Employment Glossary of terms Mini guide
Contact BLM London Andrew McDonald 020 7457 3569 andrew.mcdonald@blm-law.com BLM Manchester Michael Parr 0161 838 6771 michael.parr@blm-law.com This glossary has been prepared to provide ease of reference for some of the common terms used by employment professionals. Words or abbreviations appearing in bold are defined elsewhere within the glossary.
A ACAS The Advisory Conciliation and Arbitration Service. This is a government-funded body which assists parties in relation to the resolution of employment disputes and gives guidance on industrial relations issues. ACAS conciliation officer This is an employee of ACAS who will be appointed to employment tribunal cases and will liaise with the representatives of the claimant and respondent to ascertain whether or not settlement is possible. If settlement is arrived at, then he or she will put the same into effect using a procedure involving the preparation of a COT3 form for signature by both parties. Additional award Where an employer fails to comply with an order for reinstatement or re-engagement, an employee will receive compensation. In addition, an employment tribunal can order that an employee receives an additional award which is made up of between 26 to 52 weeks pay. Additional maternity leave See maternity leave. Adoption leave The parents of newly adopted children are entitled to take leave at the time of adoption. The periods of adoption leave are the same as those for maternity leave. Pay similar to statutory maternity pay is also payable. Age discrimination It is unlawful to discriminate against workers on the grounds of their age (whether young or old). Age is a protected characteristic. Apprenticeship This is a type of employment relationship whereby the employee earns a lower rate of pay (subject to the national minimum wage) whilst learning the skills of his trade. An apprentice has the same rights as other employees but can claim additional damages if his apprenticeship is brought to an early end. Automatic unfair dismissal In certain circumstances, statute provides that dismissal Berrymans Lace Mawer page 1
for an unlawful reason is automatically unfair. Examples include dismissals for whistleblowing or where TUPE applies. B Basic award See compensation. C Case management discussion This is a hearing before an employment tribunal which is intended to deal with matters of procedure and management of the case. It is usually conducted by an employment judge sitting alone. Claimant This is the party (usually an employee) who is making an application to the employment tribunal. Claim form See ET1. Code of Practice Many areas of employment law are covered by codes of practice issued by ACAS and government and nongovernmental bodies such as the Health and Safety Executive and the Equality and Human Rights Commission. Examples include codes on disciplinary practice and procedure, balloting and discrimination matters. These do not have the force of law given to statutes and regulations but employees and employers will be expected to take steps to comply with them. Collective agreement This is the term used to describe agreements made between employers and trade unions to govern matters such as pay, working conditions and other aspects of the employment relationship. Common law Although much of the law relating to employment issues is to be found in statutes and statutory regulations, the underlying principles of law are, in essence, judge made law which is referred to as common law. Compromise agreement This is a written agreement, which satisfies certain page 2 Berrymans Lace Mawer
specified conditions under the ERA and other statutes. It is used to settle claims brought by employees whether or not the same have been the subject of an application to the employment tribunal. Once the agreement has been signed and completed, it is in full and final settlement of the employee s claim. The employee cannot later present a claim to the employment tribunal. The important ingredient is that the employee must have received legal advice from an independent lawyer who must confirm that he or she has given such advice. Compensation When an employment tribunal hears a claim for unfair dismissal it has three possible remedies for a successful claimant. One of these remedies is monetary compensation. This compensation is calculated on the basis of two awards. A basic award is purely an arithmetical calculation which is based upon the number of complete years service, the age of the employee and the amount of a week s pay which is subject to a maximum. This calculation is identical to the statutory figure for a redundancy payment. The second award is a compensatory award which is intended to compensate the claimant for loss of earnings. The compensatory award is usually calculated by reference to the period of unemployment up to the date of the tribunal hearing and thereafter as the best estimate that the tribunal can give as to the likely period of time the employee will be out of work. The basic award is calculated on gross pay and the compensatory award on the basis of net pay. Compensatory award See compensation. Conciliation Conciliation is conducted by the ACAS conciliation officer. Confidential information An employee is bound by common law duties of confidentiality in respect of highly confidential information such as trade secrets. For less confidential information, restrictions can only be imposed by contract (usually the contract of employment). Breach of duties of confidentiality can result in an employer obtaining an injunction and/or damages. Berrymans Lace Mawer page 3
Constructive dismissal This arises in a situation where the employee claims that the conduct of the employer was such as to be so seriously in breach of the employment relationship that it entitles the employee to resign and make a claim for unfair dismissal. Continuous employment Employee rights are often only acquired after being employed for a qualifying period and financial entitlement will be governed by the length of continuous employment. Rules apply for the calculation of periods in which employment is considered to be continuous. Contributory fault Even though an employment tribunal may find that an employee was unfairly dismissed, it may also make a finding of contributory fault on the part of the employee and reduce the award of compensation accordingly. Contract of employment This term is normally used to describe the written document which represents the contract between the employer and employee. However, as a matter of law all employees are employed under contracts of employment even though they are not written. The level of complexity of a contract of employment will usually depend upon the seniority of the relevant employee. There is no need for a written contract of employment to be prepared although a statement of employment particulars must be supplied under the ERA within two months of the employee commencing employment. Costs Costs are not normally awarded in an employment tribunal case other than where one party s behaviour is deemed by the tribunal to be unreasonable or where a party pursues a claim which is without merit. COT3 The ACAS form signed by the claimant and respondent to conclude terms of settlement in employment tribunal proceedings. D Damages Damages describes the monetary award payable to an employee in a successful wrongful dismissal claim or to page 4 Berrymans Lace Mawer
an employer who successfully claims that an employee or former employee has acted in breach of his or her contract of employment. Default judgment An employment tribunal may enter a default judgment where no response has been received to proceedings and the time limit for lodging the ET3 has expired. Disability discrimination Disability is a protected characteristic and employees who are disabled or who care for disabled dependants have protection under the Equality Act 2010. Disability A person has a disability if he or she has a physical or mental impairment which has a substantial (more than minor or trivial) and long term (has lasted or is likely to last 12 months or more) adverse impact on their ability to carry out day-to-day activities (such as shopping, cleaning, driving or walking). Discrimination Discrimination on the basis of a person s protected characteristic in relation to employment and recruitment is unlawful. There are various forms of discrimination. The Equality Act 2010 governs this complex area of law. No qualifying period applies and protection from unlawful discrimination applies before, during and after employment. E EAT The Employment Appeals Tribunal. Appeals against employment tribunal decisions are heard by the EAT sitting in London. Appeals are usually only considered on points of law. Effective date of termination This is the date on which the employment relationship actually comes to an end. This can be a difficult date to identify but is an important one for the calculation of time limits for presentation of an ET1. Employment judge The employment tribunal is headed by an employment judge who usually sits with two lay members. Employment judges without lay members sit on procedural and Berrymans Lace Mawer page 5
preliminary hearings and final hearings of straightforward cases. The Equality Act 2010 This statute now contains the basic framework for protection from all forms of discrimination relating to protected characteristics. ET1 This is the number for the prescribed form of claim form to an employment tribunal. All claims to the employment tribunal must be commenced by lodging such forms. ET3 This is the number for the prescribed form of response form to be lodged by respondents to answer the claim form lodged with an employment tribunal. Employment tribunal This is the main forum for employment law claims arising under statute. It has jurisdiction to deal with other issues relating to employment matters other than dismissal or discrimination, for example, it can make determinations as to statements of employment particulars. Its jurisdiction has been extended to cover certain contractual claims relating to employment and is therefore in addition to the jurisdiction of the civil courts in limited circumstances. Equal Pay The Equality Act 2010 sets out the basic framework to ensure equality of treatment in remuneration between the sexes. Equality and Human Rights Commission This commission was set up to deal with the work of the previous commissions with responsibility for preventing discrimination in its various forms. ERA The Employment Rights Act 1996. This is the general statutory code covering employment rights. Ex-gratia payment This is a severance payment paid on the termination of employment and the term is used to describe monies that are paid over and above the employee s contractual or statutory entitlements. page 6 Berrymans Lace Mawer
F Fixed term contract It is open to the employer and the employee to agree that a fixed-term contract should be entered into which stipulates that after the expiry of the agreed term the contract will terminate. Regulations provide for fixed-term employees to have protections similar to those of permanent employees. The expiry of a fixed-term contract is a dismissal and may give the employee the right to make a claim for unfair dismissal. Flexible working Certain employees with responsibilities for child-care or dependants are given the right to apply for flexible working. An employer is required to consider applications made by eligible employees for the right to change their conditions or terms of employment so that the hours or days that they are required to work are more flexible. There is a procedure for applying for and considering flexible working. A decision to allow flexible working is permanent. An employee can make one request per year for changes to their working pattern. G Garden leave The expression used to describe the period after notice of termination but before the effective date of termination during which an employee remains employed but is required by his or her employer not to attend work or to contact customers. It is usually only enforceable where there is an express contractual term. Grievance procedure Tribunals expect employers to have a procedure to provide a formal mechanism for employees to raise concerns about the workplace or about the way they (or a colleague) are being treated. Guidance is provided by the relevant ACAS Code of Practice. Gross misconduct Various matters can constitute gross misconduct. These can best be described as serious behaviour inconsistent with a continuation of the employment relationship. Gross misconduct will usually justify summary dismissal. Berrymans Lace Mawer page 7
H Harassment The Equality Act 2010 makes harassment unlawful where it relates to the victim s protected characteristic. The employer will usually have vicarious liability for the acts of his or her employees who bully colleagues in work time. Serious or persistent bullying would normally constitute a breach of the employment contract entitling the employee to resign and claim constructive dismissal (see also Protection from Harassment Act 1997). Holidays The WTR provide that all employees are entitled to 28 days paid annual holiday, pro-rata for part-time employees. I Industrial action Various statutes govern employees' rights to take various forms of industrial action. Generally speaking, if action is preceded by a ballot of workers, the industrial action is likely to be lawful. IRLR The Industrial Relations Law Reports. These are the main source of reporting of decided cases of the EAT, Court of Appeal and the Supreme Court (formerly the House of Lords) in relation to employment cases. J Judgment A final determination of the employment tribunal proceedings or of a particular issue in those proceedings. It may include an award of compensation, a declaration or recommendation and orders for costs. L Lay off Unless expressly stipulated in the contract of employment an employer will usually be in breach of contract if it lays off employees leaving itself open to a claim for constructive dismissal and/or damages. Even if contractually entitled to lay off employees, those employees may be entitled to resign and claim a redundancy payment. page 8 Berrymans Lace Mawer
Lay members Lay members sit alongside employment judges at some employment tribunal hearings. They are not legally qualified and their role on the panel of employment tribunals is similar to that of magistrates in criminal cases. Legal aid Legal aid is not normally available to a claimant for representation at an employment tribunal. M Majrowski See Protection from Harassment Act 1997. Maternity leave Pregnant women are entitled to take maternity leave for stipulated periods before and after the birth of a child. In order to take advantage of maternity leave entitlements the employee must comply with notification requirements laid down by statute. All pregnant women are entitled to 26 weeks ordinary maternity leave followed by a further period of 26 weeks additional maternity leave. Maximum award The statutory maximum limit for the compensatory award is reviewed each year and details of the current figure can be found on government websites. Maximum week s pay In relation to the basic award and redundancy payment a maximum for a week s pay is reviewed each year and details of the current figure can be found on government websites. Misconduct This is behaviour by an employee which is considered to be unreasonable and unacceptable. It may be of a minor nature or in serious cases be classified as gross misconduct. Mitigation In assessing compensation for unfair dismissal or damages for wrongful dismissal, the tribunal or court must have regard to the employee s attempts to mitigate his or her loss by seeking alternative employment. Failure to use reasonable efforts to mitigate may result in compensation or damages being reduced. Berrymans Lace Mawer page 9
N National minimum wage This is a figure set annually by the government as a minimum hourly sum that employees must be paid. Different sums apply for employees depending on their age. These figures are reviewed each year. Remedies are available to employees not paid the national minimum wage and financial and criminal sanctions against employers (including directors personally) can be imposed by the criminal courts. Night worker Special rules apply to the hours that can be worked by employees working during night time. These are found in the WTR. Notice Other than in cases of gross misconduct, contracts of employment must be terminated by one of the parties giving notice to the other. The written contract or statement of employment particulars will normally stipulate the period of notice that must be given and, in default of any such stipulation, the ERA makes provision for minimum periods of notice to be implied into contracts. O Ordinary maternity leave See maternity leave. P Parental leave The parents of children born or adopted on or after 15 December 1999 are entitled to take up to 13 weeks unpaid leave per child until the child s 5th birthday or for adopted children during the first five years of adoption up to the age of 18 years. Parents of a child who is in receipt of disability living allowance will be able to take their leave until the child is 18 years old. Regulations govern the length of periods of leave and the notice required to be given. Parental payments Various payments must be made to mothers, fathers and adoptive parents arising from their taking parental leave. page 10 Berrymans Lace Mawer
Part-time employees Part-time employees may not be treated less favourably than comparable full-time employees, unless it is necessary and appropriate to achieve a legitimate business objective. Paternity leave Fathers and partners (including same-sex and civil partners) are entitled to two weeks of paid leave following the birth of their children (or the placement of an adoptive child). They can also be entitled to additional leave of up to 26 weeks provided that their partner has returned to work. Payment in lieu of notice Provided the contract of employment allows it, the employer may dispense with an employee s services immediately by making a payment in lieu of notice. This must be paid net of income tax and other deductions and must be paid immediately upon termination. Pre-hearing review It is open to either party to an employment tribunal case to seek a pre-hearing review to deal with preliminary issues. It also enables a party to strike out a claim or defence where either is completely without merit. Financial conditions can be imposed on claimants whose cases appear to be without merit. It is also open to the tribunal to determine issues such as jurisdiction (ie, is the claimant allowed to bring his or her claim before the tribunal) and matters relating to time limits. Protection from Harassment Act 1997 In the Majrowski decision the House of Lords (now the Supreme Court) decided that employees can claim compensation for harassment at work under this statute where the employer has vicarious liability. Protected characteristic The Equality Act 2010 identifies those characteristics of an individual which are protected from discrimination. These are age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation. Protective award This is an award made where an employee is dismissed by reason of redundancy but has not been given adequate notification or the opportunity for consultation prior to dismissal. Berrymans Lace Mawer page 11
Q Qualifying period The rights of an employee under the ERA and various other statutes are sometimes limited in operation to those employees who have been employed for a qualifying period. For example, anybody who commenced employment on or after 6 April 2012 needs to have a qualifying period of two years (less one week) to issue a claim for unfair dismissal. During the qualifying period the employee must have had continuous employment. Statutes relating to discrimination because of a protected characteristic and for trade union activities do not require the employee to have worked for a qualifying period. R Racial discrimination Race is a protected characteristic and it is unlawful to discriminate on grounds of a person s colour, nationality or ethnic or national origins. Redundancy A redundancy situation exists where the employer has a reduced need for employees to carry out a particular type of work in a particular place. Dismissal by reason of redundancy is a potentially fair reason. Redundancy payment This is a payment that must be made to employees who have two years continuous employment and are made redundant. It is calculated by reference to a statutory formula. The calculation of a redundancy payment is identical to the calculation of a basic award. The calculation is based upon the number of complete years service, the age of the employee and the amount of a week s pay which is subject to a maximum. By virtue of a contract of employment an employee may be entitled to an enhanced payment. Re-engagement This is one of the remedies that can be ordered by an employment tribunal after a finding of unfair dismissal. Re-engagement is the re-employment of the claimant by the respondent in a different position to the one held prior to dismissal (see reinstatement). page 12 Berrymans Lace Mawer
Regional employment judge The employment tribunal has various regional offices in the main cities and each regional office has a senior employment judge holding this title. Regional secretary This is the senior administrative officer of the regional centres for employment tribunals. Regulations These are found in statutory instruments which are passed by Parliament or the relevant minister. They have the force of law. Reinstatement This is the third remedy available to the employment tribunal. It involves the re-employment of the claimant by the respondent in the same job that he or she carried out prior to dismissal. When ordering reinstatement or reengagement, an employment tribunal will also order that the employer compensate the employee to reflect any loss of earnings and benefits during the time away from work. The employment tribunal will specify any rights and privileges that must be restored to the employee and a date for reinstatement or re-engagement. Respondent This is the party (usually an employer although in discrimination cases it can be an individual) who is defending an application made to the employment tribunal. Response form See ET3. Restrictive covenant This is an agreement between an employee and employer which governs the freedom of an employee after termination of employment. At common law such restrictions will only be enforceable if reasonable. Care should therefore be taken in drafting and imposing such covenants. If held to be too restrictive or unreasonable they will be unenforceable in their entirety. Restrictive covenants are enforced by injunctions granted in the civil courts. Berrymans Lace Mawer page 13
S Severance payment This is a general term used to describe any form of payment to an employee on termination of employment. Sex discrimination Sex is a protected characteristic and refers to the gender of a person. It is unlawful to discriminate because of a person s sex. Sick pay It is open to the employer to provide sick pay for an employee at his or her normal rate of pay or some other rate. This payment is above the amount of SSP. The employer will often specify the period in which this contractual payment will be made. In the absence of a contractual provision there is no obligation to pay sick pay to employees unable to work for medical reasons. SSP Statutory Sick Pay. This is a statutory entitlement and is a payment by the employer in respect of periods of absence for medical reasons. There are statutory maximums for the amount payable and the duration of entitlement. Statement of employment particulars The ERA requires certain general particulars of employment to be set out in a written document and supplied to the employee not later than two months from the commencement of employment. An employee can receive compensation if he or she succeeds in other types of claim before an employment tribunal and the statement of employment particulars had not been provided. Statutory maternity pay Statute stipulates the amount of pay that must be received by pregnant women during ordinary and additional maternity leave. It is currently 90% of salary for the first six weeks and for a further 20 weeks the lower of 90% of salary and a weekly sum fixed by regulations. Entitlement is subject to a qualifying period of 26 weeks continuous employment and earnings being above the limit set by regulations. Details of the amounts set by regulations can be found on government websites. Summary dismissal This is dismissal without notice and will usually only be page 14 Berrymans Lace Mawer
justified in cases of gross misconduct. T Temporary employees There is no statutory definition of a temporary employee. So called temporary employees will be protected immediately upon commencement of employment by various regulations or statutes relating to discrimination and will later acquire rights of permanent employees if they work for the qualifying period. Time limits Time limits are imposed by the employment tribunal in relation to various issues but the most important matter relates to the time in which an ET1 must be lodged by a claimant. This is usually three months from the effective date of termination of employment. Failure to comply with this time limit will, save in the most exceptional circumstances, prevent a claimant from pursuing his or her claim. TUPE The Transfer of Undertakings (Protection of Employment) Regulations 2006. These regulations impose strict limits on the dismissal and treatment of employees at or about the time of a transfer of a business from one party to another or where there has been a change of service provider under a contract. They also stipulate that employees have continuous employment from the old employer to the new employer and are to continue on the same terms and conditions as before. U Unfair dismissal This is a dismissal which is deemed unlawful by virtue of the ERA. V Vicarious liability At common law and by certain statutes an employer is liable for the acts or omissions of his employees if the same arise during their employment. This is particularly relevant to discrimination, harassment or bullying by other employees. Berrymans Lace Mawer page 15
W Wasted costs An employment tribunal can make a wasted costs order where it considers that a party s representative has caused another party to incur costs as a result of any improper, unreasonable or negligent act or omission on the part of a representative. Week s pay The gross amount of pay an employee receives for working one week. The figure will be relevant for the purposes of calculating certain sums payable and will be subject to a statutory maximum. Where pay varies from week to week the ERA provides a mechanism for calculating an average figure. Whistleblowing It is an automatically unfair dismissal if an employee is dismissed for making a protected disclosure as defined by the ERA. WTR Working Time Regulations 1998. These are the regulations which control various working time matters including the maximum number of working hours in a particular week, statutory minimum periods for annual leave, rest periods and restrictions on night work. Written reasons for dismissal An employee who has worked for the qualifying period is entitled to receive written reasons for dismissal within 14 days of making a request. A failure to provide reasons can result in an award of compensation by an employment tribunal. Wrongful dismissal This is a dismissal which is unlawful by reference to the employee s contract of employment. For example, in a case where it is not one of gross misconduct there is wrongful dismissal if the employer dismisses without giving the requisite period of notice or without making a payment in lieu of notice. page 16 Berrymans Lace Mawer
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