Unfair dismissal has adverse effects on employees. This paper literally reviews the impact of unfair dismissal on employees in the UK.
Abstract:
The impact of unfair dismissal has serious consequences not only for the individuals whose lives are influenced either directly or indirectly, but also for enterprise productivity. Unfair dismissal strongly influences employee performance, rates of illnesses, absenteeism, accidents, and staff turnover.
1.0 Introduction
In this work I am going to review the various impacts of unfair dismissal on employees from different scholars in the United Kingdom. I analyze the institutional sources of dismissal conflicts when workers effort is not perfectly observable. In this context, whenever there is a dismissal, a double moral hazard problem can arise and lead to violence. In turn, disciplinary dismissals will not be cheap and unfair dismissal will have a negative effect on aggregate employment.
1.1 The conceptual definition of unfair dismissal
It refers to sacking of an employee unfairly. It happens when an employee is dismissed and qualifies for the right to bring an Unfair Dismissal claim and the employer did not have a fair reason to dismiss the employee or, the employer did have a fair reason, but the matter was dealt with unfairly. (Compact Law. 2007)
Under the terms of the UK Employment Acts, unfair dismissal means the unreasonable dismissal of someone who has been in continuous employment for a period of two years; that is, dismissal on grounds not in accordance with the codes of disciplinary practice and procedures prepared by ACAS (Advisory, Conciliation, and Arbitration Service).
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Dismissed employees may take their case to an industrial tribunal for adjudication. (Farlex, Inc. 2007)
There is no law which prevents an employer from dismissing an employee. But employees may have the right to apply to an Employment Tribunal claiming that they were unfairly dismissed. A decision by a tribunal in the employee’s favor could result in an award against the employer of substantial compensation.
1.2 Examples of unfair dismissal of employees in UK
Five firefighters based at Cowcaddens Fire Station in Glasgow’s city centre were subsequently dismissed unfairly, following 38 complaints from students at Buchanan. They were fired for being party to the decision to evacuating hundreds of students after the fire alarm had been turned off using passkeys to access homes when there was no emergency, failing to follow proper procedures, deploying fire services needlessly and to have sworn at members of the public. The students were made to wait outside for more than two hours until around 2.30am.
(Davidson F. 2007)
A Russian national was granted leave to remain in the UK until May 2004. Meanwhile, she had been employed by Hounslow Council since November 2000. In August 2005, the council dismissed her, believing that her continued employment violated immigration legislation without following any dismissal procedures. The Russian argued that these did not apply because the dismissal was for breach of a statutory restriction. However, at the time of her dismissal, she had in fact been entitled to work in the UK; so, she brought an unfair dismissal claim. The tribunal found that her dismissal was automatically unfair, as there had been no restriction on Hounslow employing her, and the dismissal procedures had not been followed. (Mackay A. 2007)
Moreover, Claims of sexual harassment and unfair dismissal resulting from the office Christmas party are on the increase. A survey by recruitment agency Pertemps found that one in 50 women who got drunk at their Christmas party the previous year lost their jobs as a result. Countless others have suffered untold embarrassment as a result of over-indulging at the free bar or trying to impress colleagues with complicated dance moves. (Lunn E. 2004)
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1.3 Review of impact of unfair dismissal on employees
Unfair dismissal may negatively affect the commitment and motivation of the workforce concerned and jeopardize the quality of the production and services provided, as well as potentially threatening the very success of any reforms undertaken. Unfair dismissal is associated with stress and with an increased risk of violence at work. This association has been confirmed in the health industry, even when stress levels were not reported to be severe or were declining. (Afford, 2001, p. 13.)
A large-scale survey conducted United Kingdom revealed that precariously employed workers (those hired on a casual, short-term, fixed-term contract and temporary agency basis) had poorer health-related outcomes than did those hired on permanent contracts (Benavides and Benach, 1999).
This poorer health status persisted after adjustment for working conditions, social and environmental factors. These are the conditions of job insecurity, which arises when an employee is dismissed unfairly. The risk factors included a low level of control over work tasks and working time, increased pace of production, performance of lower-skilled job tasks, and insecure employment, all of which are major elements in stress building. Violence at work is also associated with real vulnerability. This and other surveys also clearly indicated that workers in precarious jobs were exposed to workplace violence to a greater extent than were those employed under permanent contracts. (Mayhew, 2003, pp. 203�219)
The Impact of unfair dismissal is borne by the victim, the employing organization and society as a whole.
Individual impact
On an individual level, the impact of personal suffering and pain resulting from unfair dismissal is hard to measure. Suffering and humiliation are not self-contained events. They usually lead to lack of motivation, loss of confidence, reduced self-esteem, depression, anger, anxiety and irritability. All of these indicators are typical of stress, and stress is a very costly matter. If the effects of unfair dismissal are not contained by adequate interventions, these symptoms are likely to develop into physical illness, psychological disorders, tobacco and alcohol and drug abuse, and so on; they can culminate in reduced employability, invalidity and even suicide. (ILO, 1992)
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These negative consequences not only affect the person who is the focus of such unfair dismissal, but often extend to people in proximity to the act, and even to people far removed or physically absent from the place where violence occurs. The effects of violence can thus pervade the entire workplace, the family of the victim and the community in which they live.
Organizational impact
At the organizational level, unfair dismissal causes immediate � and often long-term � disruption to interpersonal relationships, the organization of work, productivity and the overall working environment. Employers bear the direct cost of lost work time and funding for improved security measures. Yet many other workplace events occur out of sight of the general public, in one-to-one situations, result in emotional rather than physical injury to the victim, and produce extensive costs for both the employer and the recipient. Often the victims of these less-dramatic occurrences lack power in their employment relationship, have limited protection from unfair dismissal, and have few alternative job options. The end result is that victimized workers without support may resign from their jobs, be pushed out if they remonstrate, or accept low-level workplace violence or sexual harassment as the price to be paid for a job. Thus, the causes and consequences of workplace violence cannot be analyzed independently of employment relationships.
There are many attributes of a victim of organizational unfair, who is in most cases likely to be an employee, which could be associated with the risk of violence (Paoli and Parent-Thirion, 2003, pp. 63 and 64).
These include appearance, health, age and experience, gender, personality and temperament, attitudes and expectations.
The health of workers can also influence how they interact with clients and the public at large. Stress from a heavy workload, or mild forms of mental illness, may lead to misunderstandings or misleading behavior which precipitate aggressive responses. The age and experience of workers are other factors that can either increase or diminish the possibility of aggression. Previous experience of handling similar difficult situations, which is obviously associated with age, should enable older workers to react more wisely than inexperienced staff. As has been made clear earlier, a person�s sex can influence aggressive behavior in a number of ways. Men are more likely than women to respond in an aggressive way to many workplace situations, while women are also at much greater risk of certain types of victimization at work than men
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Community impact
The impact of unfair dismissal at work also affects the community as a whole. Health care and long-term rehabilitation costs for the reintegration of the victims of unfair dismissal, unemployment and retraining costs for those who lost their job because of such violent events, disability and invalidity costs for those whose working capacities are impaired by unfair dismissal, and legal and criminal justice system expenses are all part of the price paid. An assessment of the total magnitude of the costs to the community of workplace violence also requires consideration of the indirect impact of this violence on the partners and relatives of the victim and, in a broader perspective, of its disruptive effect as a multiplier to the fear and anxiety about crime and violence in any society.
A summary of the British literature on impact of unfair dismissal reflecting this �individual behavior� approach concluded that the most common features seemed to be:
i. Feeling aggrieved. A sense of being treated unfairly, whether real or imagined, could lead to violence.
ii. Being forced to wait, causing irritation and frustration. An anger eliciting stimulus, perhaps from another person, could spark violence.
iii. Perceived intrusions into private life. Loss of self-esteem from reprimands, downsizing, and layoffs and like experiences could precipitate aggression.
iv. Prejudice. Whether racial or sexual, prejudice could provoke violence against members of another group.
v. Staff attitudes. Violence could occur if one staff member was seen as a threat to another.
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vi. Uncomfortable physical conditions. These could contribute to the display of aggression.
vii. Mental instability. This may lead to aggressive behavior. (Hoad, 1996, pp. 64�86)
Although the U.K. is perceived as one of the least regulated countries in the world, it has been the subject of many studies searching for evidence of the impact of employment protection policies on unemployment. In analyzing the impact of unfair dismissal payments and redundancy payments using quarterly manufacturing data for the period 1963-82, Burgess (1988) reports that without unfair dismissal payments, employment would have fallen by 6.15% per year between 1975 and 1982. Without redundancy payments, the fall in employment would have been 4.95%. The actual fall in employment during that period was 4.2% per year. Burgsess therefore concludes that unfair dismissal settlements and severance payments reduced the speed of adjustment of employment. It is worth noting that Burgess also concludes that protection legislation only affects the short-run level of employment. In addition, he notes that the period studied is characterized by a major increase in the use of part-timers and temporary workers. In a 1989 study Burgess only weakly confirms some of the conclusions obtained in 1988. Using quarterly manufacturing data for the period 1964-82, he finds that severance pay and the unfair dismissal penalty increased the employment lag in only one of the four industries studied.
1.4 Conclusion
Research-based literature explaining the impacts of unfair dismissal is very limited in its scope and disciplinary perspective. Most of this literature focuses upon risk factors associated with individual�s aggressive and self-destructive behavior, rather than upon what may be broadly termed social issues, and the link between the two.
The above study provides the literature review of unfair dismissal impacts for United Kingdom. There is substantial variation between industries and occupations, with costs increasing in a patchy way with skill levels. I do not find much evidence of variation by firm size, suggesting that unfair dismissal provisions do not impose a higher burden on small business.
Empirical research on firing costs, and in particular research on the cost of unfair dismissal provisions, is still at an early stage. Further survey work is needed, and we also believe the ACAS should collect data on hiring and unfair dismissal impacts. Better data, and perhaps the calibration of more sophisticated dynamic stochastic labor demand models, would improve our understanding of the labor market impact of unfair dismissal provisions.
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