The definition of employee and worker and atypical work patterns

This post is an abridged and modified version of a paper, which I submitted for my masters program. In the previous post I set out the four cardinal principals to be considered in determining whether or not a worker has been unfairly dismissed. One of the necessary qualifications is that the person must be an employee. This paper examines the concept of an employee as well as the concept of a statutory worker in relation to atypical work patterns in the United Kingdom. I must also apologise for some of the formatting but I could not seem to resolve this on the blog

Traditionally the employment relationship has consisted of full time employment with a single employer of an indefinite duration. However as identified in the literature, this pattern of work has changed over the past few decades. There has been a move towards non-standard patterns of work, which has been described as a move towards, ‘essentially temporary, casual or part-time workers’.^[1] There has also been an increase in the use of agency workers^[2] and in ‘quasi-entrepreneurial^[3]’ modes of work. That is to say the workforce has become more flexible^[4].

There has been an attempt respond to these shifting patterns by widening the scope of application of existing employment legislation as well as introducing other statutory instruments.^[5] This paper critically examines the idea of whether or these legislative interventions provide adequate protection to these atypical workers^[6].

Access to rights conferred by protective employment legislation is extended to two categories of workers, namely employees and statutory workers. The statutory definitions of employees and workers are uniform^[7]. I will now examine these definitions and therefore the scope of the protection as it applies to atypical workers.

It is an important feature of protective employment legislation that the definition of who constitutes an employee in employment legislation is not self-contained in the legislative instrument. An employee is defined as ‘someone who works under a contract of employment^[8]’. A contract of employment is not defined in the legislation and in this way is reliant on the common law definition of or tests for an employment.

The common law test for employment has developed over time and has included many different approaches.^[9]  The modern approach has been to apply a multiple test in which a number of factors are considered in order to establish whether someone is an employee or not. The leading case in this regard is Ready Mixed Concrete decision^[10] (RMC). Here the Court of Appeal held that there is a contract of employment contract where:

1.  The service provider is contractually bound to provide personal service in return for remuneration;
2. The service provider agrees that he will be subject to the other parties control to a sufficient degree and;
3. Other provisions of the contract are consistent with it being an   employment contract. 

Following on from the formulation in RMC, the courts have added a number of other necessary if not sufficient conditions of employment^[11]. One of these requirements is the so-called ‘mutuality of obligations’. This requirement is normally understood as meaning that there must be a minimum obligation on the part of the employer to provide work and a minimum obligation on the employee to undertake that work.^[12] The requirement of a mutuality of obligations is a necessary condition of employment.^[13]

The requirement of mutuality of obligations has presented a major obstacle for intermittent workers^[14]in obtaining employment protection. The courts have used this requirement on many occasions to deny such workers employment status.^[15] The problem that mutuality of obligations requirement presents for intermittent workers is that there is normally no on-going obligation to provide work to the work provider and or on-going obligation to accept work. In such circumstances, the courts have held that there is an insufficient mutuality of obligations^[16].

The requirement of mutuality of obligations has also proved to be an obstacle for agency workers in obtaining employment status. The problem can be characterized as follows. Typically the worker has a loose arrangement with the agency in that the agency only undertakes to seek work for the worker. The agency is only the recruiting agent. In such situations, it is often found that there is a lack of mutuality or control between the agency and the worker because there is no obligation to provide on-going work.^[17] It has also been found that because the end user or client does not have any contract with the worker and has no obligation to provide work to and or pay the worker, there is a lack of sufficient mutuality between these parties and as such, no employment relationship^[18]. As such, agency workers often find themselves unable to claim rights granted to employees. This is anomalous because a long term agency worker i.e. an worker that is supplied on a long term basis to a client is but for the fact that they were supplied by an agency, indistinguishable from an employee of the client as is just as dependent and vulnerable as that employee.

The intermittent or flexible service provider faces further difficulties as a result of the way the statutory interventions are structured and which result in limited access to statutory protections.

Firstly there is the problem of continuity of employment. Due to the very nature of intermittent, casual or temporary work, there are breaks in service. This presents problems because in order to gain access to certain rights, there are varying qualifying periods of continuous work or employment that must be met ^[19]. It has been accepted that continuity generally applies in respect of a single employer ^[20]. This means that the genuine casual or agency temporary worker who moves from employer to employer may not ever obtain protection from arbitrary dismissal or redundancy[21].

It has also been held that continuity applies in respect of a single contract of employment,^[22] which exacerbates the problem for most intermittent and temporary agency workers because as it is noted, continuity may be broken by regular but separate contracts ^[23].

The provisions of the Employment Rights Act, which attempt to deal with the issue of continuity, ^[24]are of limited value to the intermittent worker[25].

S 212 deems certain weeks to count in respect of the calculation of continuity of employment even though the worker may not be working. The provision, which is of primary importance, is the temporary cessation of work provision[26]. As pointed out by Davies[27], this provision does not apply if an employer replaces a casual worker with another where the work is on going. It has been held that this does not constitute a cessation of work as contemplated by S 212(3) of the ERA[28]. The remaining provisions of S 212 do not cater for the nature of the intermittent breaks in work that are part of the normal casual or intermittent worker work pattern.

S 218 of the ERA deals with exceptions to the general principle that the cessation of work with one employer brings continuity to an end. However once again these exceptions do not in the main assist intermittent worker because one would imagine that in most cases where causal employees move from one employer to another, these employers are not associated employers.

The continuity of work qualifications is also contained in the Agency Workers Regulations.^[29] The regulations provide agency workers with some protection in that it they are designed to ensure similarity of terms and conditions of employment between agency workers and full time employees of the client. However in order to qualify for protection under the regulations, the agency worker must have been continuously employed for more than twelve weeks.  It has been argued that this qualification as well as other qualifications will mean that only a half to a third of temporary agency workers will be able access these rights^[30].

While the Working Time Regulations^[31] do not have similar qualifying periods in terms of continuity of employment, they do suffer from another problem in respect of flexible or intermittent workers. As a result of regulation 20, important rights do not apply ' in relation to a worker where, on account of the specific characteristics of the activity in which he or she is engaged, the duration of his working time is not measured or predetermined or can be determined by the worker himself'. This is problematic because as pointed out by Smith and Baker, many modern forms of flexible working have some element of unmeasured time^[32]. If for example the home worker contract specifies that a piece of work must be complete by a certain date and contains no specification as to the hours of work, it is possible that various provisions of the regulations would not apply.

One major statutory development in terms of extending protection to atypical work relationships has been the development of the concept of a statutory worker. A number of important rights^[33] have been extended to statutory workers notwithstanding the fact that they may not meet the definition of employees.  A worker is defined as:

‘“worker” (except in the phrases “shop worker” and “betting worker”) means an individual who has entered into or works under (or, where the employment has ceased, worked under)—

(a) a contract of employment, or(b)any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual;’[34]

Given the problems we have seen in terms of accommodating atypical working patterns within the definition of employees, the success of labour legislation in extending rights to these workers is largely dependent on the ability of worker definition to accommodate atypical working patterns. 

While the concept of the worker is no doubt an improvement on the concept of an employee^[35] in that it creates an intermediate category between an employee and the self-employed^[36], there are significant problems with the definition, which limit its usefulness in this regard.

Firstly, take the first requirement of the definition. This is namely that a worker must render personal services under a contract. In the leading case on the definition of workers, Bryne Brothers v Baird^[37], the court specified that the requirement of a ‘mutuality of obligations’ ala Carmichael also applied to worker^[38]. A right of substitution refers to a contractual right for the service provider to provide another person to work in his or her place on any particular day. Where the contract contains an unfettered right to substitute service, the courts have found that the person is neither an employee nor a statutory worker^[39].

These principles allow the ‘employer party’ to avoid rights afforded to employees or workers by including contractual provisions such as the right of substitution and or clauses negating the mutuality of obligations^[40]. In Autoclenz^[41], the Supreme Court sought to address this problem by allowing a tribunal to depart from the written terms of an agreement in determining the nature of the relationship. However this is limited to exceptional situations and is still dependent on a contractual model^[42]. The definition of an employee or a worker is still linked to a common law contractual analysis^[43] and is handicapped by its relative inability to recognize imbalances in the bargaining positions between worker and employer or service provider and client.

This brings me to the second difficulty with the definition. Even if it is shown that the service provider is obliged in terms of the agreement between the parties to provide personal service, in order to qualify as a worker, it must be shown that the person is not providing services to a client of a self employed contractor^[44].  It seems clear that the definition of worker still excludes the self-employed. This arises both from the requirement of personal service and from the business or undertaking exception contained in the worker definition.

Once difficulty with this aspect of the definition is that it does not define or provide any guidance as to the distinction to be made between a worker and someone who is providing personal service in the form of a business undertaking. The courts have applied a ‘dominant purpose doctrine’ in order to make this distinction. That is to say is the dominant purpose of the contract to render personal service or is it incidental to it^[45]? The court asks this question in order to ‘attempt to identify the essential nature of the contract. Is it in essence to be located in the field of dependent work relationships, or is it in essence a contract between two independent business undertakings’^[46]? This test is vague and is essentially circular and is likely to lead to contradictory results.^[47]

Another difficulty is that the definition of both employees and workers may exclude some service providers who are deserving of some protection. These are the so -called dependent contractors^[48]. It has been recently argued that research shows that there are an increasing number of people choosing work in quasi-entrepreneurial ways. These people do not ‘consider themselves employees but nor are they small business because they do not employ anyone’^[49]. These sorts of workers have the potential to be excluded from the definition of workers as demonstrated by the decision in Smith v Hewitson where persons providing cabin services on a bus were found not to be employees or workers. Although the courts have been more willing to include such workers such as in James and Autoclenz because of the vagueness of the definition of a worker, such service providers are subject to judicial discretion and are not guaranteed protection.

In certain jurisdictions, a certain level of protection is afforded to what are known as dependent contractors^[50]. Dependent contractors are small contractors who are typically dependent on one or two clients’s to sustain their business. Hepple gives an example of certain sales representatives, newsagents and tenants of filling stations belonging to oil companies^[51].  These types of service providers may be excluded from scope of a worker because they operate a business and or because they are not obliged to render services personally^[52]. You may say that these types of service provider should not be protected. However from a dependency or vulnerability point of view, they are in the same position as a worker or employee because they depend on one perhaps two clients for the economic survival.^[53]

It may be argued that fault lies not in the legislation but in judicial interpretations of the definitions contained in the legislation[54].  I think that this is partly right. However it is also evident that there are structural deficiencies in the legislation itself, which has aided and abated the problematic judicial interpretation. Firstly as we have seen an employee remains undefined and to that extent, the legislation must rely on common law principals which is based on a binary contractual conception of work relationships[55] and which therefore encourages the current judicial interpretations[56].  Similarly, the definition of worker in the statutes is defective in that it does not define what is meant by business undertaking carried out by the individual. In the last analysis there seems to be, as far as the definitions of employees and workers are concerned, an inherent flaw contained in employment legislation. As Anderman has argued, it seems that the statutory provisions in question are designed to remedy or supplement the power imbalances in the common law contractual relationship between employer and employee[57]. However at the same time they explicitly rely on the common law conception of the employment contract or in extending those rights. Surely the statutory provisions will suffer from the same deficiencies as the common law.  By relying on the common law contractual approach to understanding the employment relationship, categories of workers who are denied recognition in terms of the contractual approach, will also be denied protection offered by statute.

While it cannot be said that atypical working arrangements are not yet the predominant form of work, these working patterns are increasingly prevalent. As such and to the extent that legislative intentions do not provide protection for these classes of work, the legislation has not kept pace with the times. In this paper, I have shown despite the introduction of an expanded definition of a worker and the resulting expansion of the scope of protective labour legislation, this legislation still does not afford protection to many types of intermittent, agency, or freelancer. In particular small or one-person businesses that may be vulnerable as any other employee or worker are not protected. In addition many important rights such as the right not to be unfairly dismissed or redundancy rights are still not afforded to the intermediate worker.  Moreover I have also briefly shown that even where these atypical work patterns fall within the scope of the current legislation, as a result of the intermittent or flexible nature of their work, they do not qualify in terms of access to important rights.    As such, the artificial worker still remains vulnerable and relatively unprotected. This position is unlikely to improve in the short to medium term given the current government’s position that regulation of work relationships inhibits growth and therefore retards the rate of employment. The evidence in favour of this argument remains to be seen.  

---

^[1] Davies, P and Freedland, M Towards a More Flexible Labour Market (Oxford University Press, Oxford 2007) at page 56. In addition Baker, A & Smith, I Smith and Wood’s Employment Law 10^th ed (Oxford University Press, Oxford 2011) at page 56 footnote 69

^[2] It has been reported that as much of five percent of the work force in the United Kingdom consisting of agency workers.  See Wynn, M 'Regulating Rogues? Employment Agency Enforcement and S 16-18 of the Employment Act 2008' 2009 ILJ 64

^[3] Such as Freelancers and one-person businesses.

^[4] See Smith & Baker note 1 above at page 57, footnote 71

^[5] See Davies and Freedland at note 1

^[6] I take atypical workers to include temporary workers, casual workers, agency workers, homeworkers, freelancers and single person businesses providing services to third parties.

^[7] See S 230 and 13 of the Employment Relations Act 1996 (the ERA), S 54(3) of the National Minimum Wage Act 1998, S 2 of the Working Time Regulations 1998, S 10-13 of the Employment Relations Act 1999, Reg 1 of the Part time Workers (Prevention of Less Favorable Treatment) Regulations 2000 and regulation 3 of the Agency Work Regulations SI 2010/93 

^[8] See note 7 above

^[9] See Smith and Baker at page 47-48 and Harvey on Industrial Relations and Employment Law paragraphs 18-33 for a comprehensive discussion of the history of the various tests for employment

^[10] Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497. The RMC test for employment was recently affirmed by the Supreme Court as the classic description of employment in Autoclenz Ltd v Belcher and others [2011] UKSC 41, [2011] I.C.R 1157 (SCA) at para 18

^[11] These are summarized succinctly by the court in Autoclenz v Belcher [2011] UKSC 41 at paragraph 19 of the judgment

^[12] Carmichael v National Power plc [1999] 1 WLR; [1999] ICR 226 (HL)

^[13] See Carmicheal, note 15 and Montgomery v Johnson Underwood Ltd & Another [2001] EWCA Civil 318, [2001] ICR 819 (CA), at para 46 and most recently by the SCA in Autoclenz v Belcher and others at note 12

^[14]

^[15] See Carmichael at note 12,  A.C.L Davis ‘The Contract for Intermittent Employment’ ILJ  (2007) 103 and Patricia Leighton ‘ Classifying Employment Relationships – More Sliding doors or better regulatory framework? ‘ (2011) ILJ  5, at page 118 

^[16] For a classic example of this reasoning see Carmichael at note 12

^[17] For example see Bunce v Postworth Ltd t/a Skyblue [2005] IRLR 557.

^[18] See Stephenson v Delphi Diesal Systems Ltd [2003] ICR 471 (EAT). Also see Hewitt-Packard Limited v O'Murphy [2002] IRLR 4 (EAT)   and Costain Building & Civil Engineering Ltd v Smith [2000] ICR 215 (EAT) which are cited by  Elias, J in Stephenson (supra) at paragraphs 40-45

^[19] These include qualification for written particulars, notice periods, redundancy pay and most importantly unfair dismissal rights

^[20] See note 1 Smith & Baker, page 100, fn 298

[21] The qualification period for this right is one year of continuous employment. See 108(1) of the ERA

^[22] See Lewis v Surrey County Council [1998] ICR 982, HL and Heller Bros v McLeod [1987]  1WLR 728 (CA)

^[23] See Heller Bros above note

^[24] See S 212-218 of The Employment Rights Act

[25] Davies, A.C.L’ Casual Workers and Continuity of Employment’ (2006) 35 ILJ 196, page 199-200

[26] S 212(3) of the ERA

[27] See note 58

[28] See Bryne v Birmingham City District Council (1987) 85 LGR 729, [1987] ICR 519 (EAT)

^[29] Agency Work Regulations, SI 2010/93

^[30] Leighton and Wynn ' Classifying employment relationships-more sliding doors or a better regulatory framework' 2011 ILJ 5 at page 8. The authors do not cite authority for this proposition but see Wynn, M ‘ Regulating Rogues: Employment Agency Enforcement and Sections 15-18 of the EA’ ILJ (2009) 64 quoting the Survey of Recruitment Agencies (SORA) 

^[31] SI 1998 (as amended)

^[32] Smith, I and Baker, A ' Smith and Wood's Employment Law' at page 220

^[33] For example rights concerning minimum wages (S 54(3) of the Minimum Wage Act 1998), unlawful deductions from wages (S 13 and 230(3) of the Employment Rights Act 1996), regulation of working time (s 2, Working Time Regulations). See Davidov, Guy ‘ Who is a worker?’ (2005)  ILJ 57, at 59

[34] See S 230 of the Employment Rights Act ,1998

^[35] This follows from the fact as pointed out by Davidov for example, that the set of who constitutes workers is as a matter of the definition, wider than that of an employee

^[36] As noted by Freedman, M The Personal Employment Contract (Oxford: OUP, 2003)   at pages 19-21. For judicial comments see James v Redcats (Brands) Ltd [2007] I.C.R 1066, [2007] I.R.L.R. 296 (EAT) and Autoclenz v Belcher & Others [2009] EWCA Civ 1046 (CA)

^[37] [2002] ICR 667, [2002] IRLR 96 (EAT)

^[38] See note 19 at paragraph 24 of the judgment at page 680. See also Community Dental Centers Ltd v Sultan-Damon [2010] IRLR 1024 (EAT)

^[39] See Community Dental (supra) where the court relied on a lack of an obligation to provide personal service. In addition see judgment of the EAT in Autoclenz at note 26

^[40] See Note 16, Davidov at pg 63

^[41] Autoclenz v Belcha & Others [2011] UK SSC 41, 92011] I.C.R 1157 (SC)

^[42] The court held that a tribunal may depart from the express written terms of the contract in determining the nature of the obligations between the parties where it is clear that the written terms do not reflect what the parties real intent was or is.

^[43] The analysis is still based on what both parties actually agreed to, irrespective of what the practical day-to-day reality is.

^[44] See note 36 James v Redcats (Brands) Ltd  at paragraph 6 and 49, Autoclenz Ltd v Belcher & Ors [2009] EWCA Civ 1046 (CA) at paragraph 10 and Yorkshire Window Co Ltd v Parkes Appeal No. UKEAT/0484/09/SM

^[45] See note 36 James v Recats at paragraphs 52-55

^[46] See note 30.

^[47] See for example the difference in outcome in Smith v Hewitson and Autoclenz Ltd v Belcher & Ors

^[48] This argument is made by Brodie, D in ‘Employees, workers and the Self Employed’ (2005)  ILJ 24 253 at page 254

^[49] Ibid

^[50] See Canada for example. See Marsden, D  ‘Employers, independent contractors and dependent contractors: are dependent contractors entitled to reasonable notice of termination?’ an article online at http://www.lexology.com/library/detail.aspx?g=406963ab-80c8-47c2-829a-333627d31957 accessed on the 5^th January 2012.

^[51] See Hepple, B ‘ Restructuring Employment Rights’ (1986) 15 ILJ 69

^[52] See Community Dental Centers Ltd v Sultan-Damon [2010] IRLR 1024 (EAT)

^[53] See Community Dental Centers Ltd v Sultan-Damon [2010] IRLR 1024 (EAT)

[54] For example see Davidov at note 25 where he argues that if one adopts a purposive interpretation of the term worker, these defects may be rectified. It has also been argued that the courts have misapplied the concept of mutuality of obligations to the worker category based on a misconception that such a requirement is part of the general law of contract. See Davies, A.C.L Davies ‘ The Contract for Intermittent Employment’ ILJ 2007 102, 104

[55] See Freedland, M  The Personal Employment Contract  (Oxford: OUP, 2003)

[56] This point is also made by Douglas Brodie in ‘ Employees, Workers and the Self Employed’ (2005) 34 ILJ 253,

[57] See Anderman, S ‘Protective Employment Statutes and Contracts of Employment’ (2000) 29 ILJ 223, 225

The Four Cardinal Principals for Evaluating a claim for Unfair Dismissal in the UK

In this post I will outline four principals that must be considered when as an employer you are faced with a claim for unfair dismissal in terms of the Employment Rights Act, 1996 or as an "employee", you are considering bringing a claim for dismissal. This post applies to the law of unfair dismissal in the United Kingdom. I will provide the skeleton in this post and in subsequent posts, we will consider the principals in greater detail. 

1.Does the person in question whose contract has been terminated have the right not to be unfairly dismissed? 

Not everyone who renders services to another has the right not to be unfairly dismissed. Only employees as defined by  the Employment Rights Act, 1996 (The ERA) have this right. Independent contractors and statutory "workers" do not  qualify to  have this right. There are further qualifications to this right. Only employees who have been  continuously  employed with the same employer for a year or longer acquire this right. As per my previous post, from the 6th April 2012 this is likely to change to two years. Look at S108 of the ERA to see how this period is calculated and what periods are included or excluded from this calculation . Certain categories of employee are also excluded such as  certain Crown employees etc.  In most cases, it should be easy to  determine if the person is an employee. However there are certain grey areas and complications when it comes to  certain independent contractors and atypical working patterns such as agency workers. If you have any uncertainty as  regards status, this is a highly complex and technical area and I would obtain legal advice. 

One exception to the general principle that a person has to have a specified length of employment in order to qualify, pertains to automatically unfair dismissals. A person obtains a right not to be dismissed for certain reasons from day one. The concept of an automatically unfair dismissal is explored in greater depth below. 

If the claimant does not qualify for the right not to be unfairly dismissed in terms ofS 94 of the ERA, the tribunal does not have the jurisdiction to hear a claim for unfair dismissal. 

2.If the person does qualify for this right, has there been a dismissal as defined by the ERA? 

Not all terminations of a contract of employment constitute a dismissal in terms of the ERA. S 95 of the ERA provides for the following types of dismissal. Firstly where the employer unilaterally terminates the contract of employment. This is the  most common type of dismissal. Secondly where the employee is on a fixed term or time contract and the contract expires by way of the event in question and is not renewed e.g a contract that runs from the 1st March 2012 until the 31st March 2012 terminates on the 31st March 2012 and if not renewed, this constitutes a dismissal. Lastly where the employee resigns in circumstances where they would be entitled to resign as a result of the employers conduct. This is the so called constructive dismissal. if the employer commits a serious breach or repudiates the contract, the employee can accept and resign and claim constructive dismissal. 

3.Is the reason for dismissal a "potentially fair reason" (PFR) or not?

Firstly you must determine whether the reason for the dismissal is automatically unfair? Certain reasons for dismissing an employee are automatically unfair and if the reason for dismissal falls into these category of reasons, the dismissal will be unfair irrespective of the merits of the matter. The range of these reasons is to wide to deal with in this post. The most common reasons are: 1. For carrying out health and safety functions or bringing potentially or actually harmful circumstances to his employers attention.2 For asserting various statutory rights such as instituting a claim for unlawful deductions. 3 When there is a transfer of an undertaking where the reason for the dismissal is solely or principally related to the transfer or where the reason was related to the transfer and was not an economic, technical or organisational reason. See S 98-104 of the ERA(ERA)

Secondly if the reason for the dismissal is not automatically unfair, is the reason a potentially fair reason for dismissal? S 98 (2) of the ERA provides that you may dismiss someone for a reason related to their ability to do the job (capacity  or qualifications), their conduct, failure to meet a statutory requirement,  redundancy and for "any other substantive reason". The onus is on the employer to prove the real reason for the dismissal and the determination is made at the time for the dismissal. The employer cannot rely on facts unknown to them at the time of making a decision to dismiss. 

4.Was the dismissal fair?

If the reason for the dismissal falls under S 98 (2) of the ERA, the employment tribunal must decide whether upon a consideration of all the relevant circumstances, the employer acted reasonably in dismissing the employee (see S 98(4) ).

This is a vast and complex area but essentially the tribunal must determine two questions:

Firstly whether a fair procedure was followed in taking the decision to dismiss? The general principle seems to be is that the principals of natural justice should be followed before taking a decision to dismiss. This is to say, the employee must be informed of the allegations against them and afforded an opportunity to respond to those allegations. The ACAS Code of Good Practise on Disciplinary and Grievance Procedures , is not binding on employers. However failure to follow the code may result in a 25% increase in compensation awarded if the dismissal is found to be unfair. In addition, the code distills the essential principals of natural justice and as a matter of good practise should be adopted by all employers. The code obviously does not apply in cases of redundancy. In cases of redundancy there must be a full and proper consultation process. The ACAS advisory pamphlet on redundancy  sets out the principals nicely. 

Secondly, whether the decision to dismiss is within the range of reasonable responses? The tribunal must decide whether the dismissal falls within the range of responses which a reasonable employer may have taken, taking into account all of the relevant circumstances. This element covers too much ground to discuss in this post and will be explored in greater depth in a subsequent posts.  However by way of an example, this evaluation normally involves, within the context of misconduct, whether or not the employee is guilty of the misconduct or whether the employer had a reasonable belief that he or she was guilty, the nature of the misconduct, the employees previous disciplinary record and length of service. 

I have tried to illustrate the evaluation process diagrammatically below. 

The extension of the qualifying period for protection against unfair dismissal

It has been announced by the chancellor of the United Kingdom that the government intends once again, to increase the qualifying period for rights not to be unfairly dismissed (in terms of the Employment Rights Act, 1996 ) from one to two years continuous employment. This will take effect as from the 6th April 2012 and it is rumored at this stage to only apply prospectively. That is to say it will not apply to those already employed as at the 6th April 2012. The stated reason for this change is that it is thought that this will increase small employers confidence to employ more people and therefore reduce unemployment and stimulate growth.

The question which I examine here is whether this extension to the qualifying period may be successfully challenged. This question comes to mind because this is not the first time that the qualifying period has been extended to two years. Prior to 1985, the qualifying period was one year. This was changed in 1985. This extension was challenged in the matter R v Secretary of State for Employment, ex p Seymour-Smith. The basis for the challenge was that because the two year qualifying period had a disproportionate effect on women as opposed to men, this constituted indirect discrimination on the basis of sex and as such violated the Equal Treatment Directive. The Court of Appeal agreed and quashed the extension. However on appeal the House of Lords, after seeking rulings from the ECJ, overturned the decision on appeal. However by this time, the government had reduced the qualifying period to one year and the matter was laid to rest. The impending changes thus once again raise the specter of a fresh challenge. The question is whether such a challenge would have a chance of succeeding in light if the decision by the House of Lords in the Seymor-Smith decision. percentage

The first point to note about the decision is that the House of Lords found that article 141 of the EC treaty was applicable and not the Equal Treatment Directive. The House of Lords, acting on the rulings by the ECJ, held that in order for such a claim to succeed, the claimants must be able to show that there was a considerable difference between the percentage of employed men who met the qualification and employed women who met qualification. Furthermore that such a difference was constant and persistent. This is in my view the ratio decidendi of the House of Lords ruling and the principle remains good law. The majority of the House of Lords found on the facts that while there was a constant and persistent difference, the difference was not large enough to be considered considerable. The court found that the statistics between the years 1985 - 1991 (between the time that the period was extend and the date when the claimants were dismissed) showed that for every ten men that qualified only nine women qualified. I have not researched the recent statistics but this figure is unlikely to have improved given the fact that due a variety of factors including family commitments, more women tend to be employed on short fixed term contracts than men. There is every likelihood that provided the statistics are supportive, this hurdle may be surmounted. It is also possible that the ECJ may come to a different conclusion on the same facts.

However, even if it can be shown that the order extending the qualifying period does have a disparate or disproportionate effect on women, this is not the end of the matter. As argued by Lord Nicholls in the Seymour-Smith decision, the state may still show that the disparate impact is objectively justified by the legitimate aim of the extension. The test is whether the order seeks to achieve a legitimate aim and (because we are dealing with state as opposed to private action )that the member state reasonably considered the means chosen to be suitable for achieving that aim. In a dissenting judgement in the Seymour-Smith decision, Lord Nicholls held that there was a disproportionate impact on women but that it was objectively justifiable because the extension sought to achieve the legitimate aim of encouraging employment and there was 'some' evidence supporting this contention. I believe that it is the justification defense that would provide the sticking point for a challenge to the extension of the qualifying period. What presents a particular difficulty for a claim that the order indirectly discriminates is that the state is given a wide discretion as to how they seek to achieve a legitimate end. The state may have little evidence that the extension of the qualifying period would increase employment but because of the degree of deference applied by the judiciary, this may be sufficient. It seems to me that it may be better to try find some sort of other incompatibility between the order for extension and some other EC instrument. In the end, the success or otherwise of a claim that a order extending the period from one to two years will primarily depend on the empirical evidence supporting the claim that the extension will increase employment. If the is no such evidence, then there is a significant chance that such a claim may succeed. If there is some evidence, although this may not be definitive or convincing, such a claim is unfortunately likely to fail. It would certainly be interesting for someone to analyze the impact that the last extension to two years had on the employment rate all other things being equal. The current governments claims in this regard may like many other claims it has made, may just be found wanting.

An objective approach to determining the fairness of a disciplinary sanction

It seems clear to me that an arbitrator or judge in determining if a disciplinary sanction if fair is making a value or normative judgment. I believe that this is what is meant when the constitutional court in Sidumo said a commissioner in undertaking this function must exercise his or her own sense of fairness.  However these words, ‘ his own sense of fairness’ have been fundamentally misunderstood by judges and arbitrators alike.  The prevalent interpretation of how a decision maker should go about making this value judgment endorses a subjectivist or parochial approach to the exercise of value judgments.  I submit that this is an incorrect interpretation of how this value judgment should be exercised

Firstly let me explain what I mean by the parochial approach. The statement “in deciding the fairness of a disciplinary sanction, the employer must exercise his own sense of fairness’ can be interpreted in at least two ways. Firstly it could mean that the evaluation of the fairness of the sanction must take place relative to that particular decision maker’s personal values. For example, on this approach a commissioner  evaluating a employer’s decision to dismiss for stealing a pie would look for a fit with his or her personal values. If the commissioner believes that dismissal for petty theft is unfair, on this view, the commissioner must find that the employer’s sanction is unfair.  Secondly, exercising one’s own sense of fairness could mean that it is the commissioner that must exercise this value judgment but that it must be objectively exercised in that a sanction must be evaluated in relation to values which are generally accepted by our society as a whole whether or not the individual commissioner subscribes to those values or not. Using the above example, an employer’s decision to dismiss for theft could only be judged to be unfair if such an action would be inconsistent with the public values of the society on whose behalf he exercises his judgment .  On the parochial approach, the yardstick is personal mores whereas on an objective approach the yardstick is bona mores or pubic values.

I believe that there are strong arguments against the parochial approach.

Firstly the nature of the office of an arbitrator or commissioner. The commissioner or arbitrator is a public function. The South African public has through the Nedlac process which resulted in the Labour Relations Act, given CCMA arbitrators the power to resolve disputes on their behalf.  It cannot be the case that “we” have asked these arbitrators to impose their own personal values on “us”.

Secondly, one of the functions of the law is to give guidance to the public in general as to what is permissible or what is not. The law can only serve this function if the outcome of any particular dispute is predictable. That is to say the law can only serve this purpose if we can predict with reasonable certainty what legal consequences attach to a certain action. If it is permissible for arbitrators to impose their own values in determining the fairness of a disciplinary sanction, the outcome becomes largely unpredictable and the law ceases to be able to achieve one of its chief functions.  Lastly, moral theorists often associate correct moral decision making with objectivity. It is true that unlike making a factual or empirical judgment such as “the employee arrived late for work”, a value judgment like “it is fair to give the employee who arrived late to work a written warning”, cannot said to be true or false.  However many philosophers (such as John Rawls and Ronald Dworkin) argue that value judgments are objectively justifiable and some judgments can be accepted or rejected on an objective basis. For example Rawls this objective justification consists in its “reflective equilibrium” or lack thereof with our fundamental moral convictions. For Dworkin, justification consists in an integration with the principals of dignity.  On objective approach to evaluating the fairness of a disciplinary sanction encourages moral justification and leads to greater scrutiny and better decision making.

When the Constitutional Court says a commissioner must exercise his or her own sense of fairness, it does not mean that the commissioner must impose his or her own values but rather that it is the commissioners function to make this judgment, as opposed to any of the parties to the dispute but must do so in accordance with publicly acceptable values.  We have these values. They are contained in the constitution.  The arbitrator in evaluating the fairness of an employer’s decision to dismiss or sanction an employee, the arbitrator must look for a fit with values generally accepted by the South African public. One way to achieve this would be to ask, would a reasonable member of the South African public, imbued with these public values, upon a consideration of all of the relevant circumstances consider this sanction to be fair?  If yes, then the sanction should adjudged to be fair irrespective of whether the arbitrator in his personal capacity would not have decided likewise.  This would result in more consistent and better decision making. 

Amendments to Labour Legislation - an update

The latest  news regarding the proposed amendments to existing labour legislation which has stirred up so much controversy is that the draft bills have been rejected by Nedlac as being badly drafted and have been sent back to be re-drafted. This is what was reported at the beginning of this monthSee News24. I have done some research and cannot find any further news on this issue. There is no clarity as to the details of the complaints regarding the bills as they were. However the Financial Mail said that the fact that COSATU supported the position that the bills were untenable in their current form was a positive signFinancial Mail. When and if the new drafts become available, I will provide you with a summary and analysis of them. 

A bit of a rant

Dear Reader.

I apologise for being absent for some time. You can thank our dear department of labour for that. I have been embroiled in a dispute regarding the de-registration of an employers organisation. It seems that the Registrar of Trade Unions is hell bent on deregistering as many Trade Unions or Employers Organisations as possible. At this stage the motive is unclear but in my opinion, it is not motivated by altruistic concern. A number of organisations have been de-registered for financial irregularities. I do not have any issue with this because I believe that the only justification that limitations or the impositions regarding the registration of trade unions and employers organisations can have is to protect their members ( and by extension members of the public) from being fleeced or having their money used for unauthorised or otherwise illegitimate purposes. However the department has de-registered a number of Trade Unions and Employer Organisations that in the registrars infinite wisdom do not constitute "genuine " employers organisations. This clearly smacks of the imposition of value judgements by a person not even democratically elected. I know that this practice is being constitutionally challanged in matters that are pending before the Labour Court. I hope that sanity prevails but I am certainly not holding my breath. The Labour Court it seems is more than willing to protect the registrar. On balance, the net effect of this strategy will be to undermine the stability of Labour Relations. I say this because a number of what are in my view responsible employer organisations are being or have been de-registered. When I say responsible organisations, I mean organisations that are professionally run, who conduct themselves in an ethical manner and who have over a period of time created close relationships between the employers they represent and the labour they employ. The registrar has often cast the reasons for the de-registration in the widest possible terms so as constitute no reasons at all and have de-registered these associations without first engaging them in a meaningful way with the purpose of remedying practices which the department finds offensive. 

One of the registrar's "beefs" is that the Trade Union and Employer Organisation is being used as fronts by attorneys and dare I say it "Labour Consultants" to represent their clients in the CCMA and Labour Court. One obvious way to remove this problem is to open up the right to represent in these fora. In the United Kingdom and in Botswana, anybody can represent anyone else in the employment tribunals and in the Industrial Court respectively. Why not do the same thing here? Those jurisdictions did not descend into chaos.   The argument is that firstly the limitation on representation was and is a negotiated settlement between Business, Labour and the State. In other words it was negotiated between anybody but the ordinary South African citizen. Big business, organised labour and the state do not speak for the average person who has the misfortune of finding themselves at the CCMA for whatever reason. I suspect that if you had to conduct a survey amongst South African citizens that the current limitation on representation at the CCMA and Labour Court would not be supported by the majority. The other argument against this is that it would allow unscrupulous "fly by night" consultants with little or no knowledge, skills or experience in labour litigation to operate in the various dispute resolution fora. I do not believe that the current restrictions on representation are a panacea to this evil. In my experience (and I appear on average in the CCMA and Labour Court three times a week) officials from so called "genuine " and well established trade unions such as NUMSA and SACCAWU have minimal litigation skills and often lose cases because of a lack of skill. The most highly regulated group i.e legal practitioners are expressly excluded from representing litigants in the most common type of disputes before the CCMA i.e dismissal disputes for misconduct and incapacity. It is also argued that lawyers complicate and extend the life of disputes. I believe this to be a myth. In my experience when a litigant is unrepresented, it is likely to take longer to resolve that dispute. I suspect that the restrictions on representation further vested interests of the established trade unions. It is high time that this monopoly is broken and we adopt a more mature, practical and principaled approach to this issue. 

Let me know your views.

Enjoy your weekend, over and out.