Legal Risks, Defenses & Employment Relations Issues – ABC Ltd Case Study

Legal Risks ABC would be exposed to

Employment relations in the European Union are contracts between employers and employers that are negotiated under private law. Therefore, the basic law of contract rules apply in employment negotiations unless special conditions are outlined by the employment laws (Philip, 2015).

Recruitment includes the process of analysing specific job requirements, the attraction of employees to the job, the screening n and selection of job applicants, hiring the successful ones, and integrating them in the new organization.

Selection process in employment refers to the process of identifying the applicant who meets the job requirements and is more qualified than the other applicants. It involves the perusal of attendant documents including the resume to gauge the competency of each applicant and picking the best. The best practice in employment relationship requires written contracts to define the relationship, duties and responsibilities of both the employer and the employee. Normally, the employee is considered the weaker party and the written contract would ensure the he or she is treated fairly (Philip, 2015).

Recruitment and selection are guided by among other laws, the European Charter on Fundamental Rights which outlines the right to best labour practices.

ABC is in the process of replacing the sales director, Steve Brown. In their process of replacement, they have to consider the laws relating to recruitment, selection and placement. Though there is no single Act that governs the procedure for recruitment and selection, several Acts relate to it. For instance, (Equality Act 2010) has provisions on non-discrimination during and on employment. The risks do not infer that ABC is liable. They are general risks that might arise in any contract of service.

The process of replacing the Sales director is discriminative. Section 14 of the Equality Act 2010 outlaws discrimination of job applicants and existing employees due to protected characteristics such as; race, age, sex, etc. the declaration of the vacancy and the call for applications was very informal. This ensured that qualified persons not working in the Company at the time of recruitment were locked out from participating in the recruitment process. Additionally, the existing employees’ applications were disqualified unilaterally without going through a competitive interview and selection.

The recruitment panel wholly disregarded the protected rights under the Equality Act 2010. For instance, Joan Keenan’s application is rejected on the basis of gender and age. They are arguing that she is young and the older members might not take instructions from her. And the fact that she is a lady though qualified, she is discriminated against without any lawful cause. The selection panel also disregarded the principle of equal treatment of men and women which requires access without discrimination to all employments, vocational guidance, training and promotion, vocational guidance and equal working conditions.

Aldo Visaida has also been disqualified on flimsy ground of poor English though he tops the department on sales and has even won bonuses.

The applicant chosen for the Sales Director, Mike Replica, has not been competitively recruited. He is related to the Finance Director, by being married to the Finance Director’s niece. There is nepotism evident in the choice raising issues of independence of the Sales Director. However, it was in the best interest of ABC to proceed with the appointment of Mike so as to boost sales.

Claims of Discrimination

He has proposed several changes and ideas that are most likely to raise legal issues as discussed below.

Employment contracts normally state the salary payable and the mode of payment of the salary. Mike Replica by proposing payment to be based on commission is likely to vary the terms of the employment contract. This is a breach of contract that is actionable in law (Philip, 2015).

Remuneration based on commission would be contrary to the law setting the minimum wage payable to every person in a contract of service. An employee who fails to meet the set target might miss a month’s payment or the payment if available would be below the minimum wage. This would make the company liable of breaching a Government’s directive on the minimum wage an employee is entitled to receive.

Though it is common practice for companies to introduce structures that encourage employees to work hard, such structure should be in addition to the written pay contained in the contract. Bonuses cannot suffice as salary payment and any aggrieved employee can bring an action in court to recover the arrears of unpaid salaries.

Though ABC has not dismissed an employee, the proposals by Mike are likely to lead to a dismissal. Dismissal occurs when your contract of employment is terminated by the employer, making an employees’ job to cease to exist. The employment contract states the reasons that might lead to termination and the procedure involved.

One of Mike’s proposals is to dismiss as a matter of policy employees that are non-performing and replace them. This would result to both unfair and wrongful dismissal. Dismissal as a matter of policy would be contrary and in breach of the contract of employment entered into between the company and the employees at the time of employment.

Normally, the employer should give a written notice of his or her intention to terminate, which period should be contained in the contract of employment. (Philip, 2015)

However, where the period is not contained in the contract document, the law sets out the minimum statutory period within which such notice should be given. For instance, an employee of two years or more should be notified for a minimum of two weeks to a maximum of twelve weeks. Mike is likely not to give such notices and therefore it would amount to breach of both the contract of employment and the law. Such notice should contain the reason for dismissal.

Unfair dismissal occur where an employee is dismissed and the employer failed to give a reason for the dismissal or they never followed the right procedure in dismissal.

It also occurs in cases where the reason for the dismissal of an employee is inconsistent with the way other employees are being treated, for instance, where one is dismissed for doing an act that the other employees with similar job descriptions are allowed to do.

The proposal by Mike to dismiss employees who do not meet set targets would be unfair as the company is unlikely to follow the procedure for dismissal. A claim for unfair dismissal can only be brought by employees who have been in the employment for a minimum of two years. In this ABC case, the employees in the sales department meet that time threshold and have the capacity to sue for unfair dismissal and/or wrongful dismissal. In this scenario, ABC has not dismissed any employee.

That salary based on commission is illegal

The employer is required by law to provide safe working conditions for employees and any visitor who might visit the premises.

A person should not be denied employment on health grounds except where the inherent nature of the job requires somebody to be of a certain weight.

An employer cannot force employees to undergo compulsory and regular medical tests as that would amount to infringement of their right to privacy. An employee terminated on grounds of being overweight can sue the company (Philip, 2015).

Normally, a person’s health status that does not affect the work he or she does is confidential and should not be disclosed to third parties. A breach of that confidentiality is actionable in law and the doctor involved can be sued for breach of doctor-patient confidentiality. However, where the inherent nature of the job requires a certain level of fitness, Mike would not breach the law by requiring employees to undergo medical examination as the job involved in sales requires one to be very active.

An employee who suffers an injury in the course of employment is entitled to compensation. However, not all employees who get injured are eligible for compensation. Employers put forth reasons for refusing to compensate them. Such reasons are referred to as defences.

Independent contractors are however not compensated as they do not fall under the category of employees. They are not covered under the Worker’s Compensation scheme.

Defences an employer can put forward to deny injured employee compensation include;

Any injured employee is required to notify their employers of the injuries they sustain at the workplace within reasonable time, normally between 30-90 days after the injuries are sustained. The notice should either be given orally or in writing to a supervisor by the employee, spouse, employee’s doctor or other relations. Failure to give such notice bars an employer from admitting liability and paying the compensation.

Every state in the UK has a limitation for filing a compensation claim out of which such claim cannot be entertained. The time ranges between 1-3 years. An employer is protected by the statute of limitations where an employee brings a course of action after the lapse of time given for institution of a claim. However, this statute is not strictly applied where the injuries sustained in instances of occupational disease, for example, injuries resulting from exposure to chemicals for a very long period of time.

Injuries caused purely by the employee cannot be compensated. They refer to injuries sustained knowingly, with the intention of filing a fraudulent claim for compensation or injuries that resulted from fighting, which fight was started by the claimant. An employer can claim that defence to preclude him from liability (Mark, 2014).

The injury must be proximate to the employment. it should be closely related to the employment activity. Remoteness of damage is considered in work related injury claims. Where the injury suffered is too remote to normal employment activity, the employer is not eligible to pay compensation. For example, if an employee gets a minor injury at work and fails to maintain hygiene leading to the arm developing a wound, and the arm is eventually amputated, the employer is not liable because the initial minor injury was manageable and the employee ignored. The resultant wound is remote and compensation cannot be paid (Steele, 2010).

That the proposed Dismissal would infringe rights

The extent of injury has to be determined by a health professional. The doctor’s report detailing the extent and degree of injury is the determinant for quantifying the amount of compensation an employee is entitled to receive. Where an employee fails to undergo medical examination, the employer is not obliged to compensate.

If an employee violates employment safety rules by working while intoxicated, the resultant injuries are not to be compensated. The employer would claim that the injuries resulted from the careless conduct of the employee.

Seniority Systems

This is where employees are rewarded through promotions on the basis of the period they have worked with the company. Joan is a recent recruit and this defence is likely to apply in her case (Philip, 2015).

Joan Kenan is denied the position of sales director on grounds related to gender and age. She could bring a case of discrimination based on age and gender. That she was discriminated against for being a woman on one hand and young on the other hand.

Aldo Viscida is denied promotion based on the quality of his spoken, written and mastery of the English language. A claim of discrimination against ABC would be challenged by the fact that the decision was based on the requirements of business. In this case, the job of a sales director entails writing reports and addressing conferences in English language. The decision was justified as his English is poor (Mark, 2014).

David Constant has been denied promotion on grounds based on age and the unlikely fact that he would be readily available when called upon. If he sues for discrimination, ABC can put forth the defence of Bonafide Occupational Qualification. Though he has the experience due to the number of years served, he might not be in a position to carry out the demanding tasks of a sales manager. His wife is sick and he is likely to be out of work most of the time.

Of the three cases, Joan’s is likely to succeed when she brings a case of discrimination on the ground of gender and age. The law protects the plight of women and would likely grant her the prayers.

An employer in a contract of service has rights. The rights include;

Right to recruit competent employees suitable for the nature of his business
The right to dismiss any employee who breaches the contract of employment
Right to be respected by the employees. The employees need not to question his or her lawful acts even if they affect them.
Right to participate in any hearing where one of his employees institutes a claim for compensation
Right to report to the Fraud Inspector, any suspected fraud in the compensation of an employee.
Right to seek a review from the Appellate Division on matters related to workers’ compensation.

3.Employee Relations

Employee relations refer to steps put forth by a company to manage employer-employee relationship. A company that practices good employee relations ensures that their employees are committed and exhibit loyalty to the company by treating them fairly and consistently.

Effective management of employee relations reduces conflict and boosts morale among employees. Where managers and employees work together, there is harmony as the different levels in the organization are on the same page, conflicts that arise are managed faster before they escalate. The employees are listened to and their concerns are addressed quickly. This boosts their morale making them more efficient in their work.

Good employee relations ensure that good and top talents are retained in the organization. Employees are relaxed as there are no conflicts making them comfortable. There are no compelling reasons that would force them to look for alternative employment.

Unfair dismissal

Effective employee relation increases not only individual employee productivity but the organizations’ as well. A relaxed working environment makes an employee to work more efficiently. There is constant consultation between employees and supervisors making them more equipped to undertake their respective workload.

The effective management of employee relations assist employers in correcting inappropriate behaviour and promote productive and structured working environment. Were ABC to proceed with implementation of the policies, the following issues would arise;

By overlooking the employees during the appointment of the Finance director would leave them demoralized. Their level of involvement and the vigour with which they worked prior to the turn of events would be greatly reduced. This would in turn reduce turn over making the business of the company to nose dive.

An employee who is not motivated is unlikely to produce results in his or her work. The employees would work in slower rate akin to a go-slow. Such slow performance and non-commitment would in turn have a negative effect on the profits of the company.

The act of ABC to overlook the employees in promotion would have a negative impact on the zeal and engagement in the business of the company. They would lose interest and focus in the business of the company. Some of them might even want to resign in order to avoid work related stress.

Best practice involves the prediction of the best candidate in a certain role through the use of varied methodologies. Only factors related to the job are considered.

Therefore, the selection panel were not supposed to consider factors such as the age, gender, acceptability and likelihood of absenteeism.

Conclusion

Selection and recruitment is a very important function that a company should conduct in the most cautious way. Recruitment and selection should be competitive to ensure that only the most qualified candidates are given the job (Mark, 2014).

In recruitment, only factors that relate to the job in question should be considered. Managers in charge of the recruitment process should ensure that they don’t discriminate on applicants based of factors such as age, gender, religion; nationality etc. selection should be fair such that even the applicants would approve such a process.

HR and line managers need to get recruitment and selection right. Their role is to ensure that the most qualified applicant gets the job. In doing so, they should peruse the documents and check whether all the requirements are met. They should conduct an intensive interview to enable them select the best candidate.

ABC Company should improve their recruitment and selection procedures by doing the following;

Advertising for vacant positions both internally and externally to enable qualified applicants not in the company to apply and thereby giving the recruitment and selection panel a wide variety of talents to choose from

Conducting interviews that are aimed at getting the most qualified applicant and avoiding consideration that lean towards discrimination. Considerations such as age, gender, religion, nationality should be considered at recruitment (Steele, 2010).

Creation of employee development plans should be prioritized. Employees should undergo continuous training so as to equip them with the current trends in the labour market. Employers should develop a mechanism that ensures that employees are trained on a rotational basis (Mark, 2014).

Employers should conduct a gap analysis regularly. A gap analysis entails the identification of a company’s recent resources and those that it might need in future. This would assist in planning well.

References

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