere convenience of the company cannot be the sole reason to justify discrimination as stated in the case of Cross v British Airways plc [2005].
In this case the company may have the defence under section 23 of the EA that Mike has a material difference over those who have not been selected with respect to his management skills.
Employment contract can be reasonably varied by the employer upon sufficient notice to the employees. However in this case as payment is one of the “conditions” of the employment contract it would be difficult to mount a strong case against the claim.
The rule in relation to unfair dismissal in UK is governed by the Employment Rights Act 1996. The employer must have a good reason to dismiss the employee. In this case the policy purports to remove the employees and replace them with new employees based on the fact that who has been the poorest performer. There is not much of a defence which can be taken by the organization if the policy is implemented.
It may be argued by the organization that strict health policies have been implemented by the organization to ensure good health of the employees. However it would be against human rights to force a person to change lifestyle habits. The policy can be implemented as a mere recommendation and not a policy of strict compliance. There is not much of a defence which the organization may undertake in relation to the implementation of the health policy.
According to Kornhauser (2014) the legal linkage which exists between employees and employers is known as employment relationship. The relationship is present where a individual performs services or work under specific instructions and conditions in exchange of a remuneration. Irrespective of how employment relationship is defined the reciprocal obligations and rights are established between employees and employers through employment relations. Employment relations are a primary point which determines the extent and nature of employer’s obligations and rights towards the employees. employer relation establish the culture within the work place. It is a relationship through which employees and employer perceive each other.
According to Fossum (2014) establishing a strong employment relationship between the employee and the employer is the primary requirement towards achieving the overall success of the organization. Strong employment relationships lead to advantageous results. Where a strong employment relationship is in place the employees become more efficient and productive. It also allows the workplace to be free from conflicts and provides a sense of loyalty within the employees. A pleasant atmosphere is created by a strong employment relationship. The motivations of the employees are enhanced through it along with their morals. Increased productivity has been experienced by organizations who have invested into employment relations programs. When the employees feel that their development is being properly cared for by the company and their rights are duly provided to them the employees generally become more loyal towards the organization. This also makes the employees provide extra effort towards their work and lead to enhancing the efficiency of the organization.
In the given situation of ABC Ltd the employment issues which have been identified are in relation to discrimination, Dismissal, Human rights and basic payment rights. Through the course of action taken by ABC it would be portrayed before the employees that the organization indulges in the act of discrimination. The employees would feel that as the best performers of the organization have been discriminated against there is no point of giving more effort towards the organization. Selecting Mike as he is clause to the directors would make the employees believe that they would not be promoted based on their work but on personal relations. This would hamper the employment relations with the employees as they would feel that they can also be subjected to unfavorable treatment because if their protected characteristics. In addition the dismissal policy would lead to increase job insecurity among the employees as well as the increased working hours would affect their work-life balance and subsequently lead to less productivity. The health and fitness policy would place an unreasonable burden on the employees and may lead to constructive dismissal. The managers must therefore incorporate good practices in the selection process by eliminating discrimination. This would ensure that the employee work hard to achieve their goals as they would know they would only be selected on the basis of performance.
Conclusion
From the above discussion it can be concluded that it is important to ensure legal and ethical compliance in employment practices. It is necessary to ensure that good practices are followed in the process of recruitment and selection to ensure the best possible outcome for the organization. As stated by Harper, Estreicher and Griffith (2015) inclusion of diversity in the recruitment and selection process has to be ensured in relation enhancing productivity of the organization as a diverse work force ensures more productivity within the organization. The line managers have to ensure that they comply with the legal provisions involved in the process of selection such as discrimination laws in order to establish compliance and avoid legal penalties. While selecting any employee for a position it has to be ensured by the line managers and the Human Resource managers that selection is done solely based on performance and not any other feature. Thus in the case ABC limited must not do any discrimination in relation to the process of selection and also must to implement any policy which may hamper the employment relations as this would directly affect the functioning of the organization.
- The first and foremost recommendation which would be provided in relation to the organization in the process of selection and recruitment is that of not doing any discrimination with the employees based on the protected characteristics. The process does not only hamper employment relations but also attract legal penalties for an organization.
- It is recommended for organization to enact policies and procedures which are for the betterment of the organization as well as the employees. imposing unreasonable polices which are not in compliance with law hamper employment relations and also attract legal penalties.
- The organizations must focus on the overall development of the employees. Focus has to be provided by the organizations on the work life balance of the employees so that they feel they are being cared for by the organization. The employees would provide an additional effort towards the organization which would enhance the productivity as well as efficiency of the organization.
- The process of selection within the organization has to be kept very transparent so that the employees have a clear idea of why a person has been selected or rejected. This practice would ensure that there is no conflicts situation in the work place.
References
Cross v British Airways plc [2005].
Equality Act 2010
Etam plc v Rowan [1989] IRLR 150
Feldacker, B.S. and Hayes, M.J., 2014. Labor guide to labor law. Cornell University Press.
Fossum, J.A., 2014. Labor relations. Mcgraw Hill Higher Educat.
Harper, M.H., Estreicher, S. and Griffith, K., 2015. Labor Law: Cases, Materials, and Problems. Wolters Kluwer Law & Business.
James v Eastleigh Borough Council [1990] 2 AC 751.
Kornhauser, A., 2014. Psychology of labor management relations. LERA For Libraries.
Lambeth LBC v Commission for Racial Equality [1990] ICR 768
Northern Joint Police Board v Power [1997] IRLR 610
Northern Joint Police Board v Power [1997] IRLR 610
Orr v Milton Keynes Council [2011] EWCA Civ 62
Porcelli v Strathclyde Regional Council [1986] ICR 564
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