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13 Principles of Business Law Txt

13 Principles of Business Law Txt

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Who is Qualified to Present a Claim for Unfair Dismissal?

In general, to be able to claim unfair dismissal a worker must:
Be an employee within the meaning of Section 230(1) of the Act: Section 94(1),
Employment Rights Act 1996 (ERA 1996)
Have been dismissed in accordance with Section 95(1) of the ERA 1996
Have presented his complaint within three months of the effective date of termination
of his contract of employment: Section 97, ERA 1996

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Have been employed by the same or an associated employer for the qualifying period
of continuous employment of one year (unless their reason for dismissal is one which
the ERA 1996 categorises as automatically unfair): Section 108(1), ERA 1996
Be ordinarily resident and working in Great Britain
Not work in an excluded category of employment e.g. Share fisherman and civil

Automatically Unfair Dismissal

There are five main reasons for dismissal by an employer that are regarded as automatically

(a) Dismissal on the grounds of pregnancy or childbirth

Section 99, ERA 1996 provides that an employee's dismissal will automatically be
unfair if the reason or principal reason for the dismissal was that she was pregnant or
for any other reason connected with her pregnancy, including the fact that she took
maternity leave.

(b) Dismissal on the grounds of trade union activities or membership

Section 152 of the Trade Union and Labour Relations (Consolidation) Act 1992
provides that a dismissal will be held to be unfair if the main reason for it was:
That the employee was, or proposed to become, a member of an independent
Trade Union or
Had taken part, or proposed to take part, in the activities of an independent
Trade Union, if the activities were outside the hours or
In accordance with an arrangement with the employer permitting the employee to
take part in such activities during working hours or
That the employee was not a member of a Trade Union, or had refused or
proposed to refuse to become or remain a member.
The burden of proving that the reason for the dismissal was union-related is upon the
employee where he would otherwise lack sufficient qualifying service to complain of
unfair dismissal; in all other cases it is for the employer to prove the reason for the
dismissal in the normal way.
(c) Dismissal on the grounds of health and safety activities, e.g. for acting as a Safety
Representative: Section 100, ERA 1996
The relevant health & safety grounds defined in Section 100 are five-fold. Employees
will be held to be unfairly dismissed on the grounds of health and safety activities if
their employer dismisses them (or selects them for redundancy when others in similar
circumstances are not selected) because they are, for example, carrying out health &
safety activities as an employer-designated representative; drew attention to what they
'reasonably believed' to be a health or safety risk to the employer's attention or left or
refused to return to their place of work because of what is 'reasonably believed to be a
serious and imminent danger and took appropriate steps to protect themselves or
others in circumstances of serious and imminent danger.

(d) Dismissal on the grounds of asserting a statutory right

Employment legislation provides that employees will be held to be unfairly dismissed
on the grounds of asserting a statutory right if their employer dismisses them (or
selects them for redundancy when others in similar circumstances are not selected)
because they brought proceedings against the employer to enforce a right of his, which

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is a relevant statutory right, or alleged that the employer had infringed a right of his
which is a relevant statutory right.
The relevant statutory rights include:
Any right conferred by the Employment Rights Act 1996 for which the remedy for its
infringement is by way of a complaint or reference to an employment tribunal
The right to a statutory minimum period of notice of termination of their
employment contract under Section 86(1) of the ERA 1996
The rights conferred by the Working Time Regulations 1998: Section 101A, ERA


The rights conferred by the National Minimum Wages Act 1998: Section 104A, ERA


The rights conferred by the Public Interest (Disclosure) Act 1998 which covers
whistleblowing: Section 103A, ERA 1996.

(e) Dismissal without following the statutory dismissal procedur

Failure to follow procedural requirements: Section 98A, ERA 1996. Where an
employer fails to follow the statutory disciplinary and dismissal procedure when
dismissing an employee, the dismissal will be held to be automatically unfair dismissal
and lead to an award of at least 4 weeks' pay being made to the ex-employee, further
compensation being increased by between 10% and 50%. Conversely, if employees
fail to take advantage of the procedure to appeal against their dismissal, any
subsequent compensation they may win if their dismissal is found to have been unfair
must be reduced by between 10% and 50% by the tribunal – procedure contained in
Schedule 2 of the Employment Act 2002.

Reason for Dismissal

When it has been established that the applicant is an employee and not excluded from
making a claim, the onus of proof moves to the employer, to establish the reason for
dismissal. If the employer cannot prove a reason for it, the dismissal is deemed to be unfair.
In order to be believed the employer must tell a consistent story and may not put forward a
different reason at the employment tribunal from that which he stated in his notice of
appearance, nor on appeal, from that relied upon before the employment tribunal: Nelson v
BBC (1977) nor on an internal appeal, from that initially tendered.
In Monie v Coral Racing Ltd (1981) the applicant was dismissed for dishonesty and he
exercised his contractual right to have an internal appeal. This was heard by the managing
director who confirmed the dismissal, but since he found no evidence of dishonesty against
Mr Monie, he gave as the reason that his failure to exercise the authorised cash control
procedures justified dismissal. The court thought that the reason must be that which
operated at the time of the dismissal. The internal appeal made no difference. If the
employer had no reason for dismissal such a sacking constitutes unfair dismissal.
In the absence of an automatically unfair reason for dismissal a dismissal the employer must
establish a potentially fair reason for dismissing his employee, and that he acted reasonably
in the circumstances i.e. a reasonable employer would have taken the decision to dismiss
rather than to suspend the employee concerned

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Fair Dismissal

In all cases, it is for the employer to show that the principal reason for the applicant's
dismissal is one of the statutory fair reasons cited Section 98(1)(b) and Section 98(2)(a) – (d)
of the Employment Rights Act 1996: Section 98(1)(a), ERA 1996.
There are six statutory reasons for dismissal which are potentially fair:
(a) That the employee lacks the capability or qualification to perform the work of the
kind which he was employed to do
: Section 98(2)(a), ERA 1996
This is the situation in which the employee is either unable due to sheer incompetence
or ill health to do his job or unqualified to do his job.
The only guidance in relation in 'capability' as a reason for dismissal is its definition in
Section 98(3)(a) which states that 'capability' includes 'skill, aptitude, health or any
other physical or mental quality'. So as 'incapability' through incompetence is
concerned, the general rule is that 'the employee's incapacity as it existed at the time
of dismissal must be of such a nature and quality to justify dismissal'. It need not be
reflected in one particular incident but may arise from several indications: Lewis
Shops Groups Limited v. Wiggins (1973).
However, employment tribunals are often not very well equipped to measure intangible
examples of poor work performance. To this end, Lord Denning stated in Taylor v.
Alidair Ltd (1978) that:

"Wherever a man is dismissed for incapacity or incompetence it is sufficient that
the employer honestly believes on reasonable grounds that the man is incapable
or incompetent. It is not necessary for the employer to prove that he is in fact
incapable or incompetent".

Thus, to dismiss an employee who is not capable of performing his job properly will be
fair provided the employer acted reasonably in the circumstances.
'Capability' dismissals related to the applicant's competence to do the job for which he
was employed include Alidair Ltd v. Taylor (1978). This case had particularly strong
primary facts since the applicant, Mr Taylor, was an airline pilot, dismissed by his
employers because he was thought to be at fault for a bad landing which had caused
serious damage to the respondent's aircraft. According to the Court of Appeal, the
employers had reasonably demanded a high degree of care and fairly dismissed him
when he failed to measure up to it on one occasion. He was engaged in a special
category of: "activities in which the degree of professional skill which must be required
is so high, that the potential consequence of small departures from that high standard
is so serious that the failure to perform in accordance with those standards is sufficient
to justify dismissal." The Court of Appeal in this case specifically approved of Bristow
J's examples of other such employees as, "the scientist operating nuclear reactors,
the chemist in charge of research into the possible effects of, for example, thalidomide,
the driver of the Manchester to London Express, the driver of an articulated lorry full of
sulphuric acid". Few procedural safeguards are necessary to dismiss such
The only guidance in relation to what constitutes a 'qualification' as a reason for
dismissal is given in Section 98(3)(b) which states that 'qualification' means 'any
degree, diploma or other academic, technical or professional qualification relevant to
the position which the employee held'.
Although 'qualifications' is widely defined in Section 98(3)(b) if an employee is to be
dismissed on this ground the 'qualification' concerned must relate to 'performing work
of the kind which he was employed by the employer to do': Blue Star Ship
Management Ltd. v. Williams (1978).

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In order to be dismissed fairly on the grounds of lack of 'qualifications' there must be a
contractual obligation (express or implied) to hold the relevant qualification: Litster v.
M Thom & Sons Ltd (1975).
'Capability' dismissals on the grounds of the applicant's inability to do the job on health
grounds include Coulson v. Felixstowe Dock & Railway Co Ltd (1975). In this case
the claimant was off work due to ill-health for considerable periods of time. He could
no longer perform his duties and was put on light clerical work. He was told that if he
could not return to his old job he would be re-graded and was given six months in
which to prove his fitness. However, he fell ill again and was dismissed. It was held
that the employer had treated the employee with every consideration but there must
come a time when the employer cannot be expected to keep someone on whom is not
doing his work. The tribunal had to consider fairness to the business as well as to the
In deciding what action to take in these cases employers will need to take into account
the likelihood of an improvement in health and subsequent attendance (based where
appropriate on professional medical advice); the availability of suitable alternative work;
the effect of past and likely future absences on the organisation, how similar situations
have been handled in the past and whether the illness is a result of a disability as
defined by the Disability Discrimination Act 1995.
In all cases, it is for the employer to show that the principal reason for the applicant's
dismissal is one of the statutory fair reasons cited Sections 98(1)(b) and 98(2)(a) – (d)
of the Employment Rights Act 1996: Section 98(1)(a), ERA 1996.
(b) That the employee's conduct is unacceptable: Section 98(2)(b), ERA 1996.
Misconduct by an employee is a ground frequently relied on by employers to justify
dismissal. If the principal reason for dismissal relates to serious misconduct, which the
employer reasonably believes has been committed by the employee, then the
dismissal can be regarded as prima facie fair. Over the years case law has
established various types of misconduct which will justify dismissal. Such reasons
include: abusive language; disobedience; drink and drug abuse; personal appearance;
theft and dishonesty; violence and fighting; assault; racial or sexual harassment,
lateness or absenteeism. All of the aforementioned reasons may ultimately fall within
the sphere of misconduct and so be fair reasons for dismissal under Section 98(2)(b)
subject to the application of the test of fairness in Section 98(4).
'Conduct' dismissal cases include the following.
If a job applicant is deliberately dishonest on his or her application form this will
normally make any subsequent decision to dismiss prima facie fair: Torr v. British
Railways Board (1977). In this case the EAT held that the employers
"were justified in deciding to dismiss the employee as soon as they appreciated that he
had obtained employment as a guard by dishonest concealment of a criminal
conviction carrying a sentence of three years imprisonment, even though the
conviction was as far back as 1958 and the employee had apparently been working
satisfactorily as a guard for sixteen months".

The sentence was of such a duration not to be covered by the Rehabilitation of
Offenders Act 1974 and neither could the philosophy behind the Act be extended to
render a dismissal in the circumstances unfair:

"It is of utmost importance that an employer seeking an employee to hold a position of
responsibility and trust should be able to select for employment a candidate in whom
he can have confidence. It is fundamental to that confidence that the employee should
truthfully disclose his history so far as it is sought by the intending employer".

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When determining whether an employer has acted within the 'range of reasonable
responses', in deciding in dismiss, rather than a lesser disciplinary sanction, such as
suspension, following a discovery that his employee has made a misstatement on their
application form, all the circumstances of the case should be considered, including the
significance of the misstatement, their length of continuous service, and whether or not
his or her work has been satisfactory: Johnson v. Tesco Stores Ltd (1976). In this
case the application form stated that "a misstatement as to date of birth, previous
employment details etc will render the application and any subsequent contract
invalid." When a misstatement by the complainant as to his employment history was
discovered, his job was terminated, despite having worked satisfactorily for 18 months.
The tribunal held that the effect of the clause could not be to make a contract void
from the outset when false statement was discovered. When the contract was
terminated by the employer there was a dismissal, which could be regarded as fair or
unfair applying the law relating to unfair dismissal.
It has also been deemed fair to dismiss an employee on the grounds of misconduct
where they have used Internet facilities at work to access sexually explicit pictures and
moving images: Parr v Derwentside District Council (1998). In this case Parr was
dismissed on the grounds of gross misconduct when his employers discovered that he
had used Internet facilities at work to access sexually explicit pictures and moving
images. He admitted that this was true but claimed that he had accessed the website
by mistake, 'got stuck' in it and had revisited it only because he was disturbed by the
prospect that entry could be made easily by children. That explanation did not wash
with his employers, who took the view that, being a local authority, they had a duty to
provide a high standard of public service, which necessitated moral probity on the part
of their employees. In dismissing Parr's claim for unfair dismissal the Employment
Tribunal found that the employer had investigated events thoroughly, efficiently and
objectively and had decided that Parr was guilty of violating established codes of
conduct and of breaching trust and confidence.
It should be noted, that for a dismissal on the grounds of misconduct to be justified, it
is not necessary to prove that the employee was indeed guilty of the offence.
However, what must be established is that the employer honestly believed, on
reasonable grounds, that the employee was guilty at the time when the employer took
the decision to dismiss: BHS v. Burchell (1978). In determining whether dismissal on
the grounds of misconduct is fair in the circumstances, the guidelines in the case of
BHS v. Burchell (1978) provide valuable assistance, the test is threefold, namely that:
The employer must have established a genuine belief that the employee has
committed the act of misconduct
The belief must be based on reasonable grounds and
The employer must have carried out such investigation as was reasonable into
all the circumstances of the case.
It should be noted, that in all cases the dismissal on the grounds of misconduct the
dismissal of an employee may be rendered unfair if the employer has failed to follow
the proper disciplinary and dismissal procedure when in dismissing the employee
concerned. The procedures are contained in Schedule 2 of the Employment Act 2002.
(c) That the employee has retired: Section 98(2)(ba), ERA 1996.
(d) That the employee has been made redundant: Section 98(2)(c), ERA 1996
Broadly speaking, this is where the employer's need for employees to do certain work
has ceased or diminished or is expected to do so in the future. However, if an
employee accepts an offer of suitable alternative employment a redundancy situation
will cease to exist: Section 141, ERA 1996.

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(e) That there is a statutory restriction on either the employer or the employee
which prevents the employment from being continued
: Section 98(2)(d), ERA 1996
If the principal reason for an employee being dismissed is that his work will involve
contravention of "a duty or restriction imposed by or under an enactment", his
dismissal can be regarded as prima facie fair: Appleyard v. FM Smith (Hull) Ltd
(1972). In this case it was an essential requirement for mechanics that they should
hold a valid driving licence so that they could test vehicles which they had repaired.
When the claimant lost his licence, the company had given some thought to placing
him elsewhere in the business, but this was not practicable in such a small firm, and
his dismissal was held to be fair.

(f) Some other substantial reason, which could "justify the dismissal of an
employee holding the position which the employee held":
Section 98(1)(b), ERA
In such cases the employer must be able to show that the reason is a fair one and that
they have acted reasonably. A common SOSR is where a business reorganisation has
taken place, which results in dismissals which do not meet the statutory definition of
'redundancy'. This is a long established SOSR for dismissal. If there are good
business reasons for the change in terms and conditions, the employer will usually
have no problem in establishing SOSR. However, the Employment Tribunal must also
be satisfied that the dismissal has been carried out fairly and reasonably. This means
that the employer must have followed fair procedure in attempting to introduce the
change. This involves consultation about the change involved and an evaluation of
any way in which objections raised by employees can be resolved.

RemediesAvailable toApplicant

There are five remedies are potentially available to the applicant:
(a) A declaration of rights that the worker is an employee and that they have the right to
claim unfair dismissal.
(b) An order for reinstatement: Section 114, ERA 1996 whereby the employee returns to
his old job with no financial loss (very rare to be awarded this remedy). If the employee
requests it, reinstatement is the first remedy that the Employment Tribunal will
consider. Only when this has been rejected as unsuitable does the tribunal then go on
to consider re-engagement. Reinstatement is where the employer is ordered to treat
the employee in all respects as if he had not been dismissed. This means that the
employee is awarded all arrears of pay and all rights and privileges in relation to his
contract are restored. Where reinstatement is not ordered, the tribunal then goes on to
consider re-engagement.
(c) An order for re-engagement: Section 115, ERA 1996 whereby the employee is re-
employed in a comparable job. Re-engagement is where the employee is re-employed
in a job comparable to that from which he was dismissed, or other suitable
employment. The terms of a re-engagement order must be, wherever possible, as
favourable as an order for reinstatement unless the employee was partly to blame for
his dismissal.
(d) A compensation award: Sections 117-124, ERA 1996: where the Employment
Tribunal finds that an employee has been unfairly dismissed it will provide the
alternative remedy of an award of compensation. At the moment the maximum
amount of the compensatory award is £63, 300. Awards change at the beginning of
February each year. Award figures are available from ACAS at www.acas.org.uk.
(e) Recommendations, for changes of policy: in relation to the disciplining of staff, for

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