TOP 10 MYTHS OF EMPLOYMENT LAW

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1 w TOP 10 MYTHS OF EMPLOYMENT LAW

2 As an Employment Lawyer I often come across employers who are ill informed about employment law. They frequently believe in a number of myths about the law which are either out of date, or were never right in the first place. Making mistakes with employment law can be costly for an employer, in terms of substantial compensation awards or time taken up fighting a Tribunal case which could easily be avoided if proper expert advice had been taken at the right time. In this article I highlight a number of myths which, in my experience, many employers still mistakenly believe in. 1. If nothing is written down there is no contract. The law requires employers to provide details of the employment contract in writing to their employees within 2 months of them starting work. Failure to do so can lead to Tribunal action and can, in certain circumstances, lead to an award of up to 4 weeks' pay. It is always advisable for an employer to comply with this regulation which requires details such as job description, pay rate, holidays, pension, place of work, hours of work etc to be supplied to the employee in writing. Even if nothing is written down, this does not stop there being a binding oral contract. Furthermore, the law implies a number of terms into every employment contract whether they are written or not. These include the mutual obligation between employer and employee of trust and confidence. It is always best for any employer to set down the full terms and conditions in writing to any employee as soon as the contract commences. 2. If somebody is paid monthly then they can be dismissed by giving them 1 month s notice There are minimum periods of notice set down by law. This means that anyone is entitled to a minimum period of notice of 1 week for every year they have been employed by that employer up to a maximum of 12 weeks. This means if somebody has worked for an employer for 6 years, they are entitled to 6 weeks' notice to be given. The maximum amount of notice that needs to be given under this rule is 12 weeks even if the person has worked for longer than 12 years. Some contracts of employment give longer periods of notice and if the contract gives a longer period that is the period that is binding on the employer. On the other hand employees are not required to give such lengthy periods of notice unless their contract requires them to do so and it is often in an employer s interest to ensure employees are required to give a longer period of notice so they have time to find a replacement. Page 1

3 3. It is legal to dismiss an employee without fear of a claim provided they have worked for the employer for less than 2 years. This is broadly true in relation to Unfair Dismissal, but there are so many exceptions to the rule, that any prudent employer will always be careful about dismissing an employee however short the period of employment. The general rule is that the right not to be unfairly dismissed is not granted to an employee until they have worked for an employer for 2 years. There are, however, a total of 20 exceptions to this rule (such as dismissal for raising health and safety concerns) for which unfair dismissal can be claimed as soon as the employee starts work. Many of them are unlikely to be encountered frequently, but it is easy to find yourself caught. It is worth remembering that in reality the time limit in relation to the unfair dismissal right is 23 months and 3 weeks and not the full 2 years. Many an employer has hurriedly dismissed an employee in the last week of the 2 year period thinking they were avoiding potential unfair dismissal proceedings and have walked into an unfair dismissal claim that they will lose. It is always worth going through proper procedures when undertaking any kind of dismissal. Remember also that some employment rights come in to play even before an employee starts work. Discrimination laws apply not only to all employees, but also to those seeking a job and consequently the selection and interview process are also subject to many employment rules, particularly in relation to Discrimination. 4. Part-time workers have less legal rights than full-time workers. Part-time workers have been protected for over 15 years. It is unlawful for an employer to discriminate against their part-time staff and to give them fewer rights than their full-time counterparts. Fixed term contract employees have similar protection and should not be treated less favourably than full-timers. Page 2

4 5. If an employee leaves giving short notice, an employer is not required to pay out accrued holiday pay, or outstanding wages. There are strict rules relating to payment of salary and wages. An employer is not entitled to deduct anything from an employee s wages other items such as tax and national insurance. Just because an employer considers an employee owes them money, is no excuse for deducting such debt from their wages. Deductions can only be made if the employee agrees to the deduction in writing. Accrued holiday pay is a debt owed by the employer to the employee and any pay earned up to the date of the termination of the employment contract is also owed as a debt. There is a double jeopardy in relation to any such deductions, because if an employer illegally deducts such a debt from the employee s wages, the law will not only not enforce such a deduction, but will then forbid the employer from recovering that debt in any other way. 6. Holidays do not accrue during long term sickness. Even where a person is away from work on long term sickness for over 12 months, their right to holiday continues to accrue while they are away. If somebody is not fit for work, then they are not able to enjoy the benefit of a holiday and holidays will continue to accrue during the period of absence. If a written contract of employment contains specific terms concerning carrying over of holiday from one year to the next, this problem may be alleviated, but does require specific and detailed advice. Holidays also continue to accrue during periods of maternity, and now paternity, leave. When an employee leaves to go on maternity or paternity leave, their holidays continue to accrue during that period of leave. Therefore frequently when they come back to work they are owed a period of over 4 weeks holiday. 7. When redundancies have to be made, the choice should be made on a last in, first out basis. Many years ago redundancies were frequently dealt with on the basis of last in first out. This has not been the case for many years in most industries. It is a poor way of dealing with selection. However since the introduction of Age Discrimination laws in 2006, not only would such a method be unwise, it may also Page 3

5 now be illegal as it could discriminate against younger people. Age Discrimination legislation works both ways, i.e. it not only protects older people, it also protects younger people. 8. It is easier to dismiss somebody by reason of redundancy rather than trying to dismiss them for performance issues. Many employers try to dismiss unsatisfactory employees by making them redundant rather than trying to deal with them under disciplinary procedure. In doing so, they often run into difficulty and find themselves facing an unfair dismissal claim which is likely to be successful. The rules relating to redundancy are themselves fairly complicated and it does require an employer to use a full and proper procedure to make somebody redundant even with a genuine redundancy situation. It is usually fatal if an employer tries to dress up what is really a performance issue as a redundancy. Invariably an Employment Tribunal would see through this and will make a finding of unfair dismissal and award compensation. 9. Employment law does not apply to those who are self-employed. Many employment rights relate only to employees. However an increasing number of employment rights are granted not to employees, but to workers. Consequently many people who are technically selfemployed still enjoy the benefit of employment rights even though they are not employed. These rights include the right to minimum statutory holidays and Working Time Regulations. Employers should also be aware that quite frequently a self-employed person can be deemed an employee even though they are labelled self-employed. Employment Tribunals reserve the right to declare somebody an employee if the true relationship between them and the employer is that of an employment contract and not a genuinely self-employed contractor. Many employers complacently believe that Unfair Dismissal and Redundancy legislation will not apply to their workers because they are self-employed when the reality is that they are employees. The test for self-employed status so far as employment law is concerned is not the same as the test applied by HM Revenue & Customs. 10. An employer can automatically retire an employee once they reach their 65th birthday. Page 4

6 As from the 1st October 2011 it is no longer possible to automatically dismiss someone through retirement because they have reached the age of 65. There is no longer a default retirement age. Older workers can voluntarily retire at a time they choose and draw any occupational pension they are entitled to. However, employers cannot force employees to retire or set a retirement age unless it can be objectively justified as what the law terms 'a proportionate means of achieving a legitimate aim'. It can be seen from the above myths that the employment law area is a complicated one for any employer to deal with and there is no substitute for good advice in relation to the legal problems that as an employer you may encounter. This article gives general information only and is not intended to be an exhaustive statement of the law. Although we have taken care over the information, you should not rely on it as legal advice. Page 5

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