Hauliers need to he aware that new legislation gives employees
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protection from unfair dismissal after just one year instead of two, warns Jonathan Exten-Wright.
The Government has now laid before Parliament the necessary statutory instrument to reduce an employee's qualifying period for protection from unfair dismissal from two years to one year. This took effect on r June 1999 and covers all terminations of employment on and after that date.
Anyone sacked before i June will still need to prove two years' continuous employment if he wants to achieve protection from unfair dismissal. However, as is so often the case, the situation is not clear-cut.
For example, an employee who was sacked before I June might have a provision in his contract of employment which has to be satisfied before his employment could be terminated effectively. This might be a notice period that
has to be served (not paid in lieu). The contract might well include a binding disciplinary procedure. If the employer ignores this procedure and simply terminates the contract, the courts will consider a damages claim—not only for breach of contract, but also for damages representing the lost opportunity to bring a claim for unfair dismissal!
The effect of this is that until I rune 1999 an employee with more than one year's ser
vice, but less than two years' service, could mount a challenge based on any contractual provision which should have entitled him to keep his job until I June when the new law came into force.
Any haulier planning to dismiss someone with less than two years' service needs to be aware of these points.
One-year rule
The most obvious feature of the change to a one-year rule is that more employees now have protection from unfair dismissal. For those with only one year's service a dismissal will still be unfair, unless it is on one of the five specified grounds:
• Gapability—the ability to do the job; MI Misconduct—serious enough to justify dismissal;
• Redundancy—where there is a genuine reduction in the manpower requirements for which the employee (or the category of employee to which he belongs) was recruited; • Legality—where continued employment would be a contravention of the law. A prime example of this would be a driver who has lost his licence;
• -Some other substantial reason". This is not a catch-all; the employer must show a genuine business need. This might be a customer who insists on the dismissal and presents the employer with an ultimatum that the contract would otherwise be lost. And even when one of these grounds is present, the dismissal must also be fair. In other words, an employee must
be warned of the possible outcome of any decision-making process and must have the opportunity to attend relevant meetings. The employee will then need to be consulted and his comments must be considered, even if this delays the process. Generally speaking, the employee should also have a right of appeal.
The bottom line is that dismissal will only be seen as fair if it is a reasonable sanction in all the circumstances.
Appraisal system
The reduction to one year's employment for unfair dismissal protection will require strider use of probationary periods. It will be necessary to make a judgment on the suitability of an employee well before the year is up. This will require a proper appraisal system to be set up and followed.
In using any probationary period (or a period beyond what is strictly called a probationary period but is still within the first year) the employer must ensure that he has the right to terminate the employment without falling foul of a contractual provision which would otherwise require it to continue.
In other words, an employee could claim that even though he had been dismissed before the year was up, that was still a breach of contract. In such a case a claim for damages could include not only the outstanding notice period, but also a sum of money representing the loss of his ability to bring an unfair dismissal claim.
To avoid such claims the employer should have a clear appreciation of "performance management". Tribunals will pay close attention to how well procedures are followed. With this in mind, the wise employer will check that his procedures are clear, easy to operate and appropriate for his business.
If this procedure is contractual, and not just a policy statement, then any change to it counts as a change to the contract of employment. This has legal implications, so take expert advice.
Later this year the compensation limit will rise from f12,000 to iso,000. This is bound to give a greater incentive to employees to take legal action—particularly those employees who have no concern about getting a reputation for bringing claims, or who believe they have no prospect of future employment.
Given that the compensatory award can be assessed on a more generous basis than strict contractual entitlement (to include the loss of legitimate expectation), this could lead to higher claims in a bid to recover the loss of an expectation to benefits such as stock options and bonuses.
• Jonathan Exten-Wright is an employment partner in national law firm Dibb Lupton Alsop.