Chapter 6

Question 1

What does the employment contract look like?

Answer 1

1) agreement (offer + acceptance)
2) Consideration (work/pay)
3) Intention (as a business relationship, legal relations are assumed)
4) Can be oral or written (however, some employment details must be provided in writing)

Question 2

Employment contract: Terms

Answer 2

Whether written or oral, there will be a mixture of express and implied terms

Question 3

Employment contract: express terms

Answer 3

1) Some written particulars by law
2) A change in contractual terms usually requires agreement of both parties
3) An express term in an employment contract may enable an employer to make reasonable changes

Question 4

Employment contract: implied terms

Answer 4

Implied terms are implied from various agreements:
1) the courts (common law duties)
2) Legislations (minimum wage law)
3) Custom and practice (a relativelt minor source with recent increase in legislation)
4) Collective agreements (between employer and trade unions)

Question 5

Employment contract: employee handbooks/workplace policies

Answer 5

Employee handbooks/workplace policies are generally not considered to be terms of employment contract

BUT

A workplace policy which is underpinned by legislation may form an implied term of the contract if it is therefore implied by statute

An employee failing to meet a requirement of a workplace policy may equate to failure to obey a reasonable order by an employer

Question 6

Contract of employment - common law duties - employER

Answer 6

Overriding duty of mutual trust and confidence, including:
 Taking reasonable care of employees
 Provide a safe system of working
 Pay employees
 Indemnify employee against expenses and losses incurred in course of employment
 Take care of health and safety
 Select fit and competent fellow workers
 To provide work where employee paid by reference to work done

No duty to protect employee’s property, provide references, provide smoking facilities or provide
flexible working (though employee’s request for flexible working must be seriously considered).

Question 7

Contract of employment - common law duties - employEE

Answer 7

Fundamental duty of faithful service, including:

 Not to compete with employer
 Competence to do job
 Obedience
 Account for money and property received during course of employment
 Exercise reasonable skill and care
 Not to delegate duties without permission

Question 8

Contract of employment - common law duties - employERv - NOT a duty

Answer 8

No duty to:
1) protect employee’s property
2) provide references,
3) provide smoking facilities
4) provide flexible working
-though employee’s request for flexible working must be seriously considered

Question 9

What are the ways ‘termination of employment’ can occur?

Answer 9

1) Notice
2) Dismissal
3) Wrongful Dismissal
4) Unfair Dismissal
6) Constructive dismissal
7) Summary Dismissal
5) Redundancy

Question 10

Termination of Employment: Notice

Answer 10

Most employment contracts state a minimum notice to be given to the employee/employer to end the
contract

Most employment contracts are terminated without breach, eg by proper notice given by
employee or expiry of fixed-term contract

Some jurisdictions have legally required minimum notice periods for employee (eg number of
weeks/period of service).

Question 11

Termination of Employment: Dismissal

Answer 11

A serious breach of an employment contract term will result in the injured part being able to terminate the contract and bring an action for breach of contract.

Question 12

Termination of Employment: What are examples of serious breaches by an employee?

Answer 12

Misconduct
Lack of Qualification
Theft
Statutory restriction from doing the job
Failing to carry out a reasonable order by employer

Question 13

What is wrongful dismissal?

Answer 13

An employer may breach the contract by dismissing employee without giving sufficient notice or failing to follow proper grievance procedures

Question 14

What is a remedy for wrongful dismissal

Answer 14

The employee can claim damages for the breach.
Damages are usually calculated by reference to difference between actual and contractual notice period.

Note that the dismissal itself will continue here, the damages relate to the loss of payment in the
notice period.

There is not a right to regain the employment.

Question 15

What is Unfair dismissal?

Answer 15

This is where the law deems the employer to have acted unfairly in terminating employment.

Question 16

How do employers avoid claims of unfair dismissal?

Answer 16

-They must act reasonably.
-giving reasons for dismissal in writing.

What constitutes fairness will depend to some extent on the size and resources of the employer

Question 16

What is automatically unfair dismissal?

Answer 16

It is likely that the law will state reasons for dismissal that are automatically unfair

e,g, pregnancy, whistleblowing, compulsory redundancy, membership of a trade union.

There are other reasons which are potentially unfair, which will be determined if a legal case is brought

Question 17

What are remedies for unfair dismissal?

Answer 17

Such remedies will be determined by the law of individual jurisdiction, but generally there is an
emphasis on attempting restoration rather than merely compensation in these cases.

1) Conciliation
2) Reinstatement
3) Re-engagement
4) Compensation

Question 18

What is Concilliation? (unfair dismissal?

Answer 18

• effectively mediation
  It may be possible to resolve the issue using early conciliation. If not, then although possible legal
  alternatives exist as set out below, the relationship is likely to be broken and compensation may be
  the only real solution.

Question 19

What is reinstatement (unfair dismissal)?

Answer 19

A requirement for an employer to take the employee back on identical terms as those on which he
was previously employed. (Discretionary and rarely used.)

Question 20

What is re-engagement?

Answer 20

A requirement on the employer to take the employee back but in a different capacity. (Discretionary
and rarely used.)

Question 21

What is compensation

Answer 21

There is likely to be a degree of discretion given, based on the facts of the case in terms of the level of
compensation given to an unfairly dismissed employee.

-Basic award. A statutory defined maximum linked to age and service. Treated as statutory redundancy.
-Compensatory award. Based on actual net earnings, including benefits.
-Punitive additional award. Available if employer fails to comply with order of reinstatement or re-engagement.

Question 22

When is a dismissal classified as redundancy?

Answer 22

1) The employer has ceased or intends to cease carrying on the business, or the local establishment of the business, in which the employee has been employed
2) The requirements of that business for employees to carry on the work done by the employee have ceased or diminished, or are expected to

Question 23

Redundancy: background

Answer 23

if done unfairly may constitute an unfair dismissal as discussed above.
would be entitled to a redundancy payment as set out in the law.

There are likely to be many legal rules around redundancy, including the need to consult with employees and trade unions if relevant.

Question 24

Redundancy: Examples

Answer 24

If the employee’s contract requires them to work at places other than their present place of employment and the employer relies on this, then this is not classified as redundancy.

If A’s job is abolished and A is moved into B’s job and B is dismissed, that is a case for redundancy although B’s job continues.

If the employer reorganises their business or alters their methods so that the same work has to be done by different means which are beyond the capacity of the employee, it is not a case for redundancy.

Question 25

What is Constructive dismissal?

Answer 25

Sometimes an employee may feel they have no option but to resign because of their treatment by their employer (ie when the employer has breached a vital term of the contract).

Question 26

If constructive dismissal has occured, what can the employee do?

Answer 26

The employee can claim for unfair dismissal, by showing that:

1) Breach was serious
(e.g. major change in duties, cut in remuneration, failure to follow prescribed disciplinary procedure, failure to provide suitable working environment)

2) Employee left because of the breach.

3) Employee has not waived the breach, e.g. by delaying resignation for too long (affirms the contract change).

Failure to promote employee is not constructive dismissal.

Question 27

Policies: Basic background

Answer 27

an employer is likely to have a number of workplace policies which will to a greater and lesser extent be underpinned by statute law in different areas.

Question 27

What is a summary dismissal

Answer 27

Sometimes an employer may feel they have no option but to dismiss someone on the spot, without notice, for example for gross misconduct. This is called summary dismissal. Employer is not liable for breach of contract (no wrongful dismissal), though amounts due to date must be paid.

Question 28

Policies: health and safety

Answer 28

In many jurisdictions, the law will state that it is the duty of employers, as far as it is practicable, to
ensure the health, safety and welfare of employees

Employees may also have implied duties with regard to health and safety, for instance to take
reasonable care of their own safety and that of colleagues.

Question 29

Policies: health and safety examples

Answer 29

 Insure against risks
 Employer always liable for injury caused by faulty equipment

Question 30

Policies: Discrimination

Answer 30

Most jurisdictions have law making it unlawful to discriminate on protected characteristics

The employer may defend a claim on the basis that there is a genuine occupational requirement to discriminate as a proportionate means of achieving a legitimate aim

Diversity policy seeks to embrace difference and reap the benefits of it within an organisation.

Question 31

Policies: Discrimination - what are examples of protected characteristics?

Answer 31

age, sex, sexual orientation, gender reassignment, marriage or civil partnership, pregnancy
and maternity, race, religion or belief, or disability

Question 32

Policies - discrimination - what is direct and indirect discrimination

Answer 32

discrimination may be direct (actively discriminating against individuals) or indirect
(imposing requirements that disadvantage one group over another).
Employers may have to make reasonable adjustments to accommodate disabled employees, taking
into account practicality and cost.

Question 33

Policies - whistleblowing

Answer 33

Information may need to be disclosed in the public interest, where the law or ethical rules have been broken by an organisation.

Question 34

Policies - whistleblowing - qualifying disclosures

Answer 34

Must reasonably believe that malpractice is present or will occur,
e.g. crime, danger to health orenvironment

Question 35

Policies - whistleblowing - protected disclosures

Answer 35

For a disclosure to be protected the whistleblower must:
 Make the disclosure in good faith
 Reasonably believe that the information is true
 Reasonably believe that he is making the disclosure to the right person, i.e.
– Internally first
– To a legal adviser
– To a government minister if the individual is a public sector worker
– To a professional body or potentially the media

Question 36

policies: corruption

Answer 36

Some jurisdictions have legislation, and many enterprises may have policies, in relation to the abuse of
trust for personal gain,
e.g.:
 Conflict of interest: personal stake in a corporate transaction
 Insider dealing
 Facilitation payments: payments to induce officials to undertake particular routine functions
 Bribery

Question 37

policies: Corruption - bribery

Answer 37

UK Bribery Act 2010 offences:

 bribing a person to induce or reward them to perform a relevant function improperly

 requesting, or accepting a bribe as a reward for performing a relevant function improperly

 using a bribe to influence a foreign official to gain a business advantage

 failing to prevent bribery within a commercial organisation

Facilitation payments are a form of bribe.

Question 38

Define money laundering

Answer 38

Converting the proceeds of crime into ‘clean’ money.

Money laundering is the process by which criminal proceeds are converted to legitimate funds, to conceal their criminal origins.

Question 39

What are the three phases of money laundering

Answer 39

Placement, layering, integration

Placement
Money from crime is first placed in the financial system, e.g. cash paid into a bank account.

Layering
Obscuring the origin of funds by passing them through complex transactions.

Integration
The funds finally reappear as legitimate money or assets. They may be used to buy shares or property

Question 40

How must financial professionals react to ensure they are anti - money laundering report

Answer 40

required to identify clients and report transactions of a suspicious nature

 ID must be collected from new clients are relating to large transactions.
 Firms must appoint a money laundering reporting officer (MLRO)

Accountants should exercise professional scepticism with regard to suspicious activity.

Question 41

What must you do if you suspect money laundering

Answer 41

Where money laundering is reasonably suspected, an employee must make an internal report to the MLRO.
There may then be an external report, a Suspicious Activity Report (SAR) to the authorities (in the UK, the National Crime Agency).
It is an offence to fail to disclose suspected money laundering where a responsibility to disclose exists.

Question 42

Policies: data protection

Answer 42

Data protection is an increasingly heavily legislated area

 kept no longer than is necessary
 kept secure, e.g. encrypted
 not transferred to other countries without adequate protection

Question 43

Policies: social media

Answer 43

This is an area where employers are increasingly imposing policies, as the impact of social media use
increasingly impacts the workplace and can blur the lines between work and home.

Question 44

Whistleblowing protected from dismissal if:

Answer 44

An employee who makes a qualifying disclosure is protected from dismissal, assuming they:

 Follow the disclosure provisions of the employer.
 Assess legal obligations, public impact, seriousness, reliability of information, any reasons for
non-disclosure.
 Reveal information of the right type
 Reveal information to the right person and in the right way