U.K. Law for the U.S. Employer, Part II: Discrimination, Data Privacy, and Termination Rights

by Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
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Part one of this three-part series covered the basic principles of employment laws in the United Kingdom and the minimum benefits and rights to which employees are entitled. Part two covers a number of employers’ obligations and rights to which employees working in the United Kingdom are entitled, including the right to a discrimination-free workplace, data privacy and use provisions in employment contracts, and the right to notice upon termination of employment.

Protection From Discrimination

Under U.K. law employees have the right not to be discriminated against on the following grounds:

  • age
  • disability
  • gender reassignment
  • marriage or civil partnership
  • pregnancy or maternity
  • race, ethnicity, or national origin
  • religion or belief
  • sex
  • sexual orientation

This protection applies throughout the employment relationship, from the process of recruitment to the end of employment. There is no minimum service requirement before these protections apply. It is therefore possible for an unsuccessful job applicant to bring a claim that he or she was not chosen for a position for a discriminatory reason.

U.K. discrimination laws do not impose a maximum limit on the award available for violations of the law. The available compensation is based, however, on a calculation of the employee’s loss of earnings.

Transfer of Undertakings

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (as amended) (TUPE) may apply if a business or undertaking is transferred from one owner to another. This includes the transfer or outsourcing of a service. Generally, if TUPE applies, the employees within the business or undertaking may automatically transfer to the new employer or service provider. If such a transfer occurs, the employees’ rights will be preserved and they will be protected from dismissal or certain changes to their contracts of employment. This legislation, which was derived from the European Union (EU), often comes as a shock to our U.S. clients!

Data Privacy

EU-wide data privacy rights apply to employees in the U.K. workplace. Employers need to comply with detailed rules on what data they collect and keep and how they use it. Employers usually obtain employees’ consent to use data through an appropriate provision in the employment contract.

In addition, special rules apply to transferring data to a country that is outside the European Economic Area (EEA) such as the United States. “Transferring” in this sense includes accessing data contained on a global human resources intranet from the United States. Companies must ensure that they comply with data protection rules before transferring data even in the case of an intra-company transfer. An employer’s ability to monitor employees’ emails and Internet use is also more restricted in the United Kingdom than it is in the United States.

Termination of Employment

The United Kingdom has a number of laws governing the end of an employment relationship. Generally, the law requires notice of termination and has specific rules on reductions in workforce.

  1. Notice on termination

After continuous service of one month, employees are entitled to receive a minimum of one week’s notice to terminate their contract of employment. Employees are then entitled, after two years of service, to one additional week’s notice for each complete year that they have worked, up to a maximum of 12 weeks.

  1. Dismissal

The United Kingdom’s employment laws do not recognize the concept of “at will” employment. At a minimum, in the absence of gross misconduct, employers are required to give employees notice of termination.

Generally, once an employee has worked for an employer for two years (one year, if the employment started before April 6, 2012), they can only be dismissed for one of five potentially fair reasons:

  • redundancy (i.e., reduction in force);
  • illegality (e.g., no work visa);
  • misconduct (e.g., persistent lateness);
  • capability (e.g., poor performance);
  • some other substantial reason (e.g. reorganization)

The employer’s process in terminating employment is critically important because the failure to follow a fair procedure before deciding to terminate or terminating employment for a reason other than one of the reasons listed above could lead to a claim for unfair dismissal. The maximum compensation for unfair dismissal is approximately £80,000 ($134,000) in most cases or one year’s pay if less. In certain situations, however, employees who have been unfairly dismissed, for example, in connection with violations of discrimination and whistleblowing laws, are not limited in the compensation available to them.

  1. Redundancy

Redundancy is similar to the U.S. term, “reduction in force,” and broadly occurs when a change in circumstances dictates that fewer employees are required to perform particular duties or to perform those duties in a particular place. U.K. legislation entitles employees who have at least two years’ service to a statutory redundancy payment. This payment is calculated on the basis of the employee’s age, length of service, and weekly pay. Employers must comply with certain rules concerning the information and consultation process during a redundancy. Additional rules apply when employers are making 20 or more employees redundant.

The next post in this series, “U.K. Law for the U.S. Employer, Part III: Withholding Obligations and Immigration,” will cover employers’ income tax and social security obligations in the United Kingdom in addition to the basic immigration issues involved in employing non-U.K. nationals.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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