Employment Law - a Minefield for Employers

By: Tim Bishop | Posted: 04th May 2010

Employment law is a complex area that can cause serious problems for employers whom are not fully aware of their obligations. Facing an employment tribunal claim, regardless of whether it is successful or not, can be very expensive in terms of both resources and time, as well as having a negative impact on staff morale.

Costly employment tribunal awards can arise out of what appeared to be minor matters - including failing to follow simple disciplinary and grievance procedures. Set out below are a number of key employment law issues, along with tips to help employers keep out of an employment tribunal.

Dismissal, Disciplinary and Grievance Procedures

The Employment Act 2002 (Dispute Resolution) Regulations 2004 require all employers, regardless of size, to operate minimum statutory dismissal, disciplinary and grievance procedures.

Employees are entitled (save in cases of gross misconduct or where an employee has worked for the employer for less than a year) to the benefit of a minimum standard formal disciplinary procedure before they are dismissed. If an employer dismisses an employee without following the correct statutory procedures, this can be classed as an automatic unfair dismissal. Employees who do not first attempt to settle a grievance using the internal workplace procedures are disqualified from bringing most claims to an employment tribunal.

A careful employer should always keep a full record of what action has been taken to prove compliance with the law. The law surrounding dismissal procedures is far reaching and employers must be aware of this. They normally have to be followed not just where the termination is on the grounds of capability or conduct but also when the employer is contemplating dismissing an employee on the grounds of redundancy and non-renewal of a fixed term contract. Where it is not possible to settle a grievance internally, consider alternative methods of dispute resolution such as mediation, conciliation or arbitration as a viable alternative to legal action.

Deductions from Wages

Under the Employment Rights Act 1996 it is generally unlawful for an employer to make any deduction from the wages of a worker unless the worker has agreed to this in writing or it is required by law (e.g. deductions for PAYE and National Insurance).

Working Time

The Working Time Regulations 1998 afford basic rights and protections with regard to the number of hours worked. It is unlawful for an employer to require workers who are not governed by sector-specific provisions to work more than an average of 48 hours a week, unless an individual employee has given prior agreement to waive this right.

Being 'on call' is normally regarded as working time under the law. There are special provisions which apply to shift work, night work, rest breaks, minimum holiday entitlement, sector-specific workers and the hours that can be worked by young workers aged 16 or 17.

Pay and Benefits

Promotion procedures and all employee benefits should be kept under review to ensure compliance with the law. As regards length of service-based pay increases, a pay system whereby employees with long service and more experience receive higher pay than those with short service and less experience does not automatically infringe the Equal Pay Act 1970, even though it is likely that the majority of those with longer service are male, but take care! Under the age discrimination legislation, benefits can be awarded on the basis of length of service where the length of service requirement is 5 years or less. Nevertheless, if an employee who has been working for six years or more claims they are being discriminated against i.e. by being paid less than another employee with less service, the employer has a responsibility to show that this is because of a legitimate business need.

Employers are required to recalculate the level of a woman's maternity pay if a pay rise takes effect at any time between the start of the reference pay period and the end of the maternity leave. Minimum wage rates change annually on 1 October. Failure to pay the minimum wage can lead to substantial fines.

Information and Consultation

The Information and Consultation of Employees Regulations 2004 give employees of organisations with more than a specified number of employees the legal right to be provided with information about and be consulted on major business decisions which affect them at work.

The legislation allows employers flexibility to agree consultation arrangements with employees which suit the individual circumstances of the business.

Agreements that have been made between the employer and employee are permitted to continue.

Where there aren't any existing arrangements, the onus is on employees to ask for information and consultation agreements to be put in place.

Employers will be obliged to comply with the request if it is supported by 10 per cent of the workforce.

All employers are required to consult on Health and Safety matters, with any elected safety representatives or with employees themselves, and in certain business transfer and redundancy situations.

Unless you're absolutely certain of your legal position, any careful employer would be well advised to seek legal advice from specialist employment solicitors if any of these issues arise.


Tim Bishop is senior partner at Bonallack & Bishop, a firm of compromise agreement solicitors specialising in employment law. He is responsible for all major strategic decisions, seeing himself as a businessman who owns a law firm. Tim has grown the firm by 1000% in 12 years and has plans for its continued expansion.
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Tags: redundancy, negative impact, mediation, staff morale, arbitration, unfair dismissal, employment tribunal