Dismissal of The Point of The Employment Relationship

I must begin this essay by saying that I agree with the title in that the point of the employment relationship where workers need the greatest protection is in dismissal. I believe this because for the most part that while a relationship is in progress issues may, of course, arise, however, the majority of issues tend to arise where the relationship is fractious. It is pivotal for the typically weaker party, the worker, to have protection at this time. Therefore, throughout this essay, I will be discussing the protection that is in place for dismissal and examine whether there is great protection and finish by evaluating my findings and consider possible reform if any. I firstly want to examine the implied term of trust and confidence and its relationship with the Johnson[1] exclusion area. In order to progress further, I must start with the case of Malik[2] where the implied term was given its authority. In the judgement Lord Nicholls defines the implied term as “The [employer’s] conduct must, of course, impinge on the relationship in the sense that, looked at objectively, it is likely to destroy or seriously damage the degree of trust and confidence the employee is reasonably entitled to have in his employer.”[3]. This definition is important because of the way this decision came about and the impact that it has on the employment contract. There is a causal link that needs to be explained between three cases that have shaped dismissal law going forwards and are essential for the consideration of the implied term. Firstly, Addis[4] in 1909, was a case where a man who had lost his job wanted to claim for the breach of trust and confidence or non-pecuniary damages arising from his dismissal. It was decided in this case that non-pecuniary losses(or better known as stigma damages) could not be claimed in dismissal and therefore became the precedent that employment dismissal cases can only offer pecuniary damages. It took nearly 90 years for this precedent to be considered again in the case of Malik v BCCI[5]. The case facts were that employees of the bank BCCI wanted to claim for their loss of reputation and inability to get work after being an employee of the corrupt business.

The bank eventually collapsed and the employees were made redundant, but the question was posed that although there were no expressed terms in their contract did BCCI have any duties to their employees and if so what were they, had they been broken and what were the remedies? The House of Lords unanimously held there was an implied term into all employment contracts of implied trust and confidence, Lord Steyn stating that “the employer shall not: ‘without reasonable and proper cause, conduct itself in a manner likely to destroy or seriously damage the relationship of confidence and trust between employer and employee.” It was held that an employer might be liable in damages to an employee whose reputation is damaged by the employer's corrupt practices of business even if they are learned of after termination.

The reason this case was distinguished was that Addis was not concerned with the direct economic loss but with an injury to feelings before the concept of the implied term was realized. The breach of the contract comes at the precise time of when the implied term was broken and not when the employee discovers it. This then leads into the Johnson[6] case three years later where the claimant was dismissed and claimed for unfair dismissal and also for stigma damages. He argued that the manner of his dismissal caused him to turn to drink and other issues in his life. His claim was struck out by the lords as they affirmed the reasoning in Addis that damages for dismissal were limited to economic ones and that his wrongful termination claim could only result in wage recovery. Lord Hoffman surmises that they are not overruling Malik but is actually affirming that the Implied term of trust and confidence cannot be stretched that far as to protect the employee in cases of dismissal because it is only concerned in relationships that are ongoing.

Therefore, the accumulation of these three cases results in the Johnson exclusion area where the breach of the implied term of trust and confidence cannot be used to protect an individual from dismissal. This I believe is a major downfall in the employment relationship, because as I have already stated, protection in the employment relationship is needed most at dismissal. Therefore, an implied term that specifically deals with fairness in the relationship can be used at any time apart from when you need it the most.

Expanding on this point, Lord Hoffman’s reasoning behind this decision was that of statutory conflict and this raises issues on two fronts in my opinion. Firstly, because the ruling was wrong because Hoffman stated that Johnson’s[7] claims for his situation would have been factored into the compensation given to him by the tribunal. This would mean that he would have been compensated for his pecuniary losses that stemmed from the statute but also the losses sustained to person. This would result in double compensation being given which is simply unacceptable. The second issue I have leads me to the statutory provision for unfair dismissal, Part X Employment Rights Act[8]. I think the provisions for unfair dismissal contained are very weak in their protection. I wish to compare them to contract law where a claim can be made 6 years after the event on which you are claiming for has happened. Comparatively, there can only be a claim for 3 months[9] after dismissal for unfair dismissal. In contract law, there is no financial limit to a claim for breach of contract but again in the ERA, there is a statutory cap of £80,541[10]. This cap although may be high is almost irrelevant as the median award for compensation in 2016 for unfair dismissal was £6995. Considering that a person is to have lost their job, income and potentially more a reward of this magnitude is not substantial enough. I must continue my discussion of the statute now by turning to the qualification and procedure that needs to be followed in order to have a successful claim for unfair dismissal.

I start first that only an employee can claim for an unfair dismissal as defined under section 230 and the test in ready-mix concrete. This in itself means that many people including policemen will not be able to claim or have protection from unfair dismissal. Moreover, I have more issues with the ERA because there is the condition of continuous employment[11] of 2 years to again be able to qualify.

Although this does not include your statutory rights to holiday and other types of leave, if you are absent for a reason outside the excluded zones then you break the continuity of your employment and it resets to zero. I reiterate that this offers no protection to people who have either recently broken their continuity or people who have been working for less than two years. When you then move onto the reasons for which one may be fairly dismissed the statute provides an explicit list of offences, however, in my opinion, the problem lies within section 98(1)(b) where one may be dismissed for some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held”. This issue was raised in RS Components Ltd v RE Irwin and was justified by saying that “There are not only legal but also practical objections to a narrow construction of ‘some other substantial reason’.

Parliament may well have intended to set out…the common reasons for a dismissal but can hardly have hoped to produce an exhaustive catalog of all the circumstances in which a company would be justified in terminating the services of an employee.” This gives the scope for a wide array of things to be included and therefore there can almost be any reason for dismissal. My point is illustrated in the case of Kelman v Oram[12] where the wife of a publican was dismissed purely on the basis that her husband had been dismissed.