Redundancy and the Law. A Short Guide to the Law on Dismissal with and Without Notice, and Rights Under the Redundancy Payments Act, 1965

78 Pages·1967·2.938 MB·English

by  Michael H. Whincup and E. Thorne (Auth.)

This book is dedicated to my wife {though without any
expectation that she will ever become redundant).
I should like also to express my sincere thanks to my
secretary, Miss Freda Mainwaring, for her very rapid and
accurate work in typing out the manuscript.
This book is designed to meet the needs of both management and
labour for a clear and practical explanation of the Redundancy
Payments Act. Many examples of the application of the Act are
given, together with a statement of related rules as to notice and
dismissal at common law and under the Contracts of Employment
Act.
REDUNDANCY AND THE LAW
A SHORT GUIDE TO THE LAW ON DISMISSAL WITH
AND WITHOUT NOTICE, AND RIGHTS UNDER THE
REDUNDANCY PAYMENTS ACT, 1965
MICHAEL H. WHINCUP, LL.M., Barrister-at-Law,
Lecturer in Law at the University of Keele
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First edition 1967
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REDUNDANCY CASES AND
OTHER REFERENCES
MOST of the cases referred to in this book are illustrations of the
working of the Redundancy Payments Act. Nearly all of these are
reported in full in the first volume of the 1966 Industrial Tribunal
Reports. Such cases would usually be cited by name, followed by
the reference 11.T.R. (1966) and then the page number. But since
in this book the I.T.R. cases are all drawn from that one volume
(and reproduced by courtesy of H.M.S.O.), it seems preferable to
state simply which of the first six parts of that volume contains the
report, and then to give the page number. Thus, instead of giving
the name of the case and then the citation 1 I.T.R. (1966) 460,
the reference in this book is 6/460. The names of the parties
involved in each case are in the Index, pp. 73-76.
Other Tribunal decisions mentioned are drawn from reports
in The Guardian or The Times in 1966. A number of cases decided
not by the Tribunals but by the High Court or other courts are
also included in the text. Further details of these are to be found
in The Times or other law reports, as shown in the Table of
Cases, p. 72.
It should be remembered that the cases are used primarily as
illustrations and not as stating inflexible rules applicable to all
similar circumstances.
References to "the Act" or to particular sections of it are to the
Redundancy Payments Act unless otherwise stated.
vii
COMMON LAW AND STATUTE LAW
THE rules on contracts of employment—how they are
made, what goes into them and how they are ended—
are to be found partly in the decisions of our judges
and partly in Acts of Parliament. The judge-made or
"common law" has provided many examples of the
standards of care and work which should be observed
and the rights to end the contract if they are not.
Statute law, on the other hand, has been increasingly
concerned to provide for security of employment. The
two most important Acts in this respect are the subject
of this book—the Contracts of Employment Act, 1963,
and the Redundancy Payments Act, 1965. These Acts
are interconnected, and indeed in Northern Ireland
the one Contracts of Employment and Redundancy
Payments Act, 1965, covers the situation.
The full significance of these Acts may become
clearer once we have considered in outline the basic
legal aspects of the contract of employment. Some
County Court, High Court and appeal judgments are
cited by way of illustration.
WHO IS AN EMPLOYEE?
We shall be considering rules which apply only
where there is the relationship of employer and
employee (or "master and servant" as the law still
sometimes calls them), and not to other working
relationships.
Test of These relationships are distinguished by the degree
Control f control which may be exercised by one party over
0
3
4 REDUNDANCY AND THE LAW
the other, which the judges have described as the
"what to do and how to do it" test. If A can tell Β
what job he shall do and how it shall be done, then
there is a contract of employment in existence. The
fact that it is not written is, for the moment, immaterial.
But if A can only tell Β what job he shall do, and how
he does it is left to B's discretion, e.g. where A is the
householder or passenger and Β the window-cleaner
or taxi-driver, then the relationship is that of principal
and independent contractor.
The financial burdens on employers, in the strict
sense of the term, have been increased by several
recent Acts of Parliament. Apart from the gradually
rising national insurance contributions which must
be paid by an employer, there are levies under the
Industrial Training Act, the selective employment tax,
and the weekly payments now required to provide for
redundancy benefit. None of these are imposed where
independent contractors are employed, and many
other liabilities, e.g. with regard to safety, are very
much reduced. Accordingly there has been a notice-
able increase in the number of independent contrac-
tors, sometimes achieved by a nominal alteration in
the terms of work by the employer, so that those who
were his employees one week might continue working
for him the following week as independent contractors.
The change in status from employee to self-employed
may be made immediately more rewarding for the
worker, but he suffers major losses in security.
Employed This point may be illustrated by a case of a building
or s^If" worker who was injured and sued his firm for damages
?
for breach of the Building Regulations. It was found
that he had come to the firm several years previously
as a man running his own business, assessed for tax
under Schedule D and paying his own insurance stamp,
THE CONTRACT OF EMPLOYMENT 5
and so was not strictly their employee. The judge held
that the Building Regulations only protected em-
ployees as such, and therefore that he had no claim
{Herbert v. Shaw, 1959; and similarly Inglefield v.
Macey, 1967). In a similar case men employed via a
gang leader who recruited them and gave out their
work and pay were also held not to be employees (In
Re Hughes, 1966). The Industrial Tribunals, applying
the same test of control to claims for redundancy
benefit, have held that a partner losing his job through
dissolution of the partnership was not an employee, nor
was a mission chaplain (2/164; 6/488), whereas in case
1/67 a "selling agent" was accepted as an employee.
WRITTEN AND ORAL CONTRACTS OF
EMPLOYMENT
The general rule of English law is that a contract is
no more or less binding whether it is made in writing
or by word of mouth. It is, of course, better from the
point of view of evidence of the agreement to put its
main terms in writing if they are at all complicated;
hence the practice in industry of issuing works rules
books and the like. There are also certain legal
exceptions to the general rule that writing is not
necessary. For instance, if an employer wants to be
able to fine, suspend, or search his workmen, he must
claim such powers in writing beforehand. But so far
as contracts of employment are concerned, the major
Contracts exception to the rule is in the Contracts of Employ-
of Employ- ment Act. This lays down that employees (with certain
^963 AC't excPeti°ns> Ρ· H) m u st within 13 weeks of starting
work be given a written statement of certain basic
terms of their employment, or alternatively be given a
written statement referring them to some conveniently
6 REDUNDANCY AND THE LAW
accessible document, e.g. a copy of a collective agree-
ment, where these terms can be found (section 4). The
The written points to be covered by the written statement are : date
statement f commencement of contract; pay; hours; holidays
0
and holiday pay; sickness and sick pay; pensions;
notice. Changes in these terms must also be recorded
in writing. The written particulars may be very impor-
tant from the point of view of the employer's liability
under the Redundancy Payments Act, for instance in
assessing the length of the working week—the basis
of a redundancy payment (see p. 59). There are good
reasons for clarifying other matters also, such as
the possibility of transfer from one job or site to
another (p. 22). For the 1963 Act's provisions as to
notice, see p. 10.
If those parts of the contract which should be in
writing are not, the contract's validity is not affected—
though, of course, its terms may be more difficult to
resolve for that reason. The main way in which doubts
about the terms can be settled is by a reference to the
local Industrial Tribunal. The Tribunal decides on the
evidence what the terms of the contract are, and its
findings then become by law part of the contract and
can be sued upon by the employee (s. 38, Redundancy
Payments Act, amending s. 4 of the Contracts of
Employment Act and abolishing the penalty of a fine
for non-compliance with that Act).
TERMS OF THE CONTRACT
With the introduction of the Contracts of Employ-
ment Act, the basic terms of employment are likely
to be reasonably clearly established. Other matters
outside the scope of the Act may be referred to in
works rules books. These are equally binding terms
THE CONTRACT OF EMPLOYMENT 7
of the contract if the employee remains in that
employment after receiving a copy. Their content may
or may not be determined by negotiation—a matter
depending on the relative strength of employer and
employee.
Express The fact remains, however, that it is impossible to
and implied
cover in advance all the possible difficulties which
terms
might arise between the parties. If such unforeseen
difficulties arise and, in the common law phrase,
"strike at the root of the contract" the judges may
then be prepared to supplement the express terms by
implied ones. These implied terms are common to all
contracts of employment unless expressly excluded.
Implied terms, unlike express ones, are not specified
in any written statement or in rule books or other
documents; they arise out of case law which has
clarified the nature of the relationship between em-
Employer's ployer and employee. The terms define, for example,
implied the employer's duty to take care for the safety of his
duties employees, and they lay down duties of payment for
work done or in case of sickness. The employer is
not under any duty to give a reference or testimonial,
but if he does give one he is not liable to the employee
for any inaccuracies so long as his statements are
made in good faith (Hambrook v. Law Society, 1967).
Employee's There are also implied duties upon the employee
implied
which are of considerable importance because if they
duties
are broken the employer has the same remedies,
mentioned below, as he has on breach of an express
term. As will be seen, p. 28, if the employer dismisses
with or without notice for breach of contract the
employee has no claim to redundancy benefit.
In brief, the employee's implied duties may be stated
to cover his personal relationships with the employer,
Good faith his integrity and his standard of work. "Good faith"
8 REDUNDANCY AND THE LAW
is a vital factor. The employee's duty is to protect his
employer's business interests. He must not, for
example, seek to do business with his employer's
customers on his own behalf (Sanders v. Parry, 1967).
He must not give away confidential information about
his work (Bent's Brewery v. Hogan, 1945), nor take
money out of the till without his employer's consent,
even with the intention of returning it immediately
(Sinclair v. Neighbour, 1966). He must account for all
information or money received on his employer's
behalf (Cranleigh Engineering v. Bryant, 1964). Inven-
tions arising directly out of the course of his employ-
ment must be disclosed to the employer, to whom the
patent rights then belong (British Syphon Co. v.
Homewood, 1956). His spare-time activities must not
be such as to compete with the employer or otherwise
damage the interests of the business (Bartlett v.
Shoe & Leather Record, 1960; Tomlinson v. L.MS.,
1944).
Obedience Orders given at work must not be deliberately diso-
beyed, nor the employer's authority flouted (Laws v.
London Chronicle, 1959). But orders involving hazards
additional to those normally faced in a particular job,
or to do work outside the contract of employment,
may justifiably be disobeyed. Work contracted for
Care must be done carefully and honestly. The standard of
care required is at least as high as the employee would
observe towards his own interests (Superlux v. Plaisted,
1961). If the employee causes material loss or damage
to the employer, or is unable to do the job properly
either through his own incompetence or through such
absence for illness as makes the contract purposeless,
again he may be dismissed summarily for breach of
contract (Condor v. Barron Knights, 1966).