Although the number of Employment Tribunal claims has reduced over the last couple of years with the advent of the need to pay a fee for the issue of an Employment Tribunal claim, hiring and firing staff still poses significant challenges for employers in the property sector. In addition to the potential for claims because an employee believes that they have been discriminated against because they have a “protected characteristic” (as to which see below), there is also the considerable expense in management time and effort that can be expended if, after the first few months of employment, it becomes quite clear that you have recruited someone who is unsuitable or unable to carry out the role.
All employees have legal rights. The main employment risks are discrimination, the right to work in the UK and hiring the wrong person.”
Even if you recruit the right person, there is always the possibility, at some point in the future, of having to let staff go, whether that be due to acts of misconduct, poor performance or the need to make redundancies and, in each of these cases, estate agents, like all employees, have legal rights that need to be observed. In addition, as the market picks up, many larger businesses are looking to acquire some of their smaller competitors and that gives rise to the question as to what happens to the selling businesses’ employees. In this article, we look at all three of those scenarios and, hopefully, provide some useful tips and pointers for employers in the property sector.
The 3 main risk areas when employing staff are:
- the risk of discrimination claims;
- checking that an employee actually has the right to work in the UK; and
- hiring the wrong person.
Turning first to discrimination issues; broadly speaking it is unlawful to discriminate against a person either by not offering them employment or as to the terms of which you offer them employment because they have a “protected characteristic”. These are: age; disability; gender reassignment; marriage and civil partnership; pregnancy and maternity; race, religion or belief; sex and sexual orientation. So, for example, if you ask a female candidate whether she intends to have a family and then decline to offer her employment, she might think that she has been discriminated against because she is a woman and you are worried that she will shortly get pregnant and go off on maternity leave. If she brought a claim and was able to show that she was suitably qualified for the job, the burden of proof would be on the estate agency to show a non-discriminatory reason as to why she was not recruited. This type of problem can be avoided by asking a standard set of questions to each candidate and making sure the questions simply relate to the job that you are recruiting for and the candidate’s suitability (in terms of qualifications, experience etc.).
The second issue relates to making sure that you do not inadvertently employ someone who does not have the right to work in the UK. In very broad terms, British nationals and nationals of EU countries have an unfettered right to work in the UK. Everyone else will be subject to some form of immigration control, which may affect their ability to work lawfully in the UK. Not only do agencies have to be satisfied that someone has the right to work lawfully in the UK, but you also have to retain proof of this, such as retaining a copy of their passport or other documentation confirming that they have the right to work in the UK. It is extremely important not to fall foul of this because employing someone who does not have the right to work in the UK is a criminal offence and is subject to significant financial penalties.
The third potential area is simply getting the wrong person for the job. This can be avoided by being clear as to the nature of the job which you are actually advertising for, making sure that they have the necessary skills for the job, making an early assessment as to whether they are the right person for the job and taking early action to bring the relationship to an end if they are not.
Firing staff comes with an equal number of problems. Bear in mind that every employee who has at least two years continuous employment with an employer has the right not to be unfairly dismissed. That is not the right not to be dismissed; just that if there has to be a dismissal, then there needs to be a permissible reason for the dismissal and the agency needs to go through a fair process in achieving that dismissal.
Don’t underestimate the value of a good paper trail. It’s not about what you did; it’s about what you can prove you did.”
Also, bear in mind that if the reason for the dismissal is discriminatory or because the dismissal is for an inadmissible reason (such as the fact that the agent is a “whistle-blower”) they do not need to have two years’ service to bring a claim.
The permissible reasons for dismissal are; conduct, capability (and that can mean capability in terms of competence and performance as well as whether someone is medically capable of doing the job), redundancy and contravention of a statue (for example, if someone loses the right to work in the UK). There is also a fifth category of dismissals; some other substantial reason or “SOSR”. SOSR is not a reason in itself, it is just a residual category for reasons that don’t fit within the other categories. Examples of SOSR dismissals can include; a refusal to accept new terms and conditions; pressure from third parties and personality clashes.
Just as important as the reason for the dismissal is the process that the agent goes through in effecting that dismissal. Many an employer has lost an unfair dismissal claim simply because they failed to follow a fair process in dismissing the employee. Although the employer can argue that they would still have dismissed the employee even if they had gone through a fair process, the employer is simply arguing about how much compensation they pay to an employee not whether they have to pay compensation at all.
So, what is a fair process? The actual nature of the process depends on the reason for the potential dismissal but, for example, in a disciplinary matter, the Employment Tribunal will take into account these factors:
- has there been a thorough investigation?
- has the employee been told in advance the nature of the charges that he/she faces and given the evidence that the employer intends to rely on?
- has the employee been given an opportunity to contest the charges?
- has the employer come to a reasonable conclusion based on the evidence and the representations of the employee?
- has the employee been given the right to appeal?
Don’t underestimate the importance of a good paper trail. It is not about what you did; it is about what you can prove you did.
These are the basics. Getting any one of these wrong will lead to a finding of unfair dismissal, which could cost you a year’s salary or £78,335 plus a basic award (calculated in the same way as a statutory redundancy payment with a maximum award of £14,250), whichever is lower. In addition to this, there is the management time and effort that you will incur in defending tribunal proceedings, not to mention the lawyers fees (if you instruct lawyers to act on your behalf) and you are unlikely to recover those even if you win. In addition, if the dismissal has been tainted by discrimination or is for whistle-blowing, the limits above do not apply although it should be said that awards in the hundreds of thousands remain the exception rather than the rule.
Finally, what happens to the staff when an estate agency is sold? That depends on the manner in which the agency is sold. If they are a limited company and the shareholders employed are simply selling their shares to a third party, there is no change for the employees. They are still employed by the same limited company; it is just that it is owned by a different set of shareholders.
If the business and assets of the selling company are sold, in most cases the rights of the employees are protected by the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). TUPE provides that the employment of the employees and all their contractual terms and conditions (with a limited exception in the case of pensions) are transferred intact to the buyer. TUPE also give employees enhanced protection against being dismissed because of the transfer or for a reason connected with it, places limitations on the ability of the buyer to change the employees terms and conditions post transfer and imposes obligations on both the buyer and the seller to inform and, in some cases, consult with the employees about the transfer before it takes place.
Despite recent changes, employment law remains the minefield that it has always been and if there is one piece of advice that I could give to anyone faced with employee issues; take early advice from someone who is an expert in the field – it could save you a lot of money in the long run.