Argentina  How to Hire & Fire: A Global Guide  UK - Northern Ireland

Millar McCall Wylie LLP

1

GENERAL PRINCIPLES

Forums For Adjudicating Employment Disputes

The Office of Industrial Tribunals and Fair Employment Tribunal (“OITFET”) has exclusive jurisdiction for most claims, but contractual claims can be brought either in the civil court (High Court or County Court) or, up to certain limits, in the OITFET, at the choice of the claimant. There are different rules which apply depending on the jurisdiction chosen. There is no fee for bringing a claim before the OITFET however any proceedings issued in the civil courts will be subject to a court fee. The level of fee will be dependent on the quantum of the claim.


The Main Sources Of Employment Law

The UK is a common law jurisdiction. All employment arrangements are governed by general common law principles of contract law, but there are various national legislative requirements which over-ride those general principles in some instances. The majority of legislation applying in NI reflects that of England and Wales, in particular the Employment Rights (NI) Order 1996 from which many legislative rights and obligations arise. However in NI there is no direct equivalent to the Equality Act 2010. Consequently each form of discrimination is governed by separate legislation, most notably; the Sex Discrimination (NI) Order 1976, the Disability Discrimination Act 1995, the Equal Pay Act (NI) 1970, the Fair Employment and Treatment (NI) Order 1998, the Employment Equality (Age) Regulations (NI) 2006 the Employment Equality (Sexual Orientation) Regulations(NI) 2003 and the Race Relations (NI) Order 1997. A significant amount of regulation is introduced by secondary legislation. Non-binding Codes of Practice are taken into consideration by the ET when judging best practice; European legislation and ECJ court decisions are also relevant. Individual contracts (whether written or oral), collective bargaining agreements and common practice all form part of the contractual relationship.


National Law And Employees Working For Foreign Companies

The statutory rights under national law will apply to all individuals physically working in the UK, regardless of their nationality, and regardless of the law governing their contract of employment. National contractual law may also apply in appropriate cases.


National Law And Employees Of National Companies Working In Another Jurisdiction

The statutory rights under national law will usually apply only when the employee is physically working within the jurisdiction of the OITFET. However, contractual law may still apply in appropriate cases.


Data privacy

The General Data Protection Regulation (GDPR) and the Data Protection Act 2018 together form the framework for regulating the processing of personal data in the UK (including NI) from 25 May 2018, This legislation controls how personal information is used by organisations, businesses or the government. Everyone who collects data has to follow strict rules called ‘data protection principles’. They must make sure the information is: processed lawfully, fairly and in a transparent way, collected for written, explicit and legitimate purposes, is adequate, relevant and limited to what is necessary for the purposes for which it is processed, is accurate and kept up-to-date, kept for no longer than is absolutely necessary, and is processed in a safe and secure way. There is stronger legal protection for more sensitive information, such as: race, ethnic origin, political opinions, religious or philosophical beliefs, trade union membership, genetics, biometrics (when used for ID purposes, such as facial recognition or fingerprints), health, sex life and sexual orientation.

2

HIRING THE EMPLOYEE

Legal Requirements As To The Form Of Agreement

There is no legal requirement for a contract to be in writing. However, every employer is required to provide each employee with a written statement of particulars of certain terms of the agreement, not later than two months after the beginning of the employee’s employment (see “compulsory terms” below).


Mandatory Requirements
  • Trial Period

    • There is no legal obligation to provide trial periods, otherwise known as ‘probationary periods’, when engaging new employees, but it is common in practice to do so.

  • Hours Of Work

    • Subject to certain exceptions, there is a requirement that unless an employee opts out, he/she may only work 48 hours per week (averaged out over a 17 week period). The opt-out must comply with certain statutory requirements.

  • Special Rules For Part-time Work

    • Part-time employees have the same statutory employment rights as other employees. An individual is not required to work a specified minimum number of hours to qualify for employment rights. According to the Part-time Workers (Prevention of Less Favourable Treatment) Regulations (Northern Ireland) 2000, part-time workers must be treated at least as well as equivalent full-time workers unless there is objective justification for doing so. This means that the employer has to show that the reason is necessary to meet a genuine aim of the business. If an individual believes he or she has been discriminated against due to their part-time worker status and believes the treatment is not objectively justified then they can make a complaint of discrimination to the Industrial Tribunal.

  • Earnings

    • There is a restriction prohibiting employees from earning below a minimum hourly wage (which is reviewed annually). There are different rates depending on the age of the employee.

  • Holidays/Rest Periods

    • There is a requirement that employees must take a minimum of 5.6 weeks paid holiday per year (pro rata for part-time employees). There are also various compulsory daily and weekly rest periods and breaks which have to be observed.

  • Minimum/Maximum Age

    • There is a normal minimum age of 14 (which can be varied in certain cases), below which employees cannot work. Different rules (e.g. on working time) apply to children or young workers. There are no maximum age limits.

  • Illness/Disability

    • There are no mandatory requirements relating to illness and disability. However see ‘Harassment/Disability/Equal Pay’ below.

  • Location Of Work/Mobility

    • The employee’s normal place of work must be specified by the employer in writing. Mobility clauses can be included in the contract of employment, but they cannot be operated unreasonably. Where the job requires travel to other temporary locations, it is normal for the employer to reimburse all reasonable travel expenses.

  • Pension Plans

    • Employers are required to provide employees with information relating to pensions and pension schemes. On 1 October 2012, a new pensions auto-enrolment regime came into effect. UK employers are now required to automatically enrol certain eligible workers, “jobholders”, into a pension scheme and to pay a minimum level of contributions to the scheme. Following the implementation of the new regime, each employer has been given its own “staging date” from when it must comply with the regime. The staging date depends on the size of the employer’s PAYE scheme, with the largest PAYE schemes being required to comply first.

  • Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)

    • A range of “family-friendly” rights exist, including maternity leave and pay, paternity leave and pay, adoption leave and pay, parental leave and pay, time off for dependants and part-time working. Employees who can satisfy the appropriate qualifying conditions for the right in question can enjoy, or can apply for, their statutory rights in this regard. Different rules apply to different rights, and it is not possible to summarise all the details (most of which are set out in various Regulations) within the scope of this book.

  • Compulsory Terms

    • The terms that must be provided to the employee no later than two months after the beginning of the employee’s employment includes the following: the names of the parties; the date when employment begins and when continuous employment began; the scales and intervals of pay; the hours of work; holiday entitlement; provisions relating to sickness or injury; provisions relating to pension and pension schemes; place of work; length of notice or anticipated fixed term; job title/job description; any collective agreements which apply; certain information regarding grievance and disciplinary procedures. For employees posted abroad for more than one month, additional information is required (the currency in which remuneration is to be paid, any additional remuneration or benefits to be provided and the terms and conditions relating to return to the UK).

  • Non-Compulsory Terms

    • The employer and the employee are free to agree any other terms in addition to the compulsory provisions, provided that these terms are no less favourable than certain statutory rights.


Types Of Agreement

All employment relationships are contractual in nature, whether or not the terms have ever been reduced to writing. Contracts of employment (whether express or implied) exist in several different forms: fixed term, variable, full-time or part-time. The compulsory terms apply regardless of the type of contract contemplated. There are discrimination laws which prevent employees from being treated less favourably than other employees because of working part-time or working on a fixed term contract.


Secrecy/Confidentiality

There are rules relating to secrecy and confidentiality that are implied into the employment relationship. During the employment relationship an employee is under an implied duty to respect the confidentiality of the employer’s commercial and business information. Therefore, information that an employee is expressly told is confidential, and obviously is confidential, is protected (without express covenant) during employment. After employment, only trade secrets are protected by the implied duty of confidentiality. Trade secrets include information which is of a sufficiently high degree of confidentiality to remain confidential after employment. In addition to the implied duties, employers will often include in the employment contract an express term specifying the type of information that is a trade secret, and therefore protected, to prevent future disclosure. They may also include restrictive covenants as a means of protecting future confidentiality (see below).


Ownership of Inventions/Other Intellectual Property (IP) Rights

In the absence of any contractual terms, there are statutory provisions which will apply to determine ownership of IP rights.


Pre-Employment Considerations

There is no statutory requirement for Employers to obtain any information or documentation from prospective employees. However, every employer is obligated to follow a fair and equal process when recruiting and selecting for roles in their organisation as if they do not, prospective employees may pursue a claim for discrimination. Employers therefore must ensure that recruitment takes place in a non-discriminatory way to protect themselves from potential claims. It is common practice for employers to ask prospective employees to fill out a fair employment monitoring questionnaire prior to the commencement of employment in order to promote the equality of opportunity in employment.


Hiring Non-Nationals

Employers are obliged to ensure that all employees are entitled to work in the UK. Previously different requirements applied depending on the nationality/status of the individual concerned. In broad terms, EEA nationals (subject to certain exceptions) had an automatic entitlement to work in the UK. This has changed as a consequence of Brexit. Now EEA nationals will be treated in the same way as entrants from all other nationalities with the use of a points-based approach to entry entitlement. An employer will be liable to a civil penalty if he negligently employs someone who is not entitled to work in the UK and will commit a criminal offence if he knowingly employs such a person. Employers will often include a warranty in the employee’s employment contract that the employee is entitled to work in the UK. Although the warranty will not prevent the employer from liability, it will put some of the burden on to the employee, as the employee will be in breach of contract if he is not entitled to work in the UK.

 

Hiring Specified Categories Of Individuals

There are restrictions on who can be employed to carry out certain hazardous activities and restrictions on the types of work that vulnerable groups (e.g. children or pregnant women) can be required to undertake.


Outsourcing And/Or Sub-Contracting/Temporary Agency Work

There are specific rules relating to outsourcing, insourcing and where there is a change of outsourced service provider. All of these scenarios are regulated by the Service Provision Change (Protection of Employment) Regulations (NI) 2006 (“SPC”). In situations where SPC applies, employees carrying out the work in question automatically transfer with the work and thereby become employees of the new entity carrying out the work. The employees must generally remain on exactly the same terms of employment as they enjoyed prior to the transfer (with the exception of pension arrangements, where there are special rules which apply depending on the nature of the previous pension provisions). The one exception is where the new employer can demonstrate that there are economic, technical or organisational reasons which require changes to the workforce to be made. Perhaps surprisingly, in the absence of this defence, even changes which have been “agreed” by the employee will be voidable if they are changes which are “connected” to the transfer. There are obligations imposed on both the old and the new employers to consult with the affected employees through elected representatives, or a recognised Trade Union, prior to the transfer taking place (and financial penalties for failure to do so). The old employer is also obliged to provide liability information regarding the employees to the new employer. Any dismissal held to be “connected with the transfer” is automatically unfair unless it can be proved that it was for economic, technical or organisational reasons entailing a change in the workforce.

3

MAINTAINING THE EMPLOYEE RELATIONSHIP

Changes To The Contract

In accordance with common law contractual principles, an employer may not change any terms of the employee’s contract without the employee’s consent. Such consent may be express (by the employee agreeing to the change) or implied (by the employee continuing to work for the employer without protest for an appropriate period of time after being made aware of the change). Any change of terms to which the employee does not consent will amount to a breach of contract. If the change is a significant one which goes to the root of the contract, the employee is entitled to resign and treat the contract as at an end. In so doing, the employee may also claim that he has been constructively dismissed (and seek damages accordingly). However, depending on the change in question, the wording of the contract, the reasons for the change and the consultation carried out before the change, the employer may have a defence to a breach of contract or constructive dismissal claim.


Change In Ownership Of The Business

When there is a change in ownership of a business (except a change merely in the shareholding ownership), all employees are automatically transferred to the new employer on the same terms and conditions. These rules apply also where only a specific part of a business changes ownership. Such changes are regulated by the Transfer of Undertakings (Protection of Employment) Regulations 2006, as per mainland UK. There are obligations imposed on both the old and the new employers to consult with the affected employees though elected representatives, or a recognised Trade Union, prior to the transfer taking place (and financial penalties for failure to do so). Employees are allowed to refuse to transfer to the new employer. However, if they do they will be deemed to have resigned and will not be entitled to any compensation (unless the refusal relates to a failure to maintain the same terms and conditions after the transfer).


Social Security Contributions

Employers and employees are required to make social security contributions (rates are determined annually). Employers are also required to contribute towards allowances payable to employees during their employment. These allowances include sick pay, maternity pay and paternity pay.


Accidents At Work

Employers have a common law duty to have regard to the safety of their employees. Employers are also responsible under common law for accidents caused by the acts of their employees where the employees were acting in the course of their employment. It is compulsory for the employer to take out insurance to cover potential claims by employees in this regard.

In addition to common law duties, a number of obligations are imposed on employers through legislation (most significantly the Health and Safety at Work (Northern Ireland) Order 1978). The employer also owes specific statutory duties to members of the public who are affected by the activities of the employer, and other people’s employees working on their premises. In some instances, a breach of the employer’s statutory duties may give rise to criminal and civil liability.


Discipline And Grievance

In 2004 a statutory discipline and grievance procedure was introduced across the UK. Whilst it has been repealed in mainland UK the disciplinary procedure still has legislative effect in NI. In simple terms any dismissal in NI must follow the statutory guidelines or else it will be deemed automatically unfair. In place of the statutory grievance procedure there is now a “voluntary” code of practice, known as the Labour Relations Agency Grievance Code of Practice. Although employers are not obliged to follow its guidelines when dealing with grievance matters, a failure on the part of the either party to follow the Code of Practice can affect the level of compensation awarded (the OITFET is given a power to vary the award, at its discretion, by up to 50%). For both disciplinary and grievance matters the employer must properly investigate the matter, notify in writing the findings to the employee inviting the employee to a hearing/meeting, hold a hearing/meeting, notify in writing the decision of the employer following that hearing to the employee, and give the employee a right of appeal against the decision.


Harassment/Discrimination/Equal pay

Under the various strands of legislation employees are protected from discrimination because of sex, age, sexual orientation, pregnancy and maternity, marital status, race, religion or belief, disability and gender reassignment (the “protected characteristics”). Employees are also protected from discrimination on grounds of part-time status and fixed-term status. Discrimination may occur before the employment relationship commences (for example in advertising the job), during the employment (for example in failing to promote), on termination or even after the employment has ended (for example in writing the reference). In the case of discrimination because of a protected characteristic(s) the discrimination may be direct (for example refusing to employ a man or woman), perceived (for example where an employee is wrongly perceived to have a protected characteristic and suffers discrimination), associative (for example where an employee receives less favourable treatment because of an employee’s association with someone who has a protected characteristic) or indirect (for example by imposing a condition which puts a particular group at a particular disadvantage and which cannot be justified). However, in the case of discrimination because of pregnancy or maternity there are still no provisions for dealing with indirect discrimination.

There is no qualifying period of employment for protection from discrimination. Discrimination can lead to a claim in the OITFET and there is no limit to the damages which can be awarded. Damages are calculated so as to put the claimant in the position they would have been in if the unlawful discrimination had not taken place, plus an element for injury to feelings (which generally ranges from £900 to £45,600 depending on the severity of the discriminatory behaviour). Compensation may be awarded for personal injury if the employee can show that the discrimination caused the harm. The tribunal will not normally award punitive damages, but in rare cases, aggravated damages may be awarded to an employee if a tribunal finds that the respondent was malicious, insulting or particularly heavy handed. Harassment is a separate type of claim, but is linked with discrimination. It involves unwanted conduct that has the purpose or effect of violating a person’s dignity or creating an offensive, intimidating or hostile environment. It is unlawful if it is related to any of the protected characteristics listed above. Victimisation is also a form of discrimination that involves treating a person less favourably because (s)he has complained (or intend to complain) about discrimination, or because (s)he has given evidence in relation to another person’s complaint. An employee must not be disciplined or dismissed, or suffer reprisals from colleagues, for complaining about discrimination or harassment at work. The Equal Pay Act (NI) 1970 provides that a woman employed at an establishment in Northern Ireland is entitled to enjoy contractual terms that are as favourable as those of a male comparator in the same employment, provided the woman and the man are employed on equal work.


Compulsory Training Obligations

There are no compulsory training obligations for employees generally, but obviously some trades/professions will impose their own standards/expectations. However, employees working for employers with 250 or more employees are entitled to request time off work to undertake study or training.


Offsetting Earnings

It is possible for employers to offset earnings against employee’s debts. However, the employer may only make a deduction from the employee’s wages if it is required or permitted by a statutory or contractual provision; or the employee has given his prior written consent to the deduction.


Payments For Maternity And Disability Leave

Employees will benefit from certain payments subject to satisfying the relevant necessary requirements. To trigger statutory maternity pay entitlement, a woman must have earned a minimum amount (reviewed annually) prior to going on maternity leave, must have accrued at least 26 weeks’ continuous employment as at the end of the “qualifying week” (the 15th week before the expected week of childbirth) and must still be employed during that week.

With regard to disability leave/sickness absence, an employee will be entitled to receive statutory sick pay (the amount of which is determined by statute, and reviewed annually) from the fourth day of consecutive absence, subject to earning a minimum amount on average beforehand. The maximum entitlement is 28 weeks. If payments are made in this regard, the employer can, subject to certain conditions, deduct these from the social security contributions that they are otherwise due to pay. The Government introduced shared parental leave and shared parental pay in 2015. This allows parents to share the 50 weeks of maternity leave usually only granted to the mother (maternity leave is 52 weeks in total, however the mother has to take 2 weeks as compulsory maternity leave) and to share 37 weeks of pay.


Compulsory Insurance

Employers are required to maintain insurance under an approved policy with an authorised insurer, against liability for bodily injury or disease sustained by employees during, and arising out of, their employment. The employer must not be insured for less than £5 million in respect of any one occurrence. Employers must ensure that they display copies of the insurance certificate at every place where they carry on business so that it can be easily seen and read by employees.


Absence For Military Or Public Service Duties

Employees are entitled to take leave for military or public service duties.


Works Councils or Trade Unions

An employer may voluntarily agree to recognise a Trade Union. By virtue of the Trade Union and Labour Relations (NI) Order 1995 a Trade Union can demand recognition if a sufficient proportion of the workforce desire it. To do so, a Trade Union must firstly make a written request to the employer and if not successful, may make an application to the Central Arbitration Committee. It is important to note that irrespective of the outcome, no further applications may be made by that Trade Union or a substantially similar unit for a period of three years. An employee who is a member of a Trade Union has certain rights in relation to his employer. For example: dismissal for membership of, or for taking part in the activities of, an independent Trade Union is automatically unfair for the purposes of unfair dismissal and higher awards of compensation may, in some circumstances, be made; action short of dismissal against an employee or subjecting an employee to a detriment for membership of, or for taking part in the activities of, an independent Trade Union gives the employee the right to complain to a tribunal which may award him or her compensation; a Trade Union member has the right to time off work without pay to take part in Trade Union activities. In addition, a Trade Union official has the right to take time off with pay for Trade Union duties. Under the Employment Rights (NI) Order 1996 an employer has a duty to consult with appropriate representatives of any employees who may be affected where the employer is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less.


Employees’ Right To Strike

There is no general right for employees to strike. However, certain immunities will be granted in respect of industrial action if there is a Trade Union involved, provided the action is conducted strictly in accordance with statutory requirements (e.g. conducting a ballot beforehand).


Employees On Strike

Employers can still dismiss employees on strike if the strike was not properly authorised. Even if the strike was validly authorised, after a certain period the employer can dismiss employees. Other courses of action may also be open to the employer depending on the circumstances (e.g. withholding pay, seeking an injunction, claiming damages for financial loss).


Employers’ Responsibility For Actions Of Their Employees

Employers are responsible for the acts of their employees, except where the employee was acting wholly outside the course of his employment.

4

FIRING THE EMPLOYEE

Procedures For Terminating the Agreement

In all cases the termination of an employment contract must comply with the terms of the contract, ie must give the notice required under the contract. If the employee has 12 months continuous service of employment, or is dismissed summarily without notice being given after 51 weeks or more, (s)he has statutory unfair dismissal protection. In most cases, there are certain minimum steps which must be followed before termination to avoid the termination amounting to an unfair dismissal. An employer must be able to demonstrate a “potentially fair” reason for dismissal. Whether a dismissal for the reason(s) identified is nevertheless unfair depends on the tribunal’s view as to the reasonableness of the employers’ actions. The statutory dismissal procedure must be followed or else the dismissal will be deemed automatically unfair. An employee has the right to be re-engaged or re-instated only in rare cases.


Instant Dismissal

The employer can terminate an employment contract by instant dismissal if the employee is guilty of gross misconduct and/or has committed a fundamental breach of contract, but even in this instance the employer must still follow the minimum statutory steps for dismissal (see discipline and grievance above) and must still be able to satisfy the test of fairness to avoid liability for unfair dismissal.


Employee's Resignation

The agreement can generally always be terminated by the employee’s resignation. Normally the contract will stipulate the notice period required.


Termination On Notice

The parties can terminate the employment contract on notice, but there may still be liability for unfair dismissal. There are statutory minimum periods of notice which will override the contractual notice period. The minimum period of notice is dependent on the period of continuous employment. Under the Employment Rights (NI) Order 1996, if the period of continuous employment is less than one year, not less than 1 week’s notice should be given. If the employee’s period of continuous employment is more than two years but less than twelve, the notice should be not less than one week for each year of continuous employment. If the employee’s period of continuous employment is twelve years or more, the notice period should not be less than twelve weeks.


Termination By Reason Of The Employee's Age

A person’s age now amounts to unlawful direct age discrimination unless the employer can objectively justify it or can establish that being below that age is an “occupational requirement”.


Automatic Termination In Cases Of Force Majeure

The contract will be deemed “frustrated” where intervening events make its continued performance impossible, although instances are rare. Death of the employee or complete destruction of the workplace are examples.


Collective Dismissals

Collective consultation obligations are triggered when an employer is proposing to dismiss, as redundant, 20 or more employees at one establishment, within a 90 day period. "Establishment" means the local unit or entity to which workers are assigned to carry out their duties. The employer must inform the Department for the Economy of any proposal to make 20 or more employees redundant, by way of a “HR1 Form”. Where less than 100 redundancies are proposed, the consultation period must begin at least 30 days before the first dismissal takes effect. Where 100 or more redundancies are proposed, consultation must begin at least 90 days before the dismissal takes effect. If an employer fails to carry out a collective redundancy consultation, affected employees may claim a protective award from an Industrial Tribunal. The protective award can be up to a maximum of 90 days pay.


Termination By Parties’ Agreement

The parties are entirely free to agree termination on any grounds they desire. Where the parties agree to terminate the employment, they are not required to obtain the courts’ or regulatory body’s approval before the termination is effective, but any termination agreement between the parties in which the employee purports to give up certain statutory legal rights will only be binding if it complies with certain requirements. By virtue of the Employment Rights (NI) Order 1996, the agreement will be void (with regard to giving up the statutory rights, if not the termination of employment) unless it is in writing, relates to identified claims, and records that the employee has received independent legal advice from a suitably qualified person on the nature and effect of the agreement. The agreement must identify the employee’s adviser by name.


Directors Or Other Senior Officers

There are no special rules which relate to the termination of a director’s or other senior officer’s employment, but in the case of a statutory director (or other company officer), termination of employment does not automatically bring to an end the directorship. Separate steps will be required to bring the directorship to an end (pursuant to the company’s articles of association).


Special Rules For Categories Of Employee

There are no categories of employee to whom special rules apply, but certain categories (e.g. pregnant women) benefit from more generous rules for protection from unfair dismissal. Apprentices under common law and under certain statutes have additional protections against redundancy and dismissal.


Whistleblower Laws

The Public Interest Disclosure (Northern Ireland) Order 1998 together with the Employment Rights (NI) Order 1996 and the The Employment Act (Northern Ireland) 2016, protects those who report serious wrongdoing in the workplace from dismissal or detrimental treatment as a result of their whistleblowing. In order to receive the statutory protection that is under that legislation, there must be a qualifying disclosure, and such a disclosure is allowed in the following six circumstances: Where criminal activity or a breach of civil law has occurred, is occurring, or is likely to occur. That a person has failed, is failing, or is likely to comply with any legal obligation to which he is subject. Or, where there is a miscarriage of justice which is going to occur, that has occurred, or may occur. Also, issues around health and safety, if that has been compromised, or is likely to be compromised. Or, where the environment has been, or is likely to be, damaged. And finally, where there is information indicating that evidence of one of those circumstances has happened, is likely to be concealed, or it has been destroyed. For the disclosure to be protected, the worker must reasonably believe the information and any allegation it contains are substantially true and is in the public interest to disclose and reasonably believe they are making the disclosure to the relevant person or body. It makes no difference whether the circumstances leading to the breach are inside or outside of NI, as long as either NI law or the law of another jurisdiction prohibits it.


Specific Rules For Companies in Financial Difficulties

There are special rules which apply if a company is in financial difficulty. If a company goes into liquidation, all employees are automatically dismissed. Any claims by the employees against the company are as unsecured creditors - though the debts are viewed as ‘preferential` up to certain limits. By contrast, if a company goes into administration, the administrator has 14 days to decide whether or not to “adopt” the employees’ employment contracts. If the employee works for longer than 14 days, the administrator loses the right to terminate the employment contract. A further factor to consider is when the assets (including employees) of a company in administration are packaged up and are sold to another company. In this situation, the employees will be normally be transferred in accordance with the TUPE rules, as described above.


Special Rules For Garden Leave

There is no statutory right for an employer to place an employee on garden leave. Employers should not place an employee on garden leave unless there is an express clause in the contract permitting this. Placing an employee on garden leave without this could amount to a fundamental change in the employee’s contract. If the employee is not in agreement with this change, they may have an employment tribunal claim for constructive dismissal.


Restricting Future Activities

Generally clauses that attempt to restrict the future activities of an employee are contrary to public policy and therefore unenforceable, but the courts will uphold restrictions if they are drafted sufficiently narrowly. Essentially such restrictions must be designed to protect a ‘legitimate business interest’ and they should be no wider than is necessary to protect those interests. Further they must be clear and reasonable in time and area. Typical clauses include those designed to restrict an employee from joining a competitor (or setting up in competition), from soliciting business from/dealing with certain customers or from enticing other employees to leave. Each case is considered on its own facts, so what might be considered appropriate for one individual may be held by a court to be unreasonable for another – even if the individuals work for the same employer.


Severance Payments

Normal contractual principles apply to severance payments included in the contract. In cases of redundancy and unfair dismissal, there are statutory payments which are calculated by reference to the employee’s age, length of service and salary (subject to certain statutory caps, reviewed annually). In cases of unfair dismissal only, the severance payment will include an additional compensatory element (damages) to reflect the losses suffered by the individual, but this is again subject to a cap (currently £89,669, reviewed annually). Compensation in discrimination and whistleblowing claims is, however, uncapped.


Special Tax Provisions And Severance Payments

Contractual payments are subject to tax in the normal way. The first £30,000 of non-contractual severance payments is generally tax-free subject to certain conditions; there are certain other tax concessions for benefits in kind provided on termination (e.g. provision of outplacement services). All other non-contractual severance payments will be subject to tax.


Allowances Payable To Employees After Termination

Employers are not required to contribute to any allowances payable to employees after termination.


Time Limits For Claims Following Termination

Most claims to the OITFET (including contractual claims) must be lodged within 3 months of the event or last in a series of linked events. Claims for redundancy payments or claims for equal pay must generally be made within 6 months. However, contractual claims (including a claim for equal pay, as confirmed by the Supreme Court) brought in the civil courts can be issued up to 6 years after the event.

5

GENERAL

Specific Matters Which Are Important Or Unique To This Jurisdiction

An employer is obliged to monitor its workforce in respect of gender and religion and provide yearly submissions to the Equality Commission Northern Ireland



Search by:
Need more information?
Contact a Contributing Author:
Jan Cunningham
Millar McCall Wylie LLP
Northern Ireland


Disclaimer:

© 2021, Millar McCall Wylie LLP. All rights reserved by Millar McCall Wylie LLP as author and the owner of the copyright in this chapter. Millar McCall Wylie LLP has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this Guide.

The information in the How to Hire and Fire Guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: June 2021