4) Flexibility and Precarious Work PDF

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Flexibility and Precarious Work Lecture: Flexibility and Precarious Work Overview of the Lecture 1) 2) 3) 4) 5) 6)

Variation of the terms of the contract Changing the content of the job Flexibility clause Mutuality of obligation and umbrella contracts Continuity of employment Conversion of fixed-term contracts

Flexibility  Functional flexibility  Numerical flexibility  Wage flexibility  Flexibility that the employers want Precarious Work      

Casual work, ‘as required’ Zero hours (contracts) The Gig economy – one off events Temporary agency workers Fractured workplace Casual work as required e.g. over Christmas – people called when needed – standby situation

1. Variation of Terms of the Contract of Employment General Principle  Contracts of employment, like other contracts, can only be varied by agreement of both parties  Therefore unilateral variation by either party without consent of the other is legally ineffective

Consent by Conduct  Employee may consent to variation if continues working as normal without protest at the variation  If employee works but continues to protest and brings legal proceedings, the employee has not consented to the variation and may enforce original agreement: Rigby v Ferodo ‘30. The fundamental question is this: is the employee's conduct, by continuing to work, only referable to his having accepted the new terms imposed by the employer? That may sometimes be the case. For example, if an employer varies the contractual terms by, for example, changing the wage or perhaps altering job duties and the employees go along with that without protest, then in those circumstances it may be possible to infer that they have by their conduct after a period of time accepted the change in terms and conditions. If they reject the change they must either refuse to implement it or make it plain that, by acceding to it, they are doing so without prejudice to their contractual rights. But sometimes the alleged variation does not require any response from the employee at all. In

such a case if the employee does nothing, his conduct is entirely consistent with the original contract continuing; it is not only referable to his having accepted the new terms. Accordingly, he cannot be taken to have accepted the variation by conduct.’ (emphasis added) Solectron Scotland v Roper [2004] IRLR 4 (EAT) Abrahall v Nottingham City Council (1)  In order to avoid redundancies, employer imposes wage cuts. Trade union objects but fails to get support for industrial action. Employees continue to work as normal. Question: after two years have they agreed to the new lower wage rates? ‘It could not in these circumstances be said that the employees had unequivocally by their conduct shifted their position and accepted the change in terms.’ (Elias LJ). Abrahall v Nottingham City Council(2)  ‘[87] First and foremost, the inference must arise unequivocally. If the conduct of the employee in continuing to work is reasonably capable of a different explanation it cannot be treated as constituting acceptance of the new terms: that is why Elias J in Solectron used the phrase 'only referable to'. That is simply an application of ordinary principles of the law of contract (and also of waiver/estoppel). It is not right to infer that an employee has agreed to a significant diminution in his or her rights unless their conduct, viewed objectively, clearly evinces an intention to do so. To put it another way, the employees should have the benefit of any (reasonable) doubt’ (Underhill LJ) Abrahall v Nottingham City Council(3)  It may be said that the employee should never be held to have accepted a variation simply by working without protest under the new terms without more. After all, a party can bring a claim for breach of contract within the limitation period without having to notify the other party that he objects to the breach, and why should this be different? I think that the answer lies in the fact that the employment relationship is typically a continuing relationship based on good faith, and exceptionally in that context it might be appropriate to infer that a failure to complain about a proposed variation of the contract for the future may be taken as agreement to that variation which prevents it constituting a breach. (Elias LJ

Variation by Collective Agreement  If terms of contract of employment say that they are set by a relevant collective agreement, a change in the collective agreement will change the contract of employment  Individual consent of employee usually inferred from long-standing practice of automatic incorporation  Employee protest can negative consent

2. Changing the Job  If the employer does not alter the terms of the contract, but merely issues new instructions or rules, employees are obliged to comply,(Cresswell v Board of Inland Revenue), subject only to the question of whether manner of change is a breach of implied term of mutual trust and confidence(French v Barclays Bank plc)

3. Flexibility Clause    

Express terms of contract may permit variation of terms by employer. If (clear) express clause (Bateman v ASDA Stores [2010] IRLR 370 (EAT)) subject to implied term of trust and confidence can insert a term which says employer can change the contract at their discretion

‘31…. However, in the employment field an employer or for that matter an employee can reserve the ability to change a particular aspect of the contract unilaterally by notifying the other party as part of the contract that this is the situation. However, clear language is required to reserve to one party an unusual power of this sort. In addition,

the court is unlikely to favour an interpretation which does more than enable a party to vary contractual provisions with which that party is required to comply. If, therefore, the provisions of the code which the council were seeking to amend in this case were of a contractual nature, then they could well be capable of unilateral variation as the counsel contends. In relation to the provisions as to appeals the position would be likely to be different. To apply a power of unilateral variation to the rights which an employee is given under this part of the code could produce an unreasonable result and the court in construing a contract of employment will seek to avoid such a result.’ (emphasis added) Wandsworth LBC v D’Silva and another [1998] IRLR 193 (CA)

Bateman v ASDA Stores  9330 employees refused to accept a new pay scale (‘Top Rate’) and claimed deductions from wages  The ‘Colleague Handbook’: ASDA reserved the right to review, revise, amend or replace the contents of this handbook, and introduce new policies from time to tome reflecting the changing needs of the business.  ASDA argued successfully that the handbook was a term of the contract and that it was sufficiently transparent and unambiguous to permit unilateral wage changes. Claim for Constructive Unfair Dismissal  Employee may resign as a way of objecting to change and bring a claim for constructive unfair dismissal  There is a constructive dismissal if the employer has broken a fundamental term of the contract  However, the courts usually find it reasonable and fair for employers to insist upon changes to terms of employment that are needed for the purposes of the business Hollister v NFU

4. ‘MUTUALITY OF OBLIGATION’ and Umbrella Contracts Intermittent Employment  Have a job one day, maybe not the next etc - casual workers or zero hour workers  Many workers only work when required by an employer, as in the case of casual workers or zero hours workers  Examples are waiters for banquets in Kelly v Trusthouse Forte, homeworking clothing workers in Nethermere v Gardiner, or tour guides in Carmichael v National Power Continuous employment  Many statutory employment rights have a qualifying period of continuous employment, such as (now) 2 years for a claim for unfair dismissal, or (formerly) 1 month for a written statement of particulars.  Is there continuous employment that covers both the period of working and the gaps in between? (ie an umbrella contract) ‘At the first level there is an exchange of work for remuneration. At the second level there is an exchange of mutual promises for future performance. The second level - the promise to employ and to be employed - provides the arrangement with its stability and continuity as a contract. The promise to employ and to be employed may be of short duration or may be terminable at short notice; but they still form an integral and most important part of the contract. They are the mutual undertakings to maintain the employment relationship in being which are inherent in any contract of employment so called’(emphasis added) M Freedland, The Contract of Employment (Clarendon Press, 1976 at 20)

Two Issues about Umbrella Contracts  Was there a long-term contract at all ?  If so, was this long-term contract a contract of employment or some other kind of contract? (the question here is to be considered next week, but is essentially whether it is a contract of employment, a contract for services, or some other kind of option contract).

Was there a long-term contract?    

Orthodox contract law says that there must be an agreement supported by consideration When the worker is working, there is clearly a contract consisting of work for pay. Question is about the gaps between work: is there a contract then? For consideration the employer must promise some work, and the employee must promise to perform it.

‘41. I would, for my part, accept that the mutual obligations required to found a global contract of employment need not necessarily and in every case consist of obligations to provide and perform work. To take one obvious example, an obligation by the one party to accept and do work if offered and an obligation on the other party to pay a retainer during such periods as work was not offered would in my opinion, be likely to suffice. In my judgment, however, as I have already indicated, the authorities require us to hold that some mutuality of obligation is required to found a global contract of employment.’ Clark v Oxfordshire Health Authority [1998] IRLR 125 (CA) Carmichael v National Power    

Casual as required contract agreed. CA says that there is an implied obligation to offer work and for employees to accept work (unless sick etc). HL says express agreement negative any such implied obligations (except in morals) If employer had removed Carmichael from rosta for irrational or discriminatory reasons, would there have been any legal claim available?

Statutory extension of continuity of employment  ERA s. 212(1) Any week during the whole or part of which an employee’s relations with his employer government by a contract of employment counts in computing the employee’s period of employment.  Cornwall CC v Prater [2006] IRLR 362 (CA) home tutor for 10 years

5. Conversion of Fixed-term contracts of employment  Fixed-Term Employees (Prevention of Less Favourable Treatment Regulations 2002 Successive fixed-term contracts Reg 8. (1) This regulation applies where— (a)an employee is employed under a contract purporting to be a fixed-term contract, and (b)the contract mentioned in sub-paragraph (a) has previously been renewed, or the employee has previously been employed on a fixed-term contract before the start of the contract mentioned in subparagraph (a). (2) Where this regulation applies then, with effect from the date specified in paragraph (3), the provision of the contract mentioned in paragraph (1)(a) that restricts the duration of the contract shall be of no effect, and the employee shall be a permanent employee, if— (a)the employee has been continuously employed under the contract mentioned in paragraph 1(a), or under that contract taken with a previous fixed-term contract, for a period of four years or more, and (b)the employment of the employee under a fixed-term contract was not justified on objective grounds— (i)where the contract mentioned in paragraph (1)(a) has been renewed, at the time when it was last renewed; (ii)where that contract has not been renewed, at the time when it was entered into…. Concluding Issues  Do the law do enough to protect employees against adverse unilateral variations in their terms of employment? What else might be done?  Does the law do enough to protect workers from accepting precarious work packages that exclude them from employment rights? Taylor review proposed higher minimum wage and a contract with minimum hours after a year’s service.

CEM Chapter 5. Flexibility and Precarious Work  Under the general law of contract, employer and employee are bound by the terms of their initial agreement  Unless otherwise provided in the terms of the contract, the law assumes these terms will last indefinitely until contract is terminated  Contract protects against opportunism and unfair conduct The Need for Flexibility  in order to adapt to changing market confitions and new technologjs, employers must be flexible to adapt and stay a successful business  IT provide money-saving, efficient and priducitve working methods  More effective service to customers  Reudeces labour costs  Flexibility required from employees if wages, hours, bonuses and contracts are subject to change  Three types of flexibility: o Functional: workforce must operate new technologies, work variable hours, take on new duties and transfer to new locations  Key management stratedy for improvement of pridctivity in 1980s  Everyone must be able to do an array of jobs e.g. on the tills, stacking shelves, scanning o Numeric: aims to permit the employer to decrease labour costs by reducing the size of the workforce or the number of hours worked in response to changes in demand  Increasing or decreasing umber of people on the job  Achieved by dismissing some of the workforce  Can use temporary short term or part time work  Employer may hire low-skilled workers temporarily when required o Wage flexibility: varies rates of pay through mechanisms such as bonuses and performance-related pay, in order to reflect market conditions, profitiabiltiy and levels of productivity  Altering shift system means employer may avoid higher wage costs associated with over tiem and night-shifts th  First half of 20 century  full time indefinite contract of employment performed in a seoarate wokplace becam dominant practice  prevalence coincided with an industrialised economy using mass production techniques  Importance of service sector in IK and pressures from global competition means full-time indefinite contract has declined alternatives to full-time = part time, working at home, only being paid for the hours worked  Alternatives to full time employment may suit needs of workers by permitting to care for dependents by working part time or for student who study, most people take non-standard jobs because they are the only type of work available o Workers with poor skills, training experience and those suffering from discrimination in the labour market have little option but to take short-term jobs  Focus on the legal conseuqences of the dynamic flexibility that can be obtained by the employer’s power to change the terms of the contract of employment or content of the job  To what extent should the law protect employees from unwelcome changes to their contract or jobs  To what extent should legal regulation orevent the use of precarious work packages to provide empolyoees with intermittent wages and tenuous job security  Consideration fo dismissals for economic reasons – later topic Unilateral Variation of Terms  General contractual prniicple is that parties are ntitled to insist upn their original agreement made at the fomraiton of a contract of employment until such time as, by agreement, the parties ubstitute a new contract or vary the terms of the contract for consideration  An employer cannot simply vary terms of employment unilaterally, no matter how much notice is given

 If the change does not require an alteration in the terms for the contract, an employee must rely on the implied terms or statue for protection  An employee is entitled to treat the unilateral variation in contract as a breach o Choice of employee: disrecard the proposed variation and protest against the change and affirm and enforce the existing contract or the employee may resign and claim compensation for dismissal Enforcement of the Contract  If an employee continues to work normally despite unilateral variation of contract by the m,ployer, tehere is a risk that this behaviour may be regarded as acceptance by conduct of new terms  Employee, to avoid risk, needs to make it clear that he or she continues to work normally only under protest and still expects the wmployer to honour the original agreement  Employee may seek judicial declaration to clarify elgal position - can also claim any shortfall in wages or other benefits resulting from the unilateral variation by the employer  HL in Rigby v Ferodo Ltd: o Plaintiff was a lathe operator who had worked for the employer for 20 years o Gave him statutory entitlement to 12 weeks’ notice of dismissal o Severe financial pressure in business meant employer deciede that it has no option but to reduce wages by 5% to remain in business o Management sough to reach agreement with unions but paintitff’s union made no agreement but to refrain roms trike action o Employer imposed wage reduction o R continued to work  after more than a year, plaintiff successfully claimed the difference in wages on the basis of a breach in contract  F’s reduction = fundamental breach in contract o Action would not bring contract to end unless emplpoyee hd accepted the repudiation of the contract, nor had the employer terminates the contract by notice o Shortfall of wages could be claimed  Difficult for employees to protest against change when they continue to work even when making it clear  A worker can bring an ordinary common law claim for breach if there is a unilateral wage reduction  Using ERA 1996 s.13 can also protect employee statutorily o Employee can claim at ET  Unless new contract is determined, any reduction will be seen as a dedc=uction form wages which the employee can recover o Bruce v Wiggins Teape Ltd:  Employees successfullt challenged the employer’s unilateral withdrawal of a shift bonus as a deduction from wages o where there is a reduction fo normal working days as a result of a wage cut, there may be no deduction as employee is not entitled under the contract to fill payment in an event of a 3 or 4 day week  employee can claim shortfall by claiming statutory guarantee payment from employer o guarantee payment consists of minimum remuneration during days of lay-off – max figure is £23.50 – well below min. wafe Claim for unfair dismissal  refusal by employee to agree to a wage cut or other changes to terms of contract may lead to eventual termination of CoE  employer may dismiss the employee for a refusal to agree to the new contract  employee may resign rather than put up with the changes  constructive dismissal  despite breach by employer, employee’s chances of winning at tribunal are slim  at ET for unfair dismissal, it must be asked, o has the employer established a ‘substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held’?  employer cannot rely on normal reasons for dismissal that relate to personal conduct of employee such as misconduct  employer must point to business need combined with refusal of conduct  Hollister v National Farmers’ Union:

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Applicantwas dismissed when he refused to accept a new contract of employment, which offered improved remuneration in some respects but less advantageous pension scheme  Lord Denning: provided the employer had a sound, good business reason for reorgansisation and variation, refusal to agree could amount to a substantial reason for dismissal o He rejected the view that the business reason for variation must satisfy a test of necessity in the sense th...