#3646 - Unfair Dismissal - Labour Law

Discipline and termination of employment

Introduction

Law governing termination of employment occupies a central place in modern labour law: substantial proportion of litigated disputes arise out of terminations of the employment relationship.

The legislation on unfair dismissal represents a major incursion into the common law, limiting the employer’s otherwise open-ended power to bring the contract of employment to an end without the need for substantive justification, and imposing general standards of procedural fairness upon the process of dismissal.

Redundancy payment legislation, the other major area of statutory intervention, grants the employee the right to compensation, based loosely on the principle of seniority, for the loss of a job on economic grounds.

The law relating to unfair dismissal and redundancy is about much more than the process of termination and its results; it affects the entire structure of the employment relationship. Just as the power of dismissal is the “fiercest sanction which backs up managerial authority to direct the workforce”, so dismissal law has become the “tail [wagging] the whole dog of the employment relation (Collins).

The forms which govern the circumstances in which dismissal is legitimate indirectly set the limits to the employer’s power to operate lesser disciplinary sanctions, such as suspension or demotion; accordingly also concerned with the law relating to disciplinary procedures and the extent of the employer’s power to impose sanctions short of dismissal.

Statutory intervention has also qualified the employer’s common law rights to insist on unilateral changes to terms and conditions of employment. As long as the employer could terminate the contract of employment at will or on short notice, it effectively had the right to dismiss and re-employ on those terms which it deemed acceptable. Now that this power of the employer is limited by the principles of unfair dismissal law, dismissal legislation does not simply underpin the accrued contractual rights of the employees; the framework of implied and express terms through which the parties’ reciprocal rights and obligations are expressed rests upon the capacity of dismissal law to stabilise the employment relationship.

Dismissal protection is also an essential bulwark of those fundamental employment rights which are currently recognised by British legislation: these include rights in relation to trade union membership, health and safety protection, the protection of pregnancy and maternity and, by extension from the anti-discrimination legislation, rights to equal treatment on the grounds of sex, race, disability, religion or belief, sexual orientation and age.

Dismissal legislation: forms, aims and impact

Forms of dismissal legislation

Dismissal legislation in Britain takes the form of rights conferred on the individual employee against his employer, and administered by the specialised system of labour courts, the employment tribunals, charged with the task of interpreting and enforcing employment protection legislation.

The regulation of dismissal may take a collective as opposed to an individual form e.g. the US where regulation exists in the form of arbitration under the umbrella of collective bargaining agreements. In the UK, the law accords collective relations an important role in the regulation of economic dismissals, where workforce representatives have the right to be consulted over planned redundancies (TULRCA 1992 ss188 et seq, and ICER 2004 Reg 20). Collective arbitration over dismissals also exists, but for the most part alongside and not by way of substitution for unfair dismissal protection (ERA s 110 provides a power to exempt employees from the scope of the unfair dismissal provisions of the Act where a collective dismissal procedures agreement, designated by order of the SoS, is in place).

One advantage of arbitration, in addition to the possible reduction of legalism in procedures, is that the arbitrator is closer to the parties concerned than a labour court can be, and may as a result be in a better position to award reinstatement. However, there is disagreement on the question of whether American arbitration is any more effective than the individual model in protecting employees against the exercise of managerial prerogative (Collin, Glasbeck, Finkin); it also suffers from the weakness of providing protection only in those workplaces where unions are established as representative bargaining agents and have established collective agreements containing job security provisions.

Aims and influences

The apparent goal of dismissal legislation, namely the achievement of greater employment security, is neither straightforward in itself, nor the only or even principal objective of statutory intervention.

Various meanings of employment security - Buchtemann

Job security – can be taken to imply that a worker is protected in the particular job which he holds; this in turn presupposes the existence of quite rigid job classifications and, from a regulatory perspective, the placing of limits on the employer’s right to change those classifications at will.

Employment security – in its widest sense could be taken to refer to the availability of employment opportunities in a given economy; if this is the goal, economic and regulatory policy should be concerned to maximise the chances of employees finding a job and being able to move between jobs throughout their career, rather than being protected in relation to a given job which they might hold at any one time (Lindbeck and Snower).

Dismissal legislation does not neatly fit either of these definitions. It rarely goes to the lengths of granting a worker absolute protection in relation to a specific job classification; but nor is it concerned simply with individuals’ opportunities in the labour market.

It focuses instead on employees’ positions within employing organisations, and operates on the disciplinary and managerial powers of employers in relation to those who are employees, and not in relation to those who are job seekers or applicants for employment.

Buchtemann – the term employment security should be distinguished from de facto employment stability. The latter describes a situation in which stable, long term employment relationships are the norm, which may occur even in systems, such as that of the USA, where there are few legal or other controls over managerial prerogative (Addison and Castro). This situation may persist, thanks to economic circumstances or to shared expectations of the contracting parties, but it cannot be said that the worker in such a situation enjoys security as opposed to the bare expectation that employment will continue.

Employment security properly understood refers to the existence of “explicit or implicit rules and provisions putting a restraint on the ability of firms to dismiss workers ‘at will’” (Butchtemann) – without the need to show good cause or to respect certain procedures. The key to the meaning of employment security is the existence of some form of regulatory intervention designed to protect workers against arbitrary managerial decision-making.

Employment security is sometimes said to confer a form of job property or ownership of jobs on workers (Meyers and Njoya). The idea should not be taken too literally; an employee is unlikely to be in a position where he can sell or alienate their job rights to another, so that any analogy between this form of property and the legally-recognised forms of property rights over tangible and intangible assets is inevitably incomplete. Although legislation or collective agreements may confer on employees the right to be compensated ex post for the loss of employment arising from redundancy, it is not clear that anything is gained by describing this as a right to compensation for the expropriation of a property right; a core feature of property is the ability of the right-holder to enjoin, ex ante, any interference with his enjoyment of it, and not simply to receive compensation after the interference has taken place.

Nevertheless, the notion of job property could be thought of, less formalistically, as implying a recognition not simply of the dependence of workers on their jobs for economic subsistence but, more broadly, of the need for job satisfaction in the sense of personal self-expression and the fulfilment of career-related and occupational goals.

It is doubtful that lifetime employment guarantees can be made legally effective in a market economy: in such an economy, “employment security can for the vast majority of workers mean security only from ungrounded or arbitrary job terminations” (Buchtemann).

The limitations of the job property model have led to a search for principles which can more legitimately be said to underlie the legal control of managerial power. Collins has suggested in this vein that instead of seeing the individual rights of employees in terms of property rights over jobs, “the employee’s interest in job security is better conceived as a right to dignity combined with the establishment of conditions for autonomy and freedom”.

The right to dignity and autonomy involves a recognition of the employee’s rights to be treated with respect of his person and individually. At the same time, it is to accept the legitimacy of those dismissals which are motivated by rational considerations and which are implemented with regard for due process or procedural fairness. Hence the dismissal of an employee on the grounds that there is no longer any demand for his...