Introduction to Employment Law
As a corporate lawyer you will not be expected to be an expert in employment law. However, you will need to be able to identify potential employment law issues, know when to consult an appropriate colleague and understand the solution being suggested to your client and how this will impact on the work that you are doing.
A good example of this is the impact of TUPE on corporate transactions. As a corporate lawyer you will need to be able to identify a potential TUPE transfer. You will also be expected to understand at a basic level what obligations arise for your client as a result of the deal constituting a TUPE transfer.
By illustration, the potential impact of TUPE was highlighted in a case in June 2005 when The Transport & General Workers Union alleged that William Hill had failed to consult with employees prior to its acquisition of Stanley Racing and brought a claim for compensation of up to £4,000,000. Thankfully for William Hill the claim was subsequently thrown out by the Employment Tribunal on the basis that there had only been a share sale and not a business sale, so TUPE did not apply. However, this demonstrates the potential costs of not complying with these regulations and the importance of being able to identify such employment issues in the context of a corporate deal.
The impact of European Law
EC legislation and case law has had a major influence on UK employment law. You may already be familiar with the Equal Treatment Directive, the Equal Pay Directive and the Acquired Rights Directive which gave rise respectively to the Sex Discrimination Act, the Equal Pay Act (both of which have now been replaced by the Equality Act 2010) and TUPE.
The role of EU law in domestic legislation is something that could undergo significant change following the UK’s decision to leave the EU as a result of the Brexit referendum in June 2016.
The law is moving towards the protection of workers generally, and not just employees.
General nature of Employment Law
Employment law is best described as a mixture of contractual and statutory rights.
In essence, the employment relationship is largely governed by the employment contract between the employer and the employee (whether it is an oral agreement or an agreement in writing). The employment contract will always be the starting point when advising an employer or employee of their respective rights and duties. Many issues relating to employment law therefore involve the application of the common law principles of contract law.
However, the reality of the employment relationship is such that the employer is typically in a much stronger negotiating position than the employee. To address this inequality and protect employees, a raft of statutory provisions has been introduced. The employment contract and the entire employment relationship is now very strictly controlled by statutes (many of which have derived from EC law). For example, we have statutory control over the two most basic elements of the contract of employment, namely the minimum amount which employees must be paid (this is controlled by the National Minimum Wage Act 1998) and how long they can be required to work (controlled by the Working Time Regulations 1998).
Employment law is driven by the economic and political climate making it an extremely fast-changing area. The economic downturn of 2007-09 led to a government drive to try and promote business recovery and remove excessive restrictions and regulations upon businesses. Much of the consequent employment law legislation was designed with this aim in mind and it produced a real reduction in employment rights. For example, an increase in the qualifying period needed to claim unfair dismissal has meant that fewer employees are eligible to bring claims for unfair dismissal and the introduction of fees for Employment Tribunal claims, designed to discourage unmeritorious claims, has resulted in a huge drop in proceedings being issued against employers.
Whether the Government will take this deregulation agenda further following the UK’s decision to leave the EU as a result of the Brexit referendum is something that remains to be seen.