Employment law implications of the recovery: XpertHR’s top 10

The downturn has led to significant restructuring in many organisations, from job cuts to changes to working hours. As the economy gets back on track, here is XpertHR‘s Q&A guide to ensure you don’t succumb to any legal pitfalls, plus links to a wealth of related online guidelines and resources.

Q1 Your organisation my have been forced to cut jobs during the recession, but consider a time when things are picking up, demand is increasing and you’re creating new jobs. What does this mean for the employees who you recently made redundant – are you required to offer the new jobs to the employees who lost theirs?

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A While it’s good practice for employers to keep in touch with employees dismissed for redundancy and notify them of vacancies that arise, there is no requirement on them to do so. There is also no duty on employers to offer employment to an employee who was made redundant from a position to which they are now recruiting.

Employers should be cautious when deciding to recruit to a position soon after a redundancy, as this could raise doubts about whether or not the dismissal was due to a genuine redundancy situation. However, a dismissal can be a fair redundancy dismissal even when it becomes necessary to recruit to the position soon after the redundancy has been effected. What employers need to be able to do is to show that there was a genuine reason for redundancy at the time of the dismissal (and a fair procedure was followed), but that the situation has since changed because of, for example, an upturn in demand.

Click on these related redundancy questions to find the answers on XpertHR:

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Q2 A change for the better in business or economic circumstances may also mean that you’ve given notice of redundancy to employees but subsequently wish to withdraw it. Is this possible?

A Once notice of redundancy has been issued to an employee, it is legally binding and cannot be unilaterally withdrawn by the employer, even if the employee is still working out their notice period. If the employer subsequently wishes to withdraw the notice because of a change in business or economic circumstances, the express consent of the employee is needed.

That said, s.141 of the Employment Rights Act 1996 provides that an employee who is dismissed by reason of redundancy loses the right to a statutory redundancy payment if they unreasonably refuse an offer of suitable alternative employment. The offer must be made before the end of the employee’s employment under the previous contract and must take effect either immediately on the end of the employment under the previous contract or after an interval of not more than four weeks. The employment must either be on the same terms and conditions as the previous contract or be suitable alternative employment in relation to the employee.

If, after notice of redundancy has been issued, the employer makes an offer to the employee of their old job back on the same terms and conditions of employment, but the employee turns it down, the employer can argue that no statutory redundancy payment is due because the employee has unreasonably refused an offer of suitable alternative employment. The suitability of an offer of alternative employment is an objective matter for assessment, whereas the issue of the reasonableness of an employee’s refusal has to be assessed on an individual basis by reference to the employee’s personal circumstances. If, for example, during the notice period the employee has already secured alternative employment, it is likely that an employment tribunal will hold that the employee’s refusal was reasonable in the circumstances. On the other hand, refusing to accept a job back simply to obtain a redundancy payment is likely to be deemed to be unreasonable.

Model letter

Model letter withdrawing notice of redundancy because of a change in circumstances:

I am writing to you further to my letter dated [ ] advising you of the termination of your employment by reason of redundancy. As you know, you are currently working out your notice period and your employment with the Company is due to terminate on [ ].

I am now pleased to advise you that, since you were issued with notice of termination of employment, there has been a significant change of circumstances, as a result of which it is no longer necessary for the Company to make you redundant. [Set out details of the change of circumstances.]

The Company is now in a position to be able to offer to continue to employ you in your current role on your existing terms and conditions of employment and with your continuity of service preserved. I would therefore like you to agree to the Company withdrawing your notice of redundancy. If you are willing to agree to this, you would then continue in employment with the Company and you will not be dismissed by reason of redundancy. Please signify your agreement to withdrawal of your notice of redundancy by signing, dating and returning a copy of this letter to [name] by no later than [ ]. If you are not, however, willing to agree to withdrawal of your notice of redundancy, please let me have your detailed reasons as soon as possible and, in any event, by no later than [ ]. I must advise you at this stage that if you unreasonably refuse an offer by the Company to renew your contract of employment, you may lose your right to a statutory redundancy payment.

I look forward to hearing from you. In the meantime, if there are any particular aspects of this letter that you would like to discuss, please do not hesitate to contact me.

Yours sincerely
[ ]

More information
The XpertHR policies and documents service provides hundreds of model policies, contract clauses, letters and forms. Each document comes complete with notes and guidance on how and when it should be used, along with advance warning of any relevant future developments, such as forthcoming legislation.


Q3 Increased demand for their product or service in an upturn will be a welcome event for employers. But you may find that redundancies you were forced to make during the recession have left you short-staffed just when you need to be making the most of an improvement in the economy. The solution may be to ask your staff to work longer hours than usual – but is there a maximum number of hours that employees can be required to work?

A Yes. Under the Working Time Regulations 1998, adult workers cannot be required to work more than an average of 48 hours a week, calculated over a reference period of 17 consecutive weeks, subject to certain exemptions. The 17-week period may be increased to 26 weeks for workers whose work keeps them away from home for long periods and for some other groups of workers. The 17-week period may also be extended to up to 52 weeks under the terms of a collective agreement or workforce agreement that applies to particular workers or groups of workers.

An adult worker may, however, agree to work more than an average of 48 hours a week so long as they do so voluntarily and in writing without any pressure from the employer. The opt-out agreement may relate to a specific period or apply indefinitely. Subject to any provision in the agreement providing for a different period of notice, it is terminable by the worker giving no less than seven days’ notice to the employer. Where a different notice period is agreed, this should not exceed three months.

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Q4 With your organisation in a state of flux during the recession, you may have been using agency temps to retain flexibility, taking advantage of the fact that they can be obtained at short notice and used for anything from a couple of hours’ work to several months’. You may find that a temp has proved exceptionally competent and, with an increase in headcount, want to take them on as a permanent member of staff – do you have to pay a temp-to-perm fee?

A Employment businesses supplying temporary staff to client employers can charge a transfer fee where a temporary worker accepts an offer of employment made by a client employer. However, the contract between the employment business and the client employer must contain a term giving the hirer the option, instead of paying the transfer fee, to choose to continue hiring the worker for a specified period of time, after which the worker will transfer to its employment with no fee payable. There is no limit on this extended period of hire.

XpertHR temp-to-perm transfer fee worked example:

Issue: Robert works as a temp for the employment agency. He started working for the end-user on Monday 6 April 2009. On Monday 20 April 2009, the end-user decides that it wishes to appoint Robert as a permanent employee. The contract between the employment agency and the end-user states that a transfer fee, equivalent to 15% of Robert’s first year’s salary with the end-user, is payable. However, the contract does not provide for an extended period of hire.

Action: The end-user should make an offer of permanent employment to Robert. It does not have to pay a transfer fee to the employment agency.

Explanation: Temp-to-perm transfer fees cannot be enforced against an end-user unless the contract between the parties provides that, instead of a transfer fee, the end-user may by notice to the employment agency elect for an extended hire period, of such length as is agreed and specified in the contract. After the extended hire period, the temp may then transfer without charge (reg.10(1) of the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (SI 2003/3319)).

Given that the contract in this scenario contains no provision for an extended hire period, no fee is payable.

More information
XpertHR’s worked examples guide employers step by step through the detailed processes necessary to ensure compliance with the law in areas ranging from statutory redundancy payments to the information and consultation legislation.

A client employer can also avoid paying a transfer fee once a certain period of time has elapsed after the end of a worker’s assignment with it. This period is 14 weeks from the start of the assignment or eight weeks from the end of the assignment, whichever ends later. After this period the employer is free to hire the individual directly.

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Q5 While many employees are content to sit out a recession feeling fortunate just to have a job, once things begin to look up, you may find yourself in receipt of a flurry of resignations as employees take advantage of a better job market. Many employees quite happily work out their notice period, but where does it leave you if someone indicates their intention not to do so?

A An employee who resigns and refuses to work the full notice period provided for in their contract of employment will technically be acting in breach of contract. The only occasion where an employee is entitled to resign without any notice is in circumstances where the employer has acted in a way that represents a fundamental breach of contract.

Courts and tribunals do not have the authority to compel an employee to work for an employer, either by injunction or by an order for specific performance. The employer may, however, be able to seek an injunction to stop the employee going to work for a competitor during the outstanding part of the notice period.

One course of action that the employer could in theory take would be to sue the employee for damages for breach of contract. In practice, however, this is not usually worthwhile financially. To succeed, the employer would have to show that the business had suffered a quantifiable loss as a direct result of the employee’s leaving without working the full notice period. This might be possible where the employer had brought in a temporary employee at a higher rate of pay to cover the employee’s work during the notice period, or been forced to pay other employees to work overtime. Even then, a court would, in calculating the amount of loss, offset these costs against the value of the employee’s salary that had been saved. Unfortunately for employers, the likelihood of success in recovering damages in court is, therefore, very limited.

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Q6 Departing employees may also be taking advantage of new growth in the economy to take their skills and experience off to a better-paid job with a competitor, or even to set up in business in competition with your organisation. What tactics can you use to protect your interests in these circumstances?

A Employers can use restrictive covenants to seek to restrict employees’ freedom to work for a competitor or to compete with their employer on their own behalf. A restrictive covenant is an agreement (usually a clause within a contract) between an employer and employee that restrains the employee from carrying out certain actions. They are primarily concerned with protecting the employer’s interests when the employment ceased. The actions that covenants commonly seek to prevent a former employee carrying out include: competing with the employer, taking the employer’s trade secrets and soliciting the employer’s clients and/or staff.

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Q7 You may have had to enforce a recruitment freeze or instigate redundancies during the recession, but as the economic circumstances change, you may need to think once again about attracting the best candidates for your vacancies. So how can you ensure that you’re offering a competitive salary for a particular role?

A It’s important for employers to benchmark salaries against real pay data from other organisations, and the only way to do this is to subscribe to a reputable salary survey. Although many salary survey providers sell read-only access to pay data, organisations that participate in the survey are able to use the data more effectively, both because they understand the process of matching their jobs to the job levels and functions in the survey, and because it then becomes possible for the organisation to compare its salary data in much more depth with the data from the survey as a whole.

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Q8 Of course, recruiting in an upturn is not always plain sailing – a recruitment exercise can involve poor references, unsatisfactory performance during the probationary period and employees who accept a job and then change their mind! If the latter happens, do you have any redress?

A Once a job has been offered and accepted, a binding contract of employment comes into force. If the individual who has accepted the offer subsequently changes their mind and declines to take up the post, this will represent a breach of contract on their part. In theory the employer could sue the individual for damages for breach of contract.

In practice, however, it will not usually be worthwhile for the employer to sue the individual for breach of contract as this action would in all likelihood cost more than any potential damages the court might award to the employer. The only circumstances where such a course of action would be financially viable would be where the individual’s change of mind created a substantial quantifiable financial loss for the employer. However, even in these circumstances, the court would take into account that, if the individual had started work for the employer, they would have been entitled lawfully to give a period of notice to terminate the contract.

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Q9 Other employers will also find themselves in a position to recruit in an upturn and this may mean that the partners and spouses of your workforce who may have been taking responsibility for childcare or elder-care issues during a period of unemployment or part-time work may be returning to full-time employment. This may have a knock-on effect on your organisation, with increased requests for flexible working. Are you up to date with the eligibility requirements?

A The right to request flexible working was extended in April 2009. Under the current rules, to be eligible to request flexible working an employee must be the parent, adoptive parent, foster parent, guardian or special guardian of a child under the age of 17 (18 in the case of a disabled child), or the spouse, civil partner or live-in partner of such a person, and have, or expect to have, responsibility for the child. The right is also available to employees who care for, or expect to care for, an adult aged 18 or over who is their spouse, civil partner or live-in partner, a relative, or someone living at the same address as the employee. The purpose in making the application must be to enable the employee to care for the child or adult in question. The employee must have 26 weeks’ continuous service with the employer at the date of the application.

Click on these related right to request flexible working questions to find the answers on XpertHR:

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