Nov 2018 – The importance of “reasonableness” in employment relationships
Employment Update for Small Businesses
This month a reminder of the importance of treating employees with respect and dignity. It’s not just a moral issue, it can have significant legal implications. Also, a brief word on the budget – not much to report in the world of employment law.
Please contact me if you would like to find out a bit more about any of the subjects raised in this update or if you need any help or advice.
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Remember, remember the implied duty of mutual trust and confidence!
The importance of treating staff with civility
As an employment law consultancy firm, we take great pride in drafting written statements of employment, HR policies and procedures, and other HR documents that give good protection to employers, whilst ensuring employees receive appropriate benefits, entitlements and incentives. That includes looking ahead and trying to cover developments that the employer is likely to face.
For instance, we will consider whether there is a chance you may move premises in future and, if so, if you would like to reserve the contractual right to change your employees’ place of work when that happens. It could be that we include wording in the contract that gives you a great deal of flexibility in determining what hours your staff will work – that could amount to there being no set working pattern with a high degree of flexibility to allow you to vary it from week to week.
However, no matter how cleverly worded the contract of employment is, you always need to bear in mind that in every contract there is an implied term of mutual trust and confidence. This reflects the fact that the employment contract is very different to any other type of commercial contract, in that both parties need to have a high degree of trust in each other to act reasonably in order to make the contract work. An employee expects their employer to treat them with respect and to look after their welfare at work. An employer expects the employee to act in the best interests of the organisation in the way they go about their work, to act in good faith, and to not do anything to damage the organisation.
So it may well be that there are terms in the contract that you can rely on as an employer – such as the right to change someone’s place of work. But when exercising such a term, you must always remember to do so in a reasonable way, so as not to breach the implied term of mutual trust and confidence. This was the key issue in the case of United Bank v Akhtar from 1989, when the bank exercised its right to relocate Mr Akhtar from Leeds to Birmingham (the mobility clause provided for a move anywhere in the UK), but they gave him less than a week’s notice to move. Also, they did not offer any financial assistance for the move, even though they did have a discretionary relocation allowance available to them. Mr Akhtar resigned in response and was successful in his subsequent claim of constructive unfair dismissal.
The exercise of discretion always needs to be treated with caution, so as to avoid a breach of this implied term (and also to avoid any unlawful discrimination creeping into decision making). This can apply to bonus payments, sick pay, allowing time off for various reason, etc.
If your staff are on a very flexible working hours arrangement, you must again take into account the need to act reasonably in applying the contract. If, for instance, you have a staff member who has been assigned the same working pattern week after week for a long period, but you attempt to change it significantly without notice, because the contract says you can, that could potentially be a breach of the implied term of mutual trust and confidence.
There were few employment law / HR matters contained in Philip Hammond’s budget on Monday when it comes to small and medium-sized employers. Employers with a wage bill of less than £3 million currently contribute 10% towards the cost of training any apprentice they take on, but this will be reduced to 5%.
It was also announced that the National Living Wage, which applies to workers and employees aged 25 and over, will be increased from £7.83 to £8.21 per hour from April 2019.
National Minimum and Living Wage Rates
The current National Living Wage and National Minimum Wage rates are:
£7.83 per hour for workers aged 25 and over
£7.38 per hour for workers aged 21 to 24
£5.90 per hour for workers aged 18 to 20
£4.20 per hour for workers aged 16 and 17
£3.70 per hour for apprentices under 19 and those over 19 in their first year*
*N.B. Apprentices over 19 and who have completed at least one year are entitled to the appropriate rate for their age.