The Law [of Unfair Dismissal] Has Been Unsuccessful as an Effective Control upon Managerial Prerogative ...

The Law [of Unfair Dismissal] Has Been Unsuccessful as an Effective Control upon Managerial Prerogative … And Far from Acting as a Constraint Upon Power, the Law Actually Legitimises Managerial Control

Introduction

The relationship between the employer and employee is of crucial significance to organisations, individuals, and the society (Bauer, Bender & Bonin 2007). Employment is often considered the economic backbone of any society; however, the relationship between the employer and employee has evolved over time. During the Victorian era, the employment relationship was likened to the master-servant relationship, which was characterized by masters having the right to dismiss their servants at any time of their wish for whatever reason or lack thereof. Currently, the employment relationship is somewhat complicated (Bray & Waring 2006; Chapman 2006). This can be attributed to the fact that employees are beginning to treat their work as a valued procession. In addition, as opposed to old times, work can be used to offer companionship as well as personal satisfaction and improve personality. Nevertheless, it is imperative to note the existence of a considerable bureaucratic imbalance between employers and employees.

There is no doubt that employers have a higher bargaining power when compared to employees because employees depend significantly on the work as a means of sustaining their livelihood (Bray & Waring 2006). In order to address the aforementioned imbalance, statutory law has been adopted as a way to limit the employers’ power in dominating the employment contract that exists between entities with no equal bargaining power and ultimately restrain the managerial prerogative.

The law of unfair dismissal in the UK was first launched during 1971, and it articulates the employees’ rights not be dismissed unfairly. However, in practice, the operation of the law has not gone beyond restraining managerial power; instead, the law has resulted in debates between the managerial prerogative and employment rights (Chapman 2006). There is widespread agreement that the rights of employees are not aligned with the interests of employers, with the employers’ interests being perceived as superior (Charlwood & Terry 2007; Lewin 2005; Selden 2006).

The purpose of this research is to analyse the effect of the unfair dismissal law on managerial prerogative. The paper focuses on whether the unfair dismissal law legitimises managerial control. It takes into consideration the justification underpinning the unfair dismissal law before assessing the way the latter affects managerial control. The paper argues the substantial fairness provisions of the unfair dismissal law serve to legitimise managerial control instead of restricting it, resulting in bad labour practice. Nevertheless, the paper also notes that the procedural fairness provisions have placed important limits on managerial prerogative. A criticism of the concept of the reasonable employer is also provided to augment the discussion.

Nature of Employment Relationship

Before delving in detail the way the unfair dismissal is structured as well as its rationale, it is imperative to have an overview of the current nature of the employee-employer relationship. As it will be illustrated later, the unfair dismissal law creates a perception that employees are a burden to employers, including the operation of their organisation (Cabrelli 2005; Deakin & Njoya 2008). This plays a crucial role in reinforcing the notion of the risk associated with being ordered to appear before an employment tribunal and a subsequent view that all employment laws tend to be burdensome. This, in turn, increases the danger associated with legitimizing managerial control in the sense that it encourages employers to adopt defensive labour practices. The resulting outcome is the disagreement between employers and employees. Nevertheless, employees’ job security requires employees to be confident and loyal to their employer (Deakin, Lele & Siems 2007).

Redundancy does not result in good workplace environment that fosters efficiency; therefore, employers have the obligation of building organisational cultures that elicit loyalty and confidence from their workers. There is no doubt that employment offers economic support for employees, which subsequently reduces the burden placed on the state. Employment guarantees the continuity of the lessened burden to the state and ensures a reliable and stable labour force of significant benefit to the economy. Instead of having conflicting interests, it is imperative for employees and employers to have aligned interest (Dickens 2014; Lord 2014).

Good labour practices require the dispelling of the notion of conflict between employers’ interests and employee rights. The Employment Rights Act of 1996 outlines the law of unfair dismissal, which guarantees employees the right not be dismissed unfairly. The law also sets the provisions for determining the fairness of a dismissal. The following subsection considers the overview and mechanics of the unfair dismissal law prior to addressing the rationale of the law.

Overview of the Unfair Dismissal Law

The law of unfair dismissal comprises a crucial component of the labour law in the UK, which demands that employees be treated reasonably, justly, and fairly by their employers in instances of potential job termination (Dickens 2009). This is regulated by the Employment Rights Act by stating that employees have the right to fair reason prior to their dismissal on the grounds of the capabilities in accomplishing the task, their behaviour, the economic redundancy of their position based on statute, or any substantial reason. Consequently, it is considered unfair for an employee to be dismissed irrespective of the duration he/she worked with the organization for any reason associated with forms of discrimination spelled out in the Equality Act of 2010. In addition, employees cannot be dismissed due to pregnancy. The underlying inference is that an employer can only dismiss an employee lawfully after following a fair procedure characterised by reasonable action as well as a fair reason for dismissal (Dickens 2014). The Employment Tribunal is tasked with determining whether the decision undertaken by an employer to dismiss an employee is reasonable. Therefore, if an employer dismisses an employee in situations whereby the former can deem unfair, he/she has the burden of proof to present the reason for the dismissal of the employee. The reason provided by the employer should be listed under the potentially fair arguments (Stewart 2008).

After determining the fairness of the reason for dismissal, the next step involves qualifying whether the action by the employer was reasonable or unreasonable based on the administrative resources as well as the size of the business, and in compliance to equity. The law of unfair dismissal also outlines certain reasons considered automatically unfair such as enforcement of statutory rights, safety and health, whistleblowing, pregnancy, and activities associated with industrial action and trade unions (Wooden 2005). The second step of determining the reasonableness of the action is based on the assumption that even if the employer offers a fair reason for termination, there is the possibility of procedural failures. For an employer’s action to be considered unreasonable, the conduct of the employer should be established not to fall within the “band of reasonable responses” associated with any responsible employer. Otherwise speaking, the conduct of the employer would be considered reasonable in case a number of decent employers would have adopted a similar action under similar circumstances. Whereas, an unreasonable action is that no reasonable employers could adopt under similar circumstances leading to the dismissal (Selden 2006).

In addition, if the worker provides proof of a potential competing reason, employer is burden to adduce evidence that the claimed reason was principal (Rosenthal, Lockwood & Budjanovcanin 2008). The reason for dismissal might not be as claimed by the employer since he/she may have been mistaken on law of facts, lacked evidence or attempting to sympathetic to the worker by concealing capability with redundancy. The Employment Tribunal can make the decision that the reason for the dismissal was not the same as the one provided by the parties. It allows the parties in disagreement to amend their case (Peters, Rousseau & Seeds 2004; Robbins & Voll 2005). In this regard, employers are allowed to plead alternate reasons albeit at the cost of lessening their credibility in the case. In order to provide proof of the reason for dismissal, the employer in question is not allowed to focus on what transpired after the termination; alternatively, the employer can focus on the event happening after issuing the notice of termination and actual termination. The justification of the unfair dismissal law will be covered in the following subsection.

Rationale for the Unfair Dismissal Law

The main justification for regulating the employee-employer relationships stems from the need to tackle the bureaucratic imbalance existing between the submissive employee and the dominant employer (Ewing & Qc 2012; Freyens & Oslington 2005; Marinescu 2011). The regulation of the employment relationship plays a pivotal role in discouraging autocratic business management while at the same time fostering a business operation characterized by taking into consideration the interests of the organization (including the interests of the employees) as a whole. The employee’s right not be unfairly dismissed has been likened to a compulsory implied provision in every employment contract. An implied provision is that which employees would wish to be incorporated in their employment contracts but are in a position to demand due to the fact that labour market is a buyer’s one (Drinkwater & Ingram 2005). The International Labour Organization outlined the motivation for the adoption of laws aimed to regulate the employment relationship, which is to limit the abuses likely to be exercised by those in dominant positions of power.

In the UK, there was unwillingness to intervene in the employee-employer relationship until the Donovan Report emphasized on the need for regulations to constrain managerial prerogative (Gallie, Felstead & Green 2004). A number of authors have justified the need for the unfair dismissal law by arguing that workers have the right to an uninterrupted tenure of a job that cannot be taken disrupted in the absence of a due process of law (García-Martínez & Malo 2007; Howell & Givan 2011; Kahn 2010). Nevertheless, this is considered an extremist position since the English Law fails to guarantee an exclusive right for an individual to be kept in employment.

The unfair dismissal law has also been rationalized on the need to safeguard dignity and autonomy against the likely abuse of power. In this regard, managerial decisions must take into consideration these rights. Consequently, when interpreted correctly, it can be found that the interests of employers and employees are not divergent but convergent. Nevertheless, the provisions in the unfair dismissal law have not been understood in light with the justification underpinning its introduction and enforcement (Kersley et al. 2013; Latreille, Latreille & Knight 2007). The numerous cases of unfair dismissal in court are an indicator of the high cases of unfairness associated with managerial decisions. Thus, there is the need to impose limits (Ewing & Qc 2012). However, the issue is whether these limits exist in labour practice. As it will be demonstrated, the substantive fairness provisions in the unfair dismissal law fail to address the issue of managerial prerogative, which is the rationale for the introduction of the law. Nevertheless, with respect to procedural fairness provisions, the unfair dismissal law has been more effective in controlling rather than legitimising managerial control.

Impact of Substantive Fairness Provisions in Legitimising Managerial Control

The two specific aspects of the substantive fairness provisions that play a crucial role in validating managerial control are the reason for dismissal and the test of fairness. With respect to the reason for the dismissal of the employee, if it does not fall under the four likely fair reason, the employer can cite “some other substantial reason” (SOSR) in justifying the termination of the employment contract (Kilpatrick 2007). The phrase, “some other substantial reason,” outlined in the law provides a loophole for employers to exercise their managerial control to affirm that despite the fact that the law does not explicitly permit their reason for dismissal, their actions are nevertheless defensible and justified (Marinescu 2011).

There is a widespread agreement that employers use the “some other substantial reason” in justifying employee dismissals. In most cases, it involves reorganization in the business or change in the employment contract that the employee does not agree with. According to Bauer, Bender & Bonin (2007), employers often use this provision as a “get out of jail card” since they only need to come up with a possibly sound business reason for dismissing the employee. In contrast to redundancy, the employer does not need to consult the employee to reorganize the business, which is a loophole that managers can exploit in dismissing employees.

The SOSR provision has been argued to provide employer’s charter whereby the latter can advance numerous reasons to the test of fairness under the pretext of business efficiency. When interpreted broadly, courts have often maintained that the question of concern is whether the reason for dismissal provided by the employer is within the category of reason included by law a dismissal ground and not whether the reason provided is adequately substantive (Marinescu 2009). Instead of taking into account the substantiality of the dismissal reason, the resulting outcome is the creation of a low threshold and a diverse set of reasons that employers can cite when facing the Employment Tribunal. An example of this is illustrated in the Gilham and Others v Kent County Council. The court argued that in case the reason can be used in justifying the dismissal of the employee on the face, it satisfies the criteria of being a substantial reason (Mantouvalou 2008). The implication is that this validates a diverse range of likely reasons that employers can cite for dismissing employees.

Despite the fact that it is imperative for the employer to meet the criteria for the test of fairness, an issue of concern is the potential of allowing all sorts of reasons that are likely to pass as substantial when dismissing an employee. The SOSR is subject to open door interpretation, which in most cases tend to favour the employer (Cabrelli 2005). The reason is that the SOSR provision is often analysed from the perspective of business management. It subsequently acts as an incentive for devious employers to initiate employee dismissals in anticipation of various dubious reasons under the pretence of business efficiency. The latter in turn validates managerial control instead of restraining it.

The test of fairness depends on the resources and size of the employer. It is also based on equity as well as on the substantial merits associated with the case. The issue emphasized on the unfair dismissal law is on whether the actions of the employer to dismiss the employee are reasonable or unreasonable. Practically, the interpretation of this is the “band of reasonable responses” (BORR) test (Bray & Waring 2006). The existing judicial approach is represented in Iceland Frozen Foods v Jones whereby the court maintained that the Employment Tribunal should establish whether in the specific situation, involving the dismissal of the employee, other reasonable employers would have also acted in a similar manner (Stewart 2008). If the dismissal of the employee is established to be under the BORR, the dismissal is considered fair; otherwise, it is considered unfair.

It is evident that the focus of the test of fairness shifts from the employer being investigated to a hypothetical situation based on perceived excellent labour practice that is considered fair. The subsequent outcome is that a dismissal can only be viewed in the light of being reasonable or unreasonable with no common or middle ground in the disagreement. This is essentially crucial because it depends on the language used in the unfair dismissal law. For instance, if the Employment Tribunal focuses on establishing whether the actions of the employer are reasonable, it is highly likely that the former will deem the employers’ action as unfair (Deakin & Njoya 2008).

On the other hand, if the Tribunal focuses on establishing whether the actions of the employer are unreasonable, it is likely to deem the employer fair. The inference is that the outcome of the Tribunal depends on the language used in the case. The answer is often negative regardless of the question the Tribunal seeks to answer. For instance, if it seeks to answer the question of whether the actions of the employer are reasonable, it is likely that the answer will be negative resulting in an unfair dismissal. If the Tribunal asks itself whether the actions of the employer are unreasonable, the answer may be negative resulting in a fair dismissal (Stewart 2008). Hence, the unfair dismissal law endorses all except the extremely reasonable and arbitrary decisions made by the management. This test of fairness has been criticized on grounds that it usually produces a test of unreasonableness which, in turn, legitimizes harsh albeit fair dismissals. This reinforces bad labour practice rather than constrains it.

More importantly, the test of fairness is based on the presumption that dismissal is often a valid action regardless of being the most severe course of action. However, despite the extreme nature of dismissal, provide a similar dismissal had been undertaken by one employer considered reasonable, the dismissal is categorized as fair. An inference that can be made from this is that courts adore the present norms rather than establish the standards for fair labour and managerial practice (Cabrelli 2005). A risk associated with this approach is that employers are likely to be disillusioned with the recurrent futile dismissal claims.

A review of case law proves that claimants have slim chances of succeeding in unfair dismissal suits based on the BORR test. For instance, the 2011-2012 period reported a success rate of only 8 percent (Ewing & Qc 2012). In addition, courts have clearly maintained that actions by an industrial tribunal should not influence the decision reached by the tribunal regarding a dismissal case brought to its fore. Consequently, most of the dismissals made by the management are often upheld. Another worrying trend is that employment tribunals often consider fairness as an issue of fact, which increases the difficulty of appealing against decisions made by the tribunal. In addition, the Court of Appeal has issued warnings against the employment tribunals from going through cases to determine if errors are present (Marinescu 2009). This may discourage wronged employees from seeking appeals since the costs risks are likely to overwhelm the probability of success.