THOROGOOD PROFESSIONAL INSIGHTS A SPECIALLY COMMISSIONED REPORT REVIEWING AND CHANGING CONTRACTS OF EMPLOYMENT Annelise Tracy Phillips, Paula Rome, Thomas Player and Tracy Luke IFC THOROGOOD PROFESSIONAL INSIGHTS A SPECIALLY COMMISSIONED REPORT REVIEWING AND CHANGING CONTRACTS OF EMPLOYMENT Annelise Tracy Phillips, Paula Rome, Thomas Player and Tracy Luke Published in 2003, updated 2005 Other Thorogood Professional Insights Thorogood Publishing Ltd 10-12 Rivington Street London EC2A 3DU t: 020 7749 4748 f: 020 7729 6110 Applying the Employment Act 2002 – Crucial Developments for Employers and Employees e: info@thorogood.ws Audrey Williams © Eversheds 2003, 2005 w: www.thorogood.ws All rights reserved No part A Practical Guide to Knowledge Management Sue Brelade and Christopher Harman of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, photocopying, recording or HR Business Partners and HR Outsourcing otherwise, without the prior Ian Hunter and Jane Saunders This Report is sold subject to the permission of the publisher condition that it shall not, by way of trade or otherwise, be lent, Email – Legal Issues re-sold, hired out or otherwise Susan Singleton circulated without the publisher’s prior consent in any form of binding or cover other than in Employee Sickness and Fitness for Work Gillian Howard Successfully Defending Employment Tribunal Cases Dennis Hunt which it is published and without a similar condition including this condition being imposed upon the subsequent purchaser No responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication can be accepted by the author or publisher Special discounts for bulk quantities of Thorogood books are available to corporations, institutions, associations and other organisations For more information contact Thorogood by telephone on 020 7749 4748, by fax on 020 7729 6110, or email us: info@thorogood.ws A CIP catalogue record for this Report is available from the British Library ISBN 85418 296 X Printed in Great Britain by printflow.com The authors Annelise Tracy Phillips Annelise Tracy Phillips is a Partner in the HR Group at Eversheds She practices in all aspects of employment law, including strategic issues such as managing change and large-scale restructuring Particular areas of expertise include discrimination law and cross border change management/executive terminations Annelise lectures for the CIPD and is the co-author of published works on topics as diverse as working time, family friendly working, employment tribunals and race discrimination Paula Rome Paula Rome is a member of the Eversheds HR Training and Development Team and is involved in providing training for clients on legal and HR issues including equal opportunities, bullying and performance management as well as writing and presenting lectures on the training and development public programme Paula has also developed and provided training programmes for clients on equal opportunities, avoiding harassment, performance management and absence management, as well as participating in pan-European training sessions for international clients Thomas Player Thomas Player is a Partner in the Human Resources Team at Eversheds He has a particular interest in industrial relations and collective bargaining He is an experienced labour and employment lawyer He has experience on complex reorganisational issues and collective redundancies He has drafted collective agreements and has experience of industrial action, balloting and trade union recognition issues He has a particular interest in the working time regulations THOROGOOD PROFESSIONAL INSIGHTS THE AUTHORS Tracy Luke Tracy Luke is an HR and Employment law trainer with Eversheds Tracy initially worked for the Department of Trade and Industry (within the Statistics Division and the Insolvency Service) for six years before her departure to commence studies for her Law Degree She qualified in 1995 and practised for eight years as a solicitor Tracy currently delivers training to a range of different organisations – from FTSE 100 companies to police forces and housing associations She has also delivered training on a pro bono basis to charitable organisations THOROGOOD PROFESSIONAL INSIGHTS Contents CREATING THE CONTRACT OF EMPLOYMENT ANNELISE TRACY PHILLIPS Introduction Offer Invitation to treat Acceptance Withdrawal of offer .4 Consideration .5 Intention to create legal relations Statement of main terms and conditions Contents of the written statement .6 The terms of the contract of employment .8 REVIEWING AND CHANGING THE CONTRACT OF EMPLOYMENT 21 PAULA ROME, UPDATED BY TRACY LUKE Handbook of policies and procedures 22 Legal status of the handbook 22 Maintaining flexibility .23 Common content of the handbook 26 HR Policies – Key Policies and Procedures .30 HR Policies – Non-Key Policies 40 THOROGOOD PROFESSIONAL INSIGHTS COLLECTIVE AGREEMENTS 45 TOM PLAYER Introduction 46 Legal enforceability 47 Incorporation of collectively bargained terms into individual contracts 48 Express incorporation .49 Implied incorporation .51 Incorporation by way of agency 51 Provisions restricting rights to take industrial action 52 Trade union recognition 53 Schedule A1 54 Drafting of collective agreements 61 PRACTICAL DRAFTING CONSIDERATIONS 68 TOM PLAYER Introduction 69 Hours of work 71 Role and responsibilities 71 Building flexibility into contracts .72 Express flexibility clauses 72 Place of work 73 Deductions – protection of wages 75 Right to search 77 Employee benefits 77 Working time .79 Enforcement of the Regulations .82 THOROGOOD PROFESSIONAL INSIGHTS CONFIDENTIALITY AND POST TERMINATION RESTRICTIONS 83 PAULA ROME, UPDATED BY TRACY LUKE Background .84 Competition whilst still employed 85 Post termination restrictions – restrictive covenants 89 Enforcement .93 The effect of wrongful and constructive dismissal 95 CHANGING THE CONTRACT 98 ANNELISE TRACY PHILLIPS Introduction 99 Consent between the parties 99 Union agreement .99 Legal remedies 102 Deductions in wages claims 104 Unfair dismissal .104 Remedies for unfair dismissal 106 Discrimination claims 107 Imposing the change .107 The pressing business need 108 Collective consultation 110 With whom should you consult? 111 Employee representatives .111 Notice 113 Summary 115 THOROGOOD PROFESSIONAL INSIGHTS INDUSTRIAL ACTION 116 TOM PLAYER Introduction 117 What is industrial action? .117 Definition of a ‘trade dispute’ 118 The rules on ballots and notification .119 Information to be contained in notices 119 Sample voting paper .120 Type of ballot 121 Industrial action notices 122 Commencement of industrial action .123 Planning for industrial action .123 Temporary labour 124 Industrial action and the statutory right to claim ‘unfair dismissal’ 124 The strike 126 Picketing 127 SUMMARY 128 THOROGOOD PROFESSIONAL INSIGHTS INDUSTRIAL ACTION Industrial action notices The union is required to give not less than seven days written notice to the employer of the commencement of industrial action This seven day period cannot begin to run until the date upon which the employer has been notified of the result of the ballot The notice must: • Contain such information in the union’s possession as would help the employer to make plans and bring information to the attention of those employees who the union intends to induce to take part • If the union knows, the details, number, category or workplace of the employees who it intends to induce to take part, this information should be contained in the notice • State whether or not the industrial action is intended to be continuous or discontinuous • Make clear that the majority of industrial action, including strike action, is usually discontinuous in that it does not involve a continual strike on the part of the labour force • Make clear that, if industrial action is intended to be continuous, the intended date for action to begin should be set out • If discontinuous, the intended dates for industrial action will be set out Importantly, the notice should not overlook the fact that it should state that it is… ‘given for the purposes of section 234A of the Trade Union and Labour Relations (Consolidation) Act 1992’ The Act as amended in 1993 previously required a union to give to the employer, in obligatory notices about the strike ballot and about the industrial action, information ‘describing (so that he can readily ascertain them) the employees who will be called upon to strike.’ This requirement that the union hand over its membership list, at the risk of individual harassment or victimisation, was amended by Schedule of the Employment Relations Act 1999 to exclude the requirement for names It is entirely possible that, by the time the union is in a position to issue an industrial action notice, it will be able to provide more information relating to the number, category or workplace of the employees concerned who will be called upon to take part in industrial action The information provided should enable an employer to make appropriate plans to prepare for any industrial action The revised 2000 Code of Practice indicates the types of information an employer might need and would relate to an employer’s ability to warn customers and take steps to protect health and safety in the event of industrial action affecting normal working THOROGOOD PROFESSIONAL INSIGHTS 122 INDUSTRIAL ACTION Commencement of industrial action Any industrial action reliant upon an industrial action notice must begin within weeks of the last voting date of the ballot (unless the union and employer have agreed to extend this by up to a further weeks) or if a Court Order extending the effectiveness of the ballot has been obtained If industrial action has started but is suspended, it can be recommenced outside the week period providing a revised industrial action notice is submitted It is often the case that industrial action is suspended by trade unions in order for the parties to consider further negotiations and for the use of conciliation or mediation Planning for industrial action The most important practical step an employer can take is to ensure that every effort is made to communicate in the clearest way with employees in order to explain the Company’s position in respect of any industrial action, to ensure that employees are given clear and credible information both in terms of the impact of industrial action on the business and also on them There is nothing precluding an employer, faced with industrial action, from communicating directly with the workforce In circumstances where a Company is attempting to manage contractual change, the background and nature to the Company’s proposals should be outlined It is advisable for employers to use normal channels of communication, which might include the issuing of memoranda and employee notices supported by briefing meetings, to enable employees to have all the information at their disposal prior to making any decision as to whether or not they wish to participate in such industrial action The key consideration for any employer faced with industrial action is the importance of ensuring that such industrial action causes as little disruption as possible to the business and customers The Company should therefore consider any contingency plans that need to be drawn up in light of this obvious concern THOROGOOD PROFESSIONAL INSIGHTS 123 INDUSTRIAL ACTION Temporary labour It is important for employers to consider the impact of the ‘Conduct of Employment Agencies and Employment Business Regulations 1976’ Regulation (11) provides that: ‘a contractor shall not supply workers to a hirer as a direct replacement of employees who are in industrial dispute with that hirer to perform the same duties as those normally performed by those employees’ The Department of Trade and Industry is currently in the process of amending these Regulations with the object of making them simpler, clearer and more relevant to the labour movement of today It is proposed that new regulations will be introduced in the first half of 2003 Under the new draft regulations the restriction on providing work to a work-seeker where an industrial dispute is involved is dealt with under Regulation (1) and (2) These provide as follows: An employment business shall not introduce or supply a work-seeker to a hirer to perform: • the duties normally performed by a worker who is taking part in a strike or other industrial action (the ‘first worker’); or • the duties normally performed by any other worker employed by the hirer who is assigned by the hirer to perform the duties normally performed by the first worker; • unless, in either case, the employment business does not know, and has no reasonable grounds for knowing that the first worker is taking part in a strike or other industrial action Importantly, these new draft regulations not apply to ‘unofficial’ industrial action Industrial action and the statutory right to claim ‘unfair dismissal’ If the industrial action is unofficial and the employee is dismissed whilst taking part in the strike action, then the individual may lose his right to pursue a claim for unfair dismissal An employer would firstly need to establish whether or not he has the right to pursue a union in proceedings in tort in the event of ‘unofficial’ industrial action and whether the union does or does not have a statutory defence In accordance with Section 21 of the Act a union has the obligation to THOROGOOD PROFESSIONAL INSIGHTS 124 INDUSTRIAL ACTION repudiate unofficial action taken by their members This process would involve the union issuing a notice to members stating: ‘you union has repudiated the call(or calls) for industrial action to which this notice relates and will give no support to unofficial industrial action taken in response to it(or them) If you are dismissed whilst taking unofficial industrial action, you will have no right to complain of unfair dismissal’ The act of repudiating unofficial action would have to be taken by the Executive President or the General Secretary of the union involved Once an act has been officially repudiated by a union it is not possible to pursue a union for damages in tort It may however be possible to take direct action against the employees involved and dismiss them without risking liability for unfair dismissal It is important in such circumstances for an employer to comply with the provisions of section 237 of the Act which gives employees the opportunity, before losing the statutory protection to claim unfair dismissal, to cease to take part in unofficial industrial action In short, employees will not lose their statutory right to claim unfair dismissal if they are dismissed before the end of the next working day after the repudiation notice has been served by the union Employees who continue to take part in unofficial industrial action beyond the next working day after the repudiation notice has been served by a union are at risk of being dismissed and losing their right to pursue a claim for unfair dismissal, providing the reason for the dismissal is that they are taking part in such unofficial industrial action An employer, in these circumstances, can selectively dismiss the instigators of the industrial action or, indeed, all employees who are participating in such action However, great care needs to be taken before disciplinary action or dismissal is contemplated against employees taking part in official industrial action In such cases a dismissal will be automatically unfair if the reason, or principal reason, is that the employee took part in official industrial action and if one of the following three conditions are satisfied: • the dismissal took place within weeks of the day on which the employee started the protected industrial action; • the dismissal took place after the end of that week period but the employee had stopped protected industrial action before the end of that period, thus protecting the participants against victimisation from the employer after they have returned to work; or • the dismissal took place after the end of the week period and the employee had not stopped taking part in industrial action before the end of that period, but the employer had failed to take reasonable procedural steps to resolve the dispute THOROGOOD PROFESSIONAL INSIGHTS 125 INDUSTRIAL ACTION The typical steps that a Company would be expected to take in seeking to resolve the dispute would be compliance with any procedural agreements that may be in place for conciliation or mediation via ACAS It may also be necessary to consider further negotiations with the union prior to taking any decision to dismiss employees after the expiry of the week period If the dismissal is not automatically unfair the Tribunal will not consider the fairness or unfairness of the dismissal at all provided that a Company can show that: • all employees participating in the action have been dismissed; and • if any employees are offered re-engagement within three months of the date of dismissal and the offer is made to all relevant employees In circumstances where some employees have been dismissed or some have been re-engaged, the Tribunal must go on to consider whether the individual employees’ dismissal was fair or unfair In summary this means that if the employer has dismissed employees taking part in the industrial action, when industrial action has been taking place for more than weeks, and has taken proper steps to try and resolve the dispute then, unless all employees in the same situation have been dismissed without any being re-engaged, the Tribunal must look at each and every case to determine whether all have been fairly or unfairly dismissed The strike Under Section 241 of the Act it is a criminal offence to intimidate another person whether by violence or otherwise An offence will be committed where a person, with a view to compelling another to abstain from carrying out a legal act in complying with their contract of employment does any of the following: • uses violence towards or intimidates that person or his wife or children, or injures his property; • persistently follows that person about from place to place; • hides any tools, clothes or other property owned or used by that person, or deprives him of or hinders him in the use thereof; • watches or protects the house or place where the person resides, works, carries out business, or happens to be, or the approach to any such house or place; or • follows that person with two or more other persons in a disorderedly manner in or through any street or road THOROGOOD PROFESSIONAL INSIGHTS 126 INDUSTRIAL ACTION Picketing Section 220 of the Act provides limited scope for picketing without loss of legal immunity When a person attends a picket line at or near their own place of work, if the act is in contemplation or furtherance of a trade dispute and if the purpose is for peacefully obtaining or communicating information or peacefully persuading any person not to work, then this is lawful There is a 1992 Code of Practice governing picketing The Code states that ‘pickets and their organisers should ensure that, in general, the number of picketers not exceed six at any entrance to or any exit from a work place, frequently a smaller number would be appropriate’ Once again the Code of Practice is not legally enforceable in itself and, whilst the Tribunal or Court will have regard to it, it is often the case that picket lines will be manned by considerably more than six people The acceptable methods of picketing are limited to speaking with people leaving and entering the premises in an effort to persuade them to support a case A Company faced with industrial action should familiarise itself with the Code of Practice on picketing and be prepared to notify the police authorities in advance, in the event that they believe that a dispute has the potential to result in public unrest A Company should also consider maintaining contact with the union’s head or main office, in circumstances where industrial action and strike action occurs, in order to ensure that, as far as possible, the Code of Practice governing picketing is complied with THOROGOOD PROFESSIONAL INSIGHTS 127 THOROGOOD PROFESSIONAL INSIGHTS Summary Summary When reviewing and changing the contract of employment the following steps should be considered: • What are the existing terms and conditions? • Are terms and conditions located in documents other than the written contract, e.g in a handbook or collective agreements? • Do the existing terms and conditions contain sufficient flexibility to allow the actions/changes required? • Is there a recognised trade union which has the authority to negotiate on the employees’ behalf? • Are there existing trade union collective agreements which require the employer to collectively bargain on changes to terms and conditions? • What is the business justification for the change? • What collective consultation mechanisms are in place? • Will employee representatives need to be elected? • How will individual consultation be affected? • Are employees likely to accept the changes? • Will sweeteners and inducements be offered? • Is the employer prepared to risk unilateral variation (imposing the change) and will this be effective? • If new contracts are required, will termination and re-issue be employed? In the majority of cases, by far the best way of changing terms and conditions is to avoid conflict and obtain employee agreement to the changes It may also be preferable to red circle existing employees and offer the new terms and conditions to new employees Through turnover over a period of time a broad contract change exercise will have been effective THOROGOOD PROFESSIONAL INSIGHTS 129 Other specially commissioned reports BUSINESS AND COMMERCIAL LAW The commercial exploitation of intellectual property rights by licensing The Competition Act 1998: practical advice and guidance CHARLES DESFORGES SUSAN SINGLETON £125.00 £149.00 85418 285 • 2001 85418 205 • 2001 Expert advice and techniques for the identification and successful exploitation of key opportunities Failure to operate within UK and EU competition rules can lead to heavy fines of up to 10 per cent of a business’s total UK turnover This report will show you: • how to identify and secure profitable opportunities • strategies and techniques for negotiating the best agreement • the techniques of successfully managing a license operation Insights into successfully managing the in-house legal function BARRY O’MEARA £65.00 85418 174 • 2000 Damages and other remedies for breach of commercial contracts ROBERT RIBEIRO £125.00 Negotiating the fault line between private practice and in-house employment can be tricky, as the scope for conflicts of interest is greatly increased Insights into successfully managing the In-house legal function discusses and suggests ways of dealing with these and other issues 85418 226 X • 2002 This valuable new report sets out a systematic approach for assessing the remedies available for various types of breach of contract, what the remedies mean in terms of compensation and how the compensation is calculated Commercial contracts – drafting techniques and precedents ROBERT RIBEIRO £125.00 85418 210 • 2002 The Report will: • Improve your commercial awareness and planning skills For full details of any title, and to view sample extracts please visit: www.thorogood.ws You can place an order in four ways: • Enhance your legal foresight and vision Email: orders@thorogood.ws • Help you appreciate the relevance of rules and guidelines set out by the courts Telephone: +44 (0)20 7749 4748 Ensure you achieve your or your client’s commercial objectives Post: Thorogood, 10-12 Rivington Street, London EC2A 3DU, UK • t +44 (0)20 7749 4748 e info@thorogood.ws Fax: +44 (0)20 7729 6110 w w w w t h o r o g o o d w s The legal protection of databases SIMON CHALTON Email – legal issues £145.00 SUSAN SINGLETON £95.00 85418 245 • 2001 85418 215 • 2001 Inventions can be patented, knowledge can be protected, but what of information itself? 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