Question
Identify and explain what legal risks ABC Ltd might be taking in pursuing redundancies in respect of the four named employees who have raised concerns about their dismissals? Advise ABC Ltd on the legal risks that may emerge once redundancies have been confirmed, and whether the impact on other employees (Lydia, Pam & Diane) should present any concerns for ABC Ltd?
Identify and explain what legal risks ABC Ltd might be taking in pursuing redundancies in respect of the four named employees who have raised concerns about their dismissals? Advise ABC Ltd on the legal risks that may emerge once redundancies have been confirmed, and whether the impact on other employees (Lydia, Pam & Diane) should present any concerns for ABC Ltd?
- What advice would you give the senior management team when running an exercise of this kind in the future? Justify your answer.
This assessment is designed to assess the following learning outcomes:
- Explain the core principles that underpin employment law as it applies in the UK (or Ireland), including common law, their purpose, origin and practical implications.
- Advise colleagues about significant legal implications of decisions, plans or proposals in the employment field.
- Advise about the appropriate action that should be taken in workplace scenarios where employment regulation applies.
- Play a leading role in determining the appropriate organisational response when legal action on the part of a worker or employee is anticipated, threatened or taken
Solution/Answer
1.0 Introduction
In the UK, employment law is inclusive of multiple rights to protect all stakeholders within a workplace since they are integrated into general employment law. The principles of UK employment law, according to ACAS include dignity, fairness, equality, respect, and autonomy. Notably, the UK employment law is essential as it governs recruitment, employment terms, and conditions, data protection, holidays, redundancy, working hours and remuneration, among other aspects. As summarized in figure 1, the employment law in the UK is categorized into three primary sources. These include common law, statute law, and European Law (see figure 1) (Tim-Russell, 2018).
Figure 1: UK Employment Law Sources (Summarised from Tim-Russell, 2018)
Over the years, employment law has been improved to be in line with changing dynamics in the employment relationship and workplace environment. Among the core issues in organizational management is redundancy, which entails reducing the workforce since a certain position or job is required. According to CIPD, case law and legislation surrounding redundancy are complicated, and employees should demonstrate an understanding of their obligations, including following the right procedure and acknowledging the employee’s rights. Other aspects, such as dismissal and termination of the contract should be conducted according to the set regulations. This mitigates the possibility of legal action against the organization, which is costly to the firm. Several cases have emanated from a deficiency in following the laws on employee management. The Parnaby vs. Leicester City Council (2019), for instance, involved discriminatory based on long-term physical impairment. Notably, both employees and employers should demonstrate an understanding of the employment law, which influences the legal actions.
This report focuses on ABC Ltd, a leading is marketing business based in London with a wide range of contracts with a variety of industries. The business currently has 200 employees and is expected to increase to 300 as they open their Midlands office in the future. However, some customers terminated their contracts based on deteriorated customer satisfaction and reduced attention. This report will evaluate the legal risks in pursuing redundancies, legal risks from confirming redundancies, and advice to running a similar practice in the future.
2.0 Legal Risks of ABC Ltd in Pursuing Redundancies
2.1 Redundancy and UK Employment Law
Redundancy is identified as a special type of dismissing employees, which is effected when an employer is interested in reducing the workforce size. However, it should be the last option and requires a sensitive approach to ensure fairness and maintain the morale and productivity of the remaining employees. Different UK legislation governs the redundancy, which includes the Employment Rights Act 1996, Equality Act 2010 and Employment Tribunal (Constitution and Rules of Procedure) (Amendment) Regulations 2008. The redundancy process should be profoundly conducted and follow all the phases, including identification of the employees’ pool, allowing volunteers, consulting the individuals, appeals, and dismissal.
Redundancy is not an illegal practice, but different legal risks could be encountered based on how the redundancy is pursued. For instance, in ABC, pursuing redundancy must take into account the need for redundancy payments, redundant employees’ rights, and terms of an employee’s contract. Further, the issues raised during the consultation process should be addressed to avert the legal issues. To understand the legal risks to be faced by ABC Ltd in pursuing redundancies, the Samsung Electronics (UK) Ltd vs. Monte-D’Cruz UKEAT/0039/11/DM can be considered. In this case, there were efforts to reorganize a senior manager position due to the organisation determination to expand to a new market with a merger to a single position with a new single senior manager being created. The legal issues that were raised in the redundancy case included the use of core competencies as criteria instead of the person specification, failure of considering past performance, and an interview process that is not all-inclusive. A similar case is evident in ABC Ltd, where different issues have been highlighted by the employees regarding redundancies noting it as not being fair.
2.2 Legal Implications of ABC Decisions, Plans, and Proposals in Areas of Employees Operations
The legal implications in ABC Ltd’s case study include the section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), the Employment Rights Act 1996 and Employment Appeal Tribunal Act. In particular, these laws influence the cases of Lydia (differences in pay, in attendance to meetings abroad, and untrue elements in the criteria, including disciplinary warnings, performance, attitude and flexibility, and absence), Sarah (maternity leave), Bob (nearing retirement and equality act based on sexual orientation) and Dan (absenteeism and health issues).
Additionally, the employment status of Diane, categorized as a freelancer, has a legal implication. According to Employment and Labour Law 2020, the status of an employment contract determines their rights and responsibilities. In this case, there must be stipulated and include the scope of their roles and qualification of different categories of remunerations. For instance, in the case of Diane as a freelance writer in the creative team and not employed, she does not qualify for bonus schemes. On the other hand, Diane feels extremely obliged to account for her whereabouts. Such an aspect, combined with working on major projects and tight deadlines, are the foundations of seeking the bonus scheme and an employment contract.
Legally, several tests can be applied to identify Diane’s employment status. The test provided by the Employment Rights Act 1996 (section 230:1) stipulates that individuals doing paid work in the UK to be grouped into categories of an employee, worker, and self-employed. Based on this test, Diane can only fall under an employee or a worker. To affirm this, the Ready Mixed Concrete (SE) ltd vs. Minster of Pensions and National Insurance issues of contracts of service can be considered (Swarb. Co. Uk., 2019). The tribunal judgment on this case noted that when there is an agreement of a wage or remuneration, such an employee needs to benefit from other provisions of a contract of service. It can hence be argued that Diane involvement in critical projects and tight deadlines and her current remuneration necessitate her categorization as an employee.
The issues raised by Pam equally have an impact based on the Equality Act 2010. In this Act, employees are protected from unfairly increased workloads, failure of facilitation in carrying out their roles and deadlines that are not aligned. For instance, Pam was recently forced to cancel her leave since a critical deadline was supposed to be met despite having been on leave for a short duration.
2.3 Legal Risks for ABC Ltd in line with Four Employees Issues with Dismissals
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