Throughout the employee lifecycle, employers have to navigate the complexities of HR law. From contracts of employment and dealing with everyday personnel issues to resolving workplace disputes and defending tribunal claims, the risks of managing a workforce are relentless.
For employers and HR practitioners, it is essential to fully understand both the organisation’s legal obligations and its rights to protect its own interets.
Essentials of employment HR law
HR law, or employment law, regulates the relationship between employers and employees. The body of law is drawn from various pieces of legislation, a vast amount of case law and employment tribunal rulings, as well as practical guidance issued by ACAS.
In addition to this extensive framework, the individual contract of employment must also be considered when determining the specific terms of any employment relationship.
It is an area that is subject to continuous change, creating a challenge for businesses to stay up to date with their obligations and changes in employee rights.
We take a look at some of the key areas under HR law that employers need to be aware of.
Recruitment & onboarding
Employers are under a number of legal duties during the recruitment process, with key legislation including the Equality Act 2010, Rehabilitation of Offenders 1974 and Data Protection Act.
Employers are prohibited by law from discriminating against anyone while recruiting. You may, for example, be required to make reasonable adjustments to accommodate disabled candidates. Employers can face discrimination claims if it can be shown an individual was not successful in a job application as a result of being discriminated against due to a protected characteristic, such as age or disability.
Home Office guidelines for the prevention of illegal working regime place duties on all UK employers to verify before the start of employment that an individual has the right to undertake the work in question.
Further, any pre-employment checks have to be carried out in accordance with the six data protection principles, as set out under the Data Protection Act 2018, for example, all personal data must be processed fairly, lawfully and transparently, and not processed in any manner incompatible with the purposes for which it was collected.
Failure to meet your duties can result in serious consequences. Claims of discrimination during the recruitment process can give rise to a tribunal claim, and if you are found to be employing workers illegally, you could face fines of up to £20,000 per illegal worker, among other Home Office enforcement measures.
Contracts of employment
The contract of employment is a legally binding agreement between the employer and employee. It sets out the specific terms and conditions governing that working relationship and the rights and obligations between the parties.
The employer and employee are bound by the terms of the contract until it comes to an end, for example, through dismissal, resignation or an agreed variation in the contractual terms.
A contract of employment comprises both express and implied terms, i.e., those explicitly stated between the parties, and those implied into the contract by law, such as a duty of trust towards each other.
A written contract of employment is, however, generally advised, to provide clarity and certainty to both parties as to the terms of their working relationship. However, an employment contract can still exist even where it is not in written form.
By law, within two months of an employee commencing work, employers must provide a written statement of particulars setting out the main terms and conditions that will govern the working relationship, for example, their place and hours of work, how much and how often they will be paid, as well as holiday and sick pay entitlement.
Generally, you and your employee can agree to whatever terms you wish to be in the contract, but you cannot impose a contractual term which gives the employee lesser rights and obligations than set out by law, for example, where the employee has a statutory entitlement to be paid the national minimum wage or to receive holiday pay.
Harassment & discrimination
Employees have a right not to be harassed or bullied at work, either by their employer, senior management or other work colleagues. Employers have to take positive steps to avoid harassment in the workplace to avoid legal action being taken against the organisation.
By law, everyone has the right to be treated fairly at work and to be free of discrimination on the grounds of age, race, gender, gender reassignment, disability, sexual orientation, religion or belief. These are known as protected characteristics, as defined under the Equality Act 2010.
Discrimination rights apply across the employee lifecycle, including when hiring for a role, when determining the level of pay and benefits, when offering and providing training opportunities, when deciding on promotions and transfers and when disciplining and dismissing an employee.
Unfair & summary dismissal
Dismissal is where you bring a contract of employment to an end. In most cases, when dismissing an employee, you will need to provide them with notice in accordance with the statutory minimum, or any additional notice as contractually provided for.
You must also have a lawful reason for dismissing an employee. Valid grounds for dismissal could include performance or conduct related issues, something that prevents the individuals from legally being able to do their job, for example, a driver losing their driving licence, or redundancy.
That said, even if you have a fair reason, the dismissal is only fair if you act reasonably during the dismissal (and preceding disciplinary) process. In determining what is reasonable in the circumstances, an employment tribunal would consider whether the employer carried out proper and fair investigations where appropriate, whether they followed the relevant procedures per the ACAS guidelines and whether they gave the employee the opportunity to appeal.
In some cases, where there is evidence of gross misconduct, for example, theft, fraud or violence, employers may be lawful in dismissing an employee without notice or pay in lieu of notice, but this would still require a fair process to have been followed, and the employer must have acted reasonably given the circumstances in arriving at the decision to dismiss summarily.
Holiday leave & pay
In the UK, the minimum annual statutory entitlement for paid holiday for a full-time employee is 28 days, or 5.6 weeks. This also includes public holidays. Part-time workers are also entitled to this minimum, calculated on a pro-rata basis.
If an employee works the same number of days each week, 5.6 weeks translates into the following days’ holiday per year: 4 = 22.4 days; 3 = 16.8 days; 2 = 11.2 days; and 1 = 5.6 days. If an employee works irregular days or hours, their entitlement can be more difficult to calculate.
The rules in this area are becoming even more complex with requirements to take into account regular overtime and commission payments.
Employers may offer more than the statutory minimum holiday pay within the employment contract, but by law, employers cannot offer less.
Employers can also allow bank holidays as extra holiday in addition to the statutory entitlement, or include this in the total calculation.
Sick leave & pay
Eligible employees are entitled to Statutory Sick Pay (SSP) to allow them to stay at home to address their health needs without losing out on pay.
SSP is currently set at £94.25 a week for up to 28 weeks (as at October 2019).
Employers can offer more if under a company sick pay scheme, but cannot offer less. Company schemes are also referred to as contractual or occupational sick pay and must be included in the contract of employment.
Where there is only an entitlement to SSP, this is paid when the employee is sick for at least four days in a row. As such, typically, you must start paying SSP from the fourth qualifying day, i.e., the day an employee is normally required to work.
Maternity and paternity leave & pay
Eligible employees can take up to 52 weeks’ maternity leave. The earliest that this leave can be taken is 11 weeks before the expected week of childbirth unless the baby is born early. Further, employees must take at least two weeks’ maternity leave after the birth, or four weeks if they are a factory worker.
Statutory maternity pay (SMP) for eligible employees can be paid for up to 39 weeks, usually as follows: the first 6 weeks will need to be paid at 90% of their average weekly earnings (AWE) before tax, with the remaining 33 weeks at £148.68 or 90% of their AWE, whichever is lower. Further, tax and National Insurance need to be deducted.
In respect of paternity leave, employees can choose to take either one week or two consecutive weeks’ leave, although leave cannot start before the birth and must finish within 56 days of that date. Statutory Paternity Pay for eligible employees needs to be paid at either £148.68 a week, or 90% of their average weekly earnings, whichever is lower.
Under shared parental leave, the employee entitled to maternity leave can sacrifice some of this time to allow the other parent to stay at home with the child instead, or even to allow both parents to be at home at the same time. The combined time off work for both parents is capped at 50 weeks, with two weeks mandatory leave for the mother immediately after the birth.
Redundancy is when you dismiss an employee because you no longer need anyone to do their job. This might be because your business is changing what it does, doing things in a different way, changing location or even closing down. However, for a redundancy to be genuine, you must demonstrate that the employee’s job will no longer exist.
To avoid claims for unfair dismissal, employers are required to explore and exhaust all other options before making compulsory redundancies, for example, by seeking applicants for voluntary redundancy or early retirement, restricting recruitment, or reducing or stopping overtime.
Employees have a number of rights during a redundancy process, including the right not to be unfairly selected and the right to reasonable time off to look for a new job or arrange training if under notice of redundancy.
Given the complexity and scope of HR law, not least because both the substantive and case law is subject to constant change, it is important to keep abreast of any recent developments. It is also important to manage any potential legal issues proactively, minimising any risk of proceedings and promoting a positive working environment for all.
As employer solutions lawyers, DavidsonMorris works closely with employers to guide and support with all aspects of workforce management, development and movement. Our team of employment law and HR specialists offer a holistic approach for employers and HR teams to optimise workforce performance and engagement while mitigating legal risks. For advice and support, speak to us.
Last updated: 2 November 2020