Employment Myths

EACH YEAR, THERE is a continuing growth in employment legislation, together with legal rulings on the application of current law.

It is, therefore, not surprising that employers become confused and fail to understand how they should be treating their employees. Failing to follow the correct procedures for employee misconduct, minimum pay and even basic employment contracts, is putting employers at risk of potentially costly claims.

All businesses looking to stay within the law and save money should go back to basics and address their fundamental employment practices, especially when it comes to the hiring and firing of staff.

Croner research has shown the following to be the most common employment myths, compiled from telephone calls to its employment helplines:

"Smaller firms are exempt from paying staff the national minimum wage."
HM Revenue and Customs recently reported this as one of the top excuses of companies not paying the national minimum wage (NMW). However, the NMW must be paid to all employees, regardless of the size of the company. Enforcement teams are in place to identify companies not meeting these regulations.

"A monthly-paid employee’s period of notice is a month."
This is a widely-held misconception, as the notice to be given by the employer is the longer of that shown in the contract or that laid down in legislation. The Employment Rights Act 1996 provides minimum legal notice periods that have to be given by the employer as follows:

• More than one month, but less than two years of service: one week.
• Two years or more service: one week per complete year of service, to a maximum of 12 weeks, irrespective of how frequently the employee is paid.

The employee, however, only has to give one week’s notice, regardless of the number of year’s service, unless a longer period has been agreed in the contract.

"There is no contract of employment, as there is nothing in writing."
A contract does not have to be written down and can take the form of a verbal agreement, after which the employer is legally required to honour certain employment rights. Some of the terms of the contract may well appear in offer letters or other correspondence, and may have also resulted from verbal agreements given at interview or at meetings both before and after employment commences.

"An employer can sack someone on the spot without following any form of procedure, providing the employee is guilty of gross misconduct."
This is highly risky, leaving the employer open to an unfair dismissal claim if the employee has more than a year’s service, and a possible breach of contract claim for those with under a year’s service, if contractual procedures are not followed. Even where an employee is caught red handed stealing from their employer, the employer must follow a fair procedure before dismissing the employee and they should be given an opportunity to explain themselves at a properly-conducted meeting before decisions are made.

"An employee with less than one year’s service can be dismissed for any reason."
It is true that an employee with less than a year’s service has fewer employment rights than someone who has a year’s service or more, in that they cannot make a general unfair dismissal claim. However, there are more than 20 employment issues where an employee with less than one year’s service can make an unfair dismissal complaint. These include all forms of discrimination (including age), and other issues, such as dismissal for exerting a statutory right, or trade union membership.

The myths we have identified here are “perceived knowledge” in many companies. Most employers are not flouting the law deliberately, but it is far better they consider their employment practices now, rather than make mistakes that could cost them dearly later.