EMPLOYMENT RELATIONSHIPS

Introduction

The employment relationship, considered one of the most fundamental in modem industrial societies, spans the union-organised sectors of the company as well as the unorganised work force. The law governing the employment relationship affects the lives of all workers, from top managerial officials to part-time clerks. Though its forms and manifestations are constantly changing, the dynamic character of this critical relationship intensified in the 1990’s.

Employers are using written employment contracts more and more, and for good reason. The increasing complexity of employment law and the high costs of termination have forced employers to be more careful when they establish new employment relationships. While no contract can address every potential issue, there is much to be said for dealing with the most likely areas of future disagreements, before the problems exist.

Given consideration to a written employment contract means that the employer has reviewed the key aspects of the job in advance: duties and responsibilities, remuneration and benefits, how to end the relationship, and what obligations continue even after termination.

The application and the interview are the first opportunities an employer has to ensure that its policies are made clear. A number of measures can be taken at this early stage which will help avoid later misunderstandings and costly lawsuits.

Interviewers must be careful not to incorrectly represent any terms of employment, or the conditions or plans of the company. Also, interviewers must not make promises of representations which could lead the applicant reasonably to believe he or she will have a "permanent" job or one that will be terminated only for a good cause.

Every new employee should sign an offer letter or employment agreement which explicitly set forth the nature of the employment relationship and the nature of the relationship can be changed only in writing signed by the employee and a high level officer of the company and that the employee is not accepting the offer in reliance on any promises made by any company representative other than those in the offer letter itself, and that any such contrary promises are superseded.

Most employers develop and disseminate employee handbooks or policy manuals which touch on any number of subjects affecting the employer-employee relationship.

Whenever an employee agrees to work for an employer, a contract is established: it will either be verbal or written. There are three elements to the contract: offer, an "acceptance", and consideration. Consideration typically takes the form of a promise by the employee to perform services in exchange for the promise by the employer to pay for such services.

There is nothing illegal about a verbal contract however, its terms are significantly more difficult to prove in the event of a dispute. For example, consider the situation where an employee under a verbal contract is entitled to 3 weeks’ vacation per year. Is she entitled to vacation during the first year, or only after 12 months of employment? If the employer and employee disagree, there will likely be hard feelings or disappointment one way or the other. Claims for wrongful dismissal after termination are based on the concept of reasonable "notice" or "pay in lieu of notice". Courts imply a term into the oral contract that a reasonable period of notice must be given, and the question arises as to what is reasonable in the circumstances of each case. If the contract is in writing, and those issues are addressed, there is no room for disagreement.

One is well advised to ensure a proper account of the respective rights and responsibilities of each of the parties to avoid potential future problems.

The relationship between employer and employee is of fundamental importance to all involved and must be based on mutual respect, trust and confidence.

Developing, maintaining and sustaining employment relationships can be one of the most important assets of your business. Regardless of the industry in which you operate or whether you are selling goods or services, the success of your business is dependent on your employees' satisfaction with their jobs. Employees will be eager to promote your business so long as they are satisfied with the terms and conditions of their employment. Disgruntled employees, by virtue of their dissatisfaction, will not be motivated to work with any enthusiasm and the apparent indifference can have a negative impact on the success of your operation.

Employment law covers the entire employment relationship, From offers of employment, employee handbooks, protection of trade secrets, to wrongful termination, and/or Sexual Harassment. The employment contract, employment manual and office procedures can impact the company's position in the event of litigation.

• The use of clearly drafted contracts of employment covering all important aspects of the relationship.

• The preparation and implementation of thorough disciplinary and grievance procedures with staff trained to resolve problems quickly and fairly.

• Consideration of the various employee benefits which can be used to encourage and reward productivity and loyalty.

• Minimising the risk of conflict -There are many business decisions which have an impact in the relationship between employers and employees. Those decisions may involve:

• Changing terms and conditions of employment.

• Making redundancies.

• Negotiating a merger or take over.

• Group reorganisations.

It is important that the consequences of such decisions are fully considered before they arise and that all parties are aware of their respective rights and liabilities and the alternative ways in which they can be reconciled.

You can start at the very beginning of the relationship by outlining the terms of employment in an employment contract. This need not be a complex document. It can be as short as two pages, so long as it covers the essential features of the relationship. In preparing such a document, you should address such issues as:

• Job description.

• Salary, benefits and vacation.

• Non competition clauses.

• Terms of termination.

• Probationary periods.

In addition to the employment contract, it is imperative that you have an Employee Policy Manual. Such a document can facilitate communications within your organisation, as they relate to employment matters. It also ensures uniformity and a common understanding concerning the operation of your business. Policies should cover such topics as:

• Harassment and investigative procedures.

• Discrimination.

• Benefits.

• Training and development (internally and externally).

• Time away from work.

• Professional conduct.

• Confidentiality.

• Employee relations.

• Termination policies.

• Evaluation process.

• Safety/security/emergencies.

• Statutory holidays.

• Maternity/parental leave.

This is not an exhaustive list but rather an illustration of the types of issues to be addressed. In developing such policies you must take care to introduce policies that are enforceable in law. Policies that discriminate will run afoul of human rights legislation and cause more problems.

Policies and manuals establish the rules of the game. They do not always ensure a continuing employment relationship. Successful employers must remain in tune with the sentiments of their employees. Signs of indifference, repeated absenteeism, and/or a reduction in productivity should raise red flags. Special attention should be given in cases where the errant employee has previously been an enthusiastic participant in your business. If there are explanations to such conduct, you can attempt to work through the problems. If you cannot resolve them, you will want to investigate the appropriate remedies that may exist, the steps you should be following prior to terminating the employment relationship, and, if necessary, termination of the employee.

When you are dealing with your employees you must remember that their position with your company is a major component of their identity. Terminating the relationship must be handled with sensitivity and always within the requirements of the legislation. In doing so, you will want to avoid complaints to Employment Standards officials, suits for wrongful dismissal, or problems with the Human Rights Commission. Most significantly, by following some of the above suggestions you will be promoting a healthy employment relationship and a prosperous business.

If a breakdown in the relationship between employer and employee occurs or is threatened then the dispute (whether involving a court or Industrial Tribunal) must be resolved quickly and in some cases with great discretion. The rights, for example, of the employer to protect confidential information and trade secrets and to enforce restrictive covenants must be enforced promptly and firmly.

The organisation wants to make use of the employee's know-how, competence and experience. In return the employee wants their abilities to be put to good use and be developed. As organisations become more technologically oriented the demand for technically qualified and able staff increases.

Management and co-workers want committed motivated staffs who give their best to the firm, the task and co-workers. The individual wants their aspirations satisfied - security, health and welfare. They want opportunities for stimulus, learning and growth, achievement of personal goals, recognition by and affection from others, needs for power, control and status.

The employer needs work done to a "quality standard" with efficient outputs. Standards are defined in conversation, by regulation, by policy and specification, by example and via the business's social values. The employee wants equitable, felt-fair rewards and acceptable treatment but the relationship between perceived performance and rewards is not always clear. Subjective/objective measurement and judgement can define these. They can be defined by internal and external referencing - perceptions of similar pay for similar work, efforts and results.

Employees need to adopt the firm's business/social values and commitments yet these may conflict their own. There may be gaps between the general and the particular. The individual may encounter ambiguities and inconsistencies between what the organisation as a whole says it is committed to – in terms of right and wrong behaviour - compared to behaviours evident in particular situations within the work environment.

Employees must work within the firm's policy, procedural, technical and other constraints. Job roles, work arrangements and relationships have evolved over time as solutions to the organising problems within the firm. This task differentiation has become embedded in a range of structures and processes. All jobs offer structures and routines, which in themselves are satisfying. Jobs have varying degrees of complexity and problem solving associated with them. Yet the employee may find some aspects of a job frustrating. They may want more variety, better feedback, and opportunities for personal identity, interaction and autonomy than their job offers.

A duty of fidelity is implied into all contracts of employment. The duty means that while the employment relationship continues, the employee cannot do anything which is likely to injure the employer’s business interests. An employee cannot directly compete with their employer or work for a competitor. "Hostile acts of preparation" for competing after the employment is over, are prohibited.

Another duty implied into all employment contracts is the duty not to misuse an employer’s confidential information. Unlike the duty of fidelity, this continues even after termination of the employment relationship.

The employee must:

• Work faithfully with skill, care and commitment for the employer in the employer’s time. Respond co-operatively to reasonable, lawful instructions within the scope defined by their job and general membership of the organisation.

• Take care of themselves and others in carrying out their duties and give due regard for their employers interests.

The employer must:

• Give only reasonable, lawful instructions.

• Ensure the health, safety and welfare of the employee is safeguarded.

• Pay agreed wages for work done - when these are due and according to agreements on how the rewards are calculated.

• Recognise the crucial importance of good communication, treating the employee with respect and without discrimination on ground of race, ethnic origin, and sex.

The employee works under a legally defined contract of employment. The employment contract also defines the employment relationship, clearly setting forth the rights and duties of each party. By having the employment agreement in writing, it minimises the potential for disputes later on. The employment contract can also contain an arbitration provision, mandating that all disputes will be decided by binding arbitration rather than through the court system. Further, the employment contract can include an attorney's fee provision providing that the losing party to a dispute is liable for the other party’s attorney's fees.

The mention of employment contracts conjures up a picture of complex, multi-paged documents, full of legalese, and small print. In complex relationships, that type of document may be appropriate. Practically, written contracts will not find favour with most employers (particularly in small business) if they are too complicated. The answer is to tailor the contract to your particular needs.

The contracts can be simplified into the form a letter of employment. In plain easily understood language, the employer can spell out the job terms to the new employee and ask that a copy of the letter be signed by the employee, indicating his or her agreement with its content. The letter can be customised from one employee to another with ease.

Once signed, the document becomes part of the employee’s file to be relied on later, if necessary (by either party).

An ongoing employment relationship which is not designed to terminate after a fixed term is the norm in the workplace. Rarely does the employment contract with the original bargain remain unchanged throughout the entire relationship. Once signed, the employment letter usually disappears into the file, not to be referred to expect in situations of some disagreement.

During the course of the relationship, there may be reasons to change the terms, for the benefit of either or both the employee and the employer. Pay rates can change, benefit coverage may be adjusted, job duties may be revised, etc. Ideally, these changes should be tied in to the original employment letter: the letter should provide for the possibility of changes from time to time, and the changes to which do occur should be identified as amendments to the original agreement

An employee handbook is just as important as the employment contract. Provisions regarding transfers, re-assignments, and demotions can prevent lawsuits for Wrongful Demotion. The employee handbook sets forth the rules and procedures for the employment relationship.

Specific policies and requirements such as hours of work, attendance expectations, and systems of progressive discipline, are often set out in employee policy manuals, as are benefits such as paid bereavement of sick leave provisions. A contract would be unduly long and complex if all those items were to be included in the document. The same consideration applies to benefit plans provided by a third party insurer, such as long term disability, life insurance, and major medical coverage.

Although the ability to sue for Wrongful Termination has been narrowed by the courts, it is still possible to sue and be sued for Wrongful Termination under either a breach of contract or tort based theories. To establish a breach of contract, some terms of the employment contract (either express or implied) must be breached. To establish an action in tort for Wrongful Termination, the termination must be in violation of public policy, such as based on race, gender and religious beliefs.

Courts have defined legal cause as being the most serious types of employee misconduct or non-performance which go to the root of the employment relationship. In situations where legal cause exists for termination, an employee can be dismissed with no notice and no pay in lieu of notice since the employee has brought the termination upon himself. The Courts recognise only the most serious forms of employee misconduct as legitimate legal cause for dismissal. For example, stealing breach of trust, serious insubordination and gross incompetence etc…

Both the employer and the employee will likely be optimistic about the success of the relationship when it first begins. Despite that natural tendency, it is in both parties’ interest to address the issue of the end of the relationship so as to prevent misunderstandings with the potential for costs and aggravation from occurring later. If the employee is to give notice of her or his intention to depart, that notice should be set out and may increase depending on the individual’s length of service with the employer.

Where an employer wishes to terminate employment where no legal cause can be established, the legal issue is: how much advance notice (or pay in lieu) should an employee receive? The issue arises from the implied term in the oral employment agreement that the employer must give reasonable notice in advance of the termination.

Where an employee is paid on a basis other than regular salary, such as commission, bonus, deferred profit sharing, etc., there should be a specific reference to how final remuneration will be paid if the employment agreement ends. For example, does a sales person receive all commissions on jobs written to the date of termination even if the payment by the employer from the customer is received later? Similarly, will an employer be obligated to make a bonus payment to the terminated employee if the bonus is payable after the employment terminates? Setting out these matters when the agreement begins will make them easier to deal with since both parties are attempting to create a positive relationship rather than leaving the discussion for a later time when the relationship is ended.

If your company has trade secrets that give it a competitive advantage, then having confidentiality agreements and restricting access to those trade secrets are essential to their protection, both logically and legally. If the company does not take steps to protect its trade secrets, then the secrets lose their legal protection from misappropriation. Further, confidentiality agreements give the right to an action should an employee later disclose these secrets to a competition or set up a competing business.

To have an enforceable non-competition agreement, the agreement must be necessary to protect a legitimate trade secret or be in connection with the purchase or sale of an ownership interest in the business. Further, the agreement will only be enforceable if reasonably restricted in both time and scope. There are many drafting techniques that can be utilised to give you the best chance at creating an enforceable non-competition agreement.

As a case study, when I learnt something about the subject, I wanted to know how many people know what an Employment relationship was. And did they know anything about contracts and other documents. I selected a group of seven computer professionals working in different countries. All of them are well educated, but not in management field. To my surprise I found that none of them bothered to even read their contract in detail and knew nothing about employment relationship. Out of the seven, there were even a couple of people who felt they were cheated and were looking out for a different job. But even this does not make them think that they should have been careful with their contracts. Though I feel that employees are the most affected, I do know cases where the employers are affected because of no proper contracts. I was surprised to know that there were employers who forced employees to work for more than the number of days they were supposed to work. And the employees could not do anything because they had signed the contract with out knowing the details. I feel that the government should issue a brochure with all the details about employment and this should be given to all employees when they start working.

This is the first subject in the list that I’ve chosen to study as a part of my course. When it was time to start writing assignments, I was baffled because I could not find enough books in my library, the library that is supposed to be the biggest and best library in Dublin. I came to the point of thinking why I ever chose such a difficult subject. But that itself gave me a challenge. I did not know anything about this subject so I started surfing the net. To tell the truth I found all the required material in the Internet. Luckily for my next assignment I’ve already got the book from the library.

When I chose subjects I randomly chose them. I did not even know what "Employment Relationship" meant. When I finished the assignment, I was happy that I chose this subject as it taught me a lot of things that I had not known or thought of before. The next time I get a job offer, I will carefully read the contract and clarify everything well before I accept it. This is something that I have not done before. And I sure have learnt how to maintain an employment relationship when I become a HR Manager some day.

The Written Contract – Robert B. Reid and Leanne E. Standryk

Privacy Rights, Public Policy and The Employment Relationship by Pauline T. Kim

Guide to Contracts of Employment - Loose leaf

BOLA (Business Open Learning Archive) project by C Jarvis

T.Muthukumar – UK

Natrajan Parameswaran – Norway

B.Varatharajan – South Korea

Praveen Shetty – Ireland

Vijaya Mohan – USA

Durga Jeyashankar – Singapore

Vaishali Ambavale - India