Money: Undeserved P45 could soon be worth pounds 50,000

Legal rights of employees to improve from June, writes Ian Hunter

Last week's news of 6,000 job losses at Barclays shows that the only job for life these days is parenthood. But there is some good news for those on the receiving end of a P45. The first of the Government's promised measures to strengthen employees' rights comes into effect next month.

Employees who, with effect from 1 June, have completed over one year's continuous employment may have a potential claim for unfair dismissal if they lose their jobs.

Until now, you have had to work for two years before you have rights to claim for unfair dismissal.

There may be no way of knowing you are about to be dismissed, and there is no set format for a dismissal meeting. Some employees are asked to work out their notice, while others are immediately escorted - bulging black bin-liner in hand - to the door.

If you find yourself in this situation, the golden rule at any dismissal meeting is not to agree or disagree with anything said to you. Ask for any proposals to be put in writing. Whatever you do, do not resign voluntarily. You could prejudice your right to compensation.

Once you have the offer in writing, the next step is to compare it with what you are entitled to get. Be aware you have two potential claims: one is contractual, and the other is statutory.

Every employee is usually entitled to receive notice before his or her employment is terminated, unless he or she is dismissed for serious misconduct such as theft or dishonesty. Your contract of employment should include your notice period.

If you are dismissed without notice, or good reason, the starting point for calculating contractual compensation is an amount equal to the value of your net salary and fringe benefits (such as the use of a car or pension contributions) that you would have received during the notice period.

If you do not have a written contract of employment (and many people do not) you will be entitled to at least a statutory minimum period of notice of one week for up to the first two years of employment and after that to one week for each year of employment - up to a maximum of 12 weeks.

You may, in certain circumstances, be able to argue for a longer period of notice based on what is "reasonable" in your business or profession.

The length of notice you are entitled to is vital in calculating your contractual entitlement.

The new rights coming on to the statute books are distinct from your employees' contractual rights.

Awards for unfair dismissal are made up of two parts. First there is the basic award, currently between pounds 110 and pounds 330 for each completed year of employment (up to a maximum of 20 years) depending on your age.

The second tier, the compensatory award, is subject to a maximum of pounds 12,000. However, under the terms of the Employment Relations Bill that will become law in the near future, this figure will soar to pounds 50,000.

If you think you have a case for unfair dismissal you should submit it to the Employment Tribunal within three months of your dismissal.You can also submit to the tribunal any disagreements over your contractual claims, up to pounds 25,000. There is no qualifying period of service.

Alternatively contractual claims can be pursued in either the County or the High Courts.

It is relatively easy to bring an unfair dismissal claim. The original idea behind the Employment Tribunals was that they should be informal and that employees should be able to bring claims without professional advice.

In practice, in many cases, both parties do instruct solicitors. Some solicitors and consultants will take employees' cases on a "no fee no win" basis. Employees can also get help from law centres, citizen's advice bureaux or trade unions.

Legal aid is not available for these claims, nor can the winning party normally recover its legal costs.

In many cases, employers will seek to reach an amicable settlement with employees before the case gets to an Employment Tribunal or a court. Usually up to the first pounds 30,000 of any compensation can be paid tax free.

You may also be able to secure extra benefits that are of value to you but do not cost the employer much time or cash:

References are often important to employees to help in the search for a new job, but an employer is under no obligation to provide a reference. If possible, the wording of any reference provided should be agreed.

If you are a member of a company health scheme or a potential beneficiary under a firm's group life insurance policy, you can often remain on the group policy until the end of the contract's current year.

If you have a company car, you should investigate the possibility of buying the car from the employer at its book value. Your employer, if asked as part of a settlement, may be prepared to let you keep personal computers or fax machines.

n Ian Hunter is a partner and employment law specialist at City Law Firm Bird & Bird. He is also author of the `Which? Guide to Employment'. pounds 10.99

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