a) Critically examine the legal risks that ABC face in taking the course of action outlined in this case?
b) Critically discuss the defences available for ABC to deploy should an aggrieved employee or would-be employee decide to bring a tribunal case? How strong a case could be mounted?
c) Evaluate the employment relations issues that could result within the organisation if the senior management team were to proceed with the course of action as described in the case study?
d) As the HR Manager, what advice would you give the senior management team when running an exercise of this kind in the future?
a: Based on the course of action that is to be undertaken by Mike, the legal risks that ABC may face are discussed in this section. The legal risks identified are divided with relation to payment, dismissal and health.
Sections 13 to 27 of the Employment Rights Act, 1997 deals with the provisions that are related with the protection of employees from unauthorised deductions from their wages. For the purposes of this Act, workers shall include employees as the word “workers” includes almost all contracts to perform to work other than freelancers (Collins, Ewing and McColgan 2012). If an employer, without having the contractual power or consent of the employee, reduces or deducts wages from their salary shall be considered as unlawful under section 13 of the Employment Rights Act, 1997 (Valticos 2013). In the case of, Arora v. Rockwell Automation Ltd, Mr Arora worked for an organisation namely, Rockwell from January to March 2005. The Tribunal held that his deduction on the part of the employer was unlawful in nature as it was straightforward deduction on the part of the employer (Stainback and Tomaskovic-Devey 2012). Hence, if an employer completely makes the salary of an employee dependent on the target that is to be achieved, it shall be considered as unlawful deduction on the part of the employer and an employee may file a complaint to the tribunal against the employer (Painter and Holmes 2015).
Performance related issues are the most difficult issues to deal with justly. In many cases, they comprise of under achievement or poor performance. Ideally, an employer should not dismiss an employee for poor performance without giving him a notice for the downfall of his performance related to work (Barnard 2012). In the case of, Davison v. Kent Meters Ltd, Mrs Davison was dismissed from her work, giving her one-month’s notice, after the employer discovered that she delivered faulty components at work (Leyland 2016). Though in her defence she stated that she did as the supervisor instructed it to her, however, the supervisor denied this and she was dismissed. The Tribunal held that such a dismissal is unreasonable without formally warning her about and without giving her a chance to make changes in the faulty components (Kersley et al. 2013). In the case of Taylor v. Alidiar Ltd, the Tribunal held that the employer must show that it acted reasonably and honestly in believing that the employee was performing poorly and he or she did not have the capacity to fulfil the job responsibilities for which he was employed.
In the United Kingdom, health becomes a very important factor in oil and gas industries where workers are involved in using heavy machineries that is likely to cause harm to their body or cause injury (Wanrooy et al. 2013). In such a scenario, it becomes important for employers to maintain and organise regular health checkups to ensure that the employees are not undergoing any physical harm because of their job or industrial role (Edwards v. The National Coal Board). The Health and Safety at Work Act, 1974, is the primary piece of legislation that obligates the employer to maintain safety at workplace especially where the industry or the employment is of such a nature, that is likely to cause harm (Van Wanrooy et al. 2013). However, in the case study, Mike regulates checkups for people who are obese or smokers. No law in the United Kingdom invalidates such an action, however, such action should be made voluntary in nature and no employees should be forced for health checkups in the organisation where health is not in danger. Since ABC is a software industry hence, health checkups should not be imposed on them as a matter of organisational policy but should be made voluntary. The legal risk that may be associated in this case is that obesity or overweight is a medical condition and not a health condition; people may not feel comfortable to be a part of such health checkups. In the same way, smoking is a matter of personal choice; imposition cannot be laid on account on such factor.b: The defences that may be available if an aggrieved employee or would be employee decide to bring a tribunal case against the organisation may be segregated based on payment, dismissal and health. An employer can deduct money from the wages of an employee only in limited and certain circumstances, such as, deduction that is authorised by statute, if the employee has provided consent to it or when such an action is an outcome of a disciplinary action or order that is an order of the Court. Additionally, the employer may also deduct money from the wages if the organisation has to reimburse the business because of overpayment or payment of debt or due to strike or industrial action (Stokes and Wood 2016). In this case, ABC can defend itself on the ground that it would enter into agreements with the employees that their payment of salary shall depend on 100 percent fulfillment of the target and that if failure to meet their target shall lead to deduction from their salary. In the case of Norris and others v. London Fire and Emergency Planning Authority, the Court held that an employer might deduct money from the wages of an employee if they fail to meet the aim and objectives of the organisation on which the company survives in the market. Hence, ABC can defend itself depending on this case law (Hoque 2014).
The second course of action is related to the termination of employees for poor performance. Fall of in trade to meet specified targets may become a valid reason for dismissal, if the employer concludes such a dismissal reasonably. In the case of Woods v. Olympic Aluminum Company Ltd , Woods was unfairly dismissed from her management role as she was not able to perform her role well. However, this dismissal was unfair, as she never possessed managerial capacity (Williams et al. 2013). Hence, ABC can clearly rely on this case law showing that if a person is not able to meet his job requirements then he or she may be terminated from his work. In the United Kingdom, there is no law that explicitly states that if employees are terminated due to poor performance is illegal. Hence, this may become a defence in favour of ABC.
In the third course of action, the defence that ABC can give in its support is that efficient health policies can ensure that workers are “well thought of” and are important part of the organisation. They shall feel that their health is considered as an important factor for the organisation and they are taken care by the organisation in which they work (Dibben and Williams 2012). Organisations adopt such factors for the well-being of their employees; however, such policies cannot be made mandatory on the employees because of the personal attributes that is associated with overweight and smoking (Marginson 2014). There is an increasing concern amongst employers for employees who become a victim of passive smoking. In the United Kingdom, the number of smokers has fallen in the year 1998 from 28 percent to 25 percent in the year 2003 (Hoque 2014). Hence, the defence that ABC may hold in this course of action is that the health policies are for the well-being and protection of the employees.
In the first and second course of action, the likelihood of mounting the case in favour of ABC is however less as compared to the third course of action. The reason behind this is that, in the first and the second course of action the Court shall have the power to use its discretion, and depending on the case facts and legal issues, the Court may decide the case in favour of ABC or the employee. However, in the third course of action the chances of success is more on the part of ABC as it is for the welfare of the employees and that it has the likelihood to yield positive results in the future in favour of the employees.c: The employment relationship is the link between the employers and employees that exists when a person performs services or work under existing circumstances in return for remuneration (Bach and Bordogna 2016). It is through the existence of employment relationship that rights and obligations are created between the employer and the employee. The survival of an employment relationship is the condition that helps in the determination of the application of labour laws in an organisation. The existing laws in relation to labour laws of a given country (Marginson 2015) guide both the employer and the employee.
Mike Replica is appointed as the new Sales Director for ABC and as the new Sales Director of the Company; he has the following course of action for the organisation with relation to payment, dismissal and health:
Payment: Mike decides that the arrangement of payment for the employees should be completely commission based. Presently, the sales team receive additional 20 percent to their monthly target. However, Mike decides that the payment of employee’s salaries shall completely depend on the sales target being met. This shall have a negative impact on the employment relation between the employer and the employment. The reason behind this is that payment of wages is regarded as one the most important factors in the working life. It is a sensitive subject and such issues should be handled with care as it leads to creation of negative impact on the employee productivity and morale. It is a challenge for many companies to set proper levels in the system of remuneration and at the same time rewarding workers who work fairly. Incentives are considered as reinforcement for motivation (Lansbury and Kochan 2015). If the structure of the salary is such that employees shall not be rewarded for the extra effort that they will put in, shall decrease employee involvement to work and lessen productivity of work. Hence, ABC’s policy with relation to payment shall decrease work involvement of the employees.
Dismissal: As a matter of the organisation’s policy, Mike decides that the poorest performing member of the sales team should be dismissed each year and new employees should be recruited in place of the old employees. In the opinion of Mike, this shall boost the energy levels of the team and the hours that the team puts in to work shall be reduced. However, in the opinion of Mike, introduction of such a policy shall enhance or boost the energy levels of the employees. Nevertheless, it may lead to creation of negative impact between the employee and employer relationship. The reason behind this that employees expect a sense of empathy from their employers if for some reason they are not been able to perform well, the reason may be professional or personal in nature (Bach and Bordogna 2016). It is not necessary that at all times, employees fail to perform at work due to lack of understanding or interest. Many a times it so happens, that due to lack of concentration at workplace employees fail to perform well. It is the responsibility of the employer to address such issues at a personal level, instead of simply terminating them from work. Employees are an important part of the workplace; they should be felt wanted and understood instead of feeling that at anytime they might be terminated from the place of work. Hence, formation of such policies at workplace may decrease motivation amongst employees and they shall spread a bad name about the organisation in the market (Van Wanrooy et al. 2013). Since ABC is a growing company, it should be cautious about the policies it is formulating as it might it affect the brand name of the company in the software industry.
Health: Mike requires the members of the sales team to undergo medicals with the doctor of the company with an aim of establishing their fitness levels. Employees, who are overweight, would be required to diet until they reach a target weight, while smokers would be required to attend classes aimed at persuading them to quit smoking. Formulation of health policies within an organisation is always in favour for both the employees and the employers. The health policy that is in favour of the employees shall help the organisation in becoming popular in the near future (Marginson 2015). Overweight is a medical condition and not a physical condition, some of the employees may not wish to be a part of the health check up due to the medications that they follow at a personal level. Hence, health checkups should be made voluntary in nature and not mandatory, nevertheless continuing to be a factor of motivation amongst employees. From the perspective of people who smoke regularly, persuading them to quit smoking is a very motivating factor for the employees. This is beneficial not only for the active smokers but also for the passive smokers. Hence, formulation of health policies that is in favour of the employee works out yielding positive results for the organisation.d: As a HR Manager the advice that I would have given to the senior management had he shown interest of running this kind of course of action in the organisation, would relate to issues relating to motivation, employee engagement and commitment. The first course of action that Mike formulated in this case study was related to the system of wages that was to be awarded depending completely on achievement of sales target. In my opinion, incentives play a very important factor in motivation of employees. The system of incentive motivates employees not only to meet the target that is set for them but also motivates them to work extra so that they earn incentives. Incentives are helpful for both the employee and the organisation. However, if salaries become dependent completely on achievement of 100 percent of the target, employees who are capable of doing extra work for the benefit of the company shall be restrained from doing so, as factor of motivation is missing. Employees should be guaranteed a basic salary that they shall be entitled to irrespective of meeting their target or not (Valticos 2013).
For the second course of action, as the HR Manager, I would have advised Mike for making sure that employees are not terminated at one go. Instead, they should be first given proper training for the area in which they lack expertise and thereafter, proper time should be given for implementation of the same. Despite, the trainings that employees are provided with, if they continue to perform badly, they may be given a warning and if persistently they fail to give desired results, may be finally terminated. This shall enhance the sense of security of the employees relating to their employment.
For the third course of action, not many amendments are required as the policy is already in favour of the employees and the employer. However, the only factor that is to be taken care with regard to health policies is that such policies should not be made mandatory rather voluntary. If the employees wish to be a part of the organisation’s health programme they shall definitely be a part of it, however, would not be forced for the same.
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