7OS01 Advanced Employment law (AC 3.1) and (AC 4.2)

7OS01 Advanced Employment law (AC 3.1) and (AC 4.2)

There’s always something unsettling about how legal decisions play out in practice. Especially when ethics are involved. That’s the sort of ground we cover in 7OS01 Advanced Employment Law, which asks us to look, perhaps more closely than we’d like at how ethical frameworks influence employment tribunal outcomes. It’s not as tidy as one might expect. Judges, like all of us, interpret fairness differently.

Then things stretch beyond home borders. Globalisation complicates everything. What happens when a UK employer has operations in three countries, all with different standards for workers’ rights? There’s no single answer, and that’s exactly the point. We look at changing expectations, shifting responsibilities, and what this might mean for both employers and employees caught in between.

Sometimes the law doesn’t offer clarity. Sometimes, it just starts the conversation an that forms the fabric of 7OS01 Advanced Employment law (AC 3.1) and (AC 4.2).

Case study

Rose Hip Lodge is a nursing home located in a Welsh town. It houses 40 residents at any one time. Of these around half pay for their own care through private means, while the others have their fees met by the local authority. Rose Hip Lodge is one of six establishments owned by Mr Bradley Keepham. It is managed on a day-to-day basis by its matron, Mrs Jean Bunyon and her deputy, Ms Margery Shingles.

The permanent staff comprises five qualified nurses, five auxiliary nurses, two administrators and ten ancillary staff who undertake cleaning, catering and maintenance roles. Most of this latter group work on a casual basis with no regular weekly hours, coming in to work at Rose Hip Lodge when needed. Heavy additional use is made of agency-based nurse-bank staff so as to ensure that at least one qualified nurse and one auxiliary is present on the premises 24 hours a day, seven days a week.

Profit margins are tight and have recently become tighter still as result of increases in fuel prices and the need to undertake substantial maintenance work to comply with new health and safety regulations. As there is only very limited scope for increasing fees, Bradley has forced Jean to cut her food budgets. The re-decoration programme has also been suspended, resulting in a home which appears increasingly shabby and depressing. In the last month, the financial situation has worsened. Five rooms have become vacant and have not been taken by new residents. As a result, the home is trading at a loss. There is no alternative but to look for ways of cutting back on the staffing budget. Bradley has asked Jean to put forward a plan which will result in savings of 5% immediately and 10% over the coming year. Her suggestions include the following:

i) Gerard was employed three months ago as a maintenance assistant. At his interview he was offered the job at a rate of £12.50 an hour, rising to £14.50 an hour provided he successfully completed a four-month probationary period. Jean believes, however, that because this was never put in writing it could be treated as an informal agreement. She thus proposes that Gerard’s pay is not increased next month, despite the fact that he has performed well in the role.

ii) Jean proposes to appoint new permanent members of staff on lower salaries than are currently paid to existing employees in each of the major staff groups and to include a stipulation that they work for longer hours each week. All jobs henceforth will be advertised at rates that are 20% below those paid to equivalent staff who are already employed and on contracts which simply specify that the hours worked each week will ‘vary according to the needs of the business’.

iii) Jean proposes to withdraw the Christmas bonus that has nearly always been paid in the past to all staff.

iv) Jean decides that she will need to make three people redundant – one qualified nurse, one auxiliary nurse and one member of the ancillary staff team. In order to keep the cost to an absolute minimum she decides that the best approach will simply be to dismiss the most recent starter in each case.

v) Jean decides that if she is to reach her target of a 10% reduction in staff costs, there is no alternative but for herself and her long-serving deputy (Margery) to reduce their hours, and hence their take-home pay. Jean herself will not lose out because she will be compensated by an increase in the profit-related bonus she receives each year. Margery, though, will be left several pounds a week worse off by the change, despite having more free time.

vi) A junior care assistant called Tanya has recently been employed on £8.60 an hour (i.e. the rate of the National Minimum Wage for people aged 18-20). Jean is aware that she will have to be paid a higher rate of £11.44 an hour once she reaches the age of 21 next month. She therefore proposes to seek agreement with Tanya to continue paying her at the lower rate or to dismiss her and to replace her with an 18-year-old school leaver.

Jean discusses each of her proposals with Bradley. He congratulates her and asks her to implement all of them without delay. 

Legal Risks in Contract Law: Staffing Decisions at Rose Hip Lodge

Question 3 (AC 3.1): What risks might Bradley and Jean encounter in respect of the law of contract if they were to implement these proposals? What advice would you give to them about these?

When employers try to cut costs in tough times, it’s understandable. Especially in care homes like Rose Hip Lodge, where margins are always tight and financial pressures can intensify quickly. But cutting corners, particularly when it involves employment terms, can bring more problems than it solves. And that’s where things start to get uncomfortable. Let’s look through Jean’s proposals and consider where the real risks under the law of contract might begin to creep in.

1. The Verbal Pay Agreement: Gerard’s Hourly Rate

This one’s tricky. Gerard was told at interview he’d get a pay rise after his probation. No written agreement was issued. Jean assumes that means the rise can be withheld. The problem? Courts don’t always need something in writing to consider it binding. If an offer was made and Gerard accepted by continuing to work, it might already count as part of his employment contract.

There’s also the issue of expectation. If Gerard can reasonably prove that he was led to believe a raise was guaranteed and has been working towards it, then withholding that pay bump could amount to a breach of contract. Even without formal paperwork, the law recognises verbal agreements and implied terms, especially where there’s a clear pattern of behaviour.

Summary

Gerard was told during his interview that his pay would rise from £12.50 to £14.50 after a four-month probationary period, provided he performed well. That’s not in writing, though, and Jean believes this makes it non-binding. She now plans to withhold the increase.

Advice:
Verbal agreements can form part of a contract, especially if they relate to specific terms like pay and are relied upon. Gerard has worked under the belief that he’d be rewarded with a raise, if he has evidence of this, even indirectly (emails, witnesses), he may have a case.

Possible Risk:
If Gerard challenges this, it could be considered a breach of contract or misrepresentation. He might resign and claim constructive dismissal, arguing that his trust in the contract was broken. There’s also reputational risk if other staff become aware and lose confidence in management promises.

2. Lower Pay and Flexible Hours for New Hires

Cutting costs by paying new hires less and insisting on variable hours might seem like a simple fix. But introducing two-tier pay where new staff are paid 20% less than current workers for doing the same job could open up questions around fairness and implied terms of equality.

More significantly, these new contracts with variable hours raise the issue of lack of certainty. If a contract says that hours “will vary according to the needs of the business,” it creates a potentially unstable working relationship. That sort of ambiguity can be challenged if employees are treated unfairly, left without work, or penalised for not being available at short notice.

Summary

Jean suggests offering new roles at 20% lower salaries, with hours that “vary according to the needs of the business.” It’s an attempt to build in flexibility and cost control.

Advice:
Two-tier pay systems can create workplace tension, especially when new staff do the same work for less. Contracts must also be clear. Phrases like “vary according to business needs” are vague and could result in disputes over what’s reasonable.

Possible Risk:
Contracts lacking certainty may be unenforceable in parts. Staff may also later challenge their employment terms if they’re significantly disadvantaged compared to colleagues. Inconsistent pay and unclear working hours could lead to tribunal claims particularly if new hires feel exploited or misled.

3. Withdrawal of the Christmas Bonus

A bonus isn’t always just a perk. If it’s been paid regularly over time, employees may start to see it as a contractual entitlement, even if it’s not written down. This could become what’s known as a customary practice.

In Jean’s case, if the bonus has been paid for many years and is expected by staff, cutting it without consultation or notice might lead to legal challenge. It could be interpreted as a variation to the contract one that wasn’t agreed upon.

Jean wants to cancel the annual Christmas bonus, which has been paid almost every year in the past.

Advice:
If the bonus has been consistent over time, it may have become an implied contractual term, even without being formally documented. Taking it away suddenly could give employees reason to claim breach of contract.

Possible Risk:
Cancelling without prior notice or consultation could spark claims. Employees may argue it’s part of their remuneration package. If that’s the case, removing it might justify resignation and a claim of constructive unfair dismissal. Morale damage is another risk, staff may see this as a sign of worse things to come.

4. Making Staff Redundant Based Only on Start Date

Choosing to dismiss the most recent starters might seem like a straightforward way to reduce costs. But redundancy processes need to follow a fair and transparent procedure. That means considering more than just length of service. Selection should take into account relevant criteria, skills, performance, qualifications, otherwise it risks being labelled as unfair dismissal.

Also, any redundancy must be for a genuine reason and handled with the right notice, consultation, and (where appropriate) redundancy pay. Simply picking the newest employees without fair scoring could backfire if one of them challenges it in an employment tribunal.

To minimise redundancy costs, Jean plans to dismiss the newest qualified nurse, auxiliary nurse, and ancillary worker.

Advice:
Redundancy selection needs to be fair, objective, and non-discriminatory. Using only length of service as the basis can be legally risky, especially if the newest employee is part of a protected group (e.g., due to age, pregnancy, or disability). Redundancy criteria should be based on skills, performance, and organisational needs.

Possible Risk:
A worker dismissed purely on the basis of being the newest hire could bring a claim of unfair dismissal especially if they’ve been employed for two years or more. There’s also a risk of indirect discrimination if the approach disproportionately affects certain demographics (e.g., younger staff).

5. Cutting Hours for Senior Managers: Jean and Margery

On the surface, this might look like shared sacrifice. But when you look more closely, the impact isn’t evenly felt. Jean’s compensation increases due to her bonus structure, while Margery just earns less. That raises questions not necessarily of legality, but of morale and fairness.

From a contractual point of view, unless Margery agrees to the cut in hours and pay, it could again be a breach. Employers can’t change contractual terms without consultation and consent. Even for managers.

Jean and her deputy Margery are to reduce their working hours. Jean won’t lose pay due to her bonus, but Margery will take home less.

Advice:
Even senior staff have contractual protections. A change in hours and salary needs consent, ideally in writing. If Margery hasn’t agreed and feels pressured or disadvantaged, she may claim that her employer has fundamentally changed her contract.

Possible Risk:
If Margery doesn’t give her full consent, this change might be treated as constructive dismissal. Also, Jean benefiting financially while Margery suffers could lead to claims of unfair treatment or breach of trust and confidence. Other staff may view it as favouritism, leading to internal tension or grievances.

6. Tanya’s Pay as She Turns 21

This one is legally straightforward, and ignoring it is a clear risk. Once Tanya turns 21, the law requires that she be paid the new National Minimum Wage rate. Asking her to accept less would breach statutory wage rights. Dismissing her to avoid paying more, then rehiring someone younger, might amount to age discrimination. That’s a serious risk.

You can’t lawfully fire someone just to dodge a legal pay rise. The Employment Rights Act and Equality Act both protect against this kind of conduct.

Advice:
This is one of the clearest legal problems. Once Tanya reaches the age threshold, the National Minimum Wage must be paid at the higher rate. Asking her to accept less is illegal. Replacing her to avoid paying more creates a direct risk of age discrimination under the Equality Act 2010.

Possible Risk:
If Tanya is dismissed or denied the legal wage rise, she could take the case to tribunal, either as an unlawful deduction of wages, constructive dismissal, or direct age discrimination. The legal and reputational fallout from such a claim can be significant. Other staff may become wary of how fairly they’re treated.

Culture and Contractual Stability

There’s an invisible thread running through all of this. Yes, Jean is trying to meet tough financial targets. And yes, Bradley wants results fast. But making rapid cuts without fully considering the contractual and legal implications is risky.

Small decisions can trigger bigger consequences. Changing agreed terms without mutual consent can amount to constructive dismissal or breach of contract. Even if just one employee challenges it, the resulting tribunal case could end up costing far more than the savings made.

And then there’s staff morale. Word spreads fast in care homes. If workers feel undervalued or insecure, turnover increases, absenteeism rises, and the very quality of care the thing families pay for begins to slide.

Legal Risks in Pay and Working Hours – Advice for Jean and Bradley at Rose Hip Lodge

Question 4 (AC 4.2): What potential legal risks can you identify in respect of the law on the payment of wages and salaries, and hours of work? What advice would you give Jean and Bradley on these issues.

Let’s step back a bit. Running a care home, especially one like Rose Hip Lodge, with limited budget flexibility, puts pressure on everyone, from the owner down to the night-shift cleaner. When margins tighten, as they’ve done here, some difficult choices feel inevitable. Even so, when staff pay, hours, and conditions begin to shift under financial strain, that’s when legal exposure quietly grows. Especially in employment law, a misstep in seemingly small decisions can snowball into bigger problems.

Looking at Jean’s proposals, one by one, it’s clear they come from a place of necessity. She’s trying to keep the doors open. But, that said, several actions she’s considering could fall foul of current UK employment legislation, specifically in relation to pay, contractual rights, statutory entitlements, and fair treatment. Let’s walk through the risks and offer some grounded advice, not idealistic, just realistic for both Jean and Bradley.

i) Withholding Gerard’s Pay Increase

This is a tricky one. Gerard was verbally promised a pay rise after four months, conditional on performance. Jean argues the deal wasn’t formalised in writing, so perhaps it doesn’t hold.

Here’s the problem. While verbal agreements don’t carry the same clarity as written ones, they can still be enforceable. If Gerard reasonably believed there was a commitment, especially if there were witnesses or records of the conversation (emails, for instance), then he may have legal grounds to challenge the pay freeze. If he were to lodge a grievance or raise a claim for breach of contract, an employment tribunal might agree that the promise was part of his employment terms.

Also, if Jean fails to honour the verbal agreement solely to save costs, and Gerard is aware others are getting better rates, this could create a sense of bad faith. That’s not illegal in itself, but it may erode morale, and in worst cases lead to claims around constructive dismissal if Gerard feels he’s being pushed out unfairly.

Advice: Jean should honour the verbal agreement unless she has solid evidence it was merely a casual comment with no binding intent. If unsure, it might be better to discuss it directly with Gerard. Perhaps even propose a revised arrangement mutually agreed in writing. Quietly ignoring it could backfire.

ii) Offering New Staff Lower Pay and Flexible Hours

On the surface, this seems like a logical solution, offer lower salaries and vague hours to save money. But this introduces two major risks.

First, there’s the potential for equal pay claims. If two workers perform substantially similar roles, yet one earns 20% less simply because they’re newer, that might be grounds for complaint—especially if the disparity falls along lines of gender, race, or age. While employers can set pay levels freely, differences must be justifiable. Time of hire alone may not be enough.

Second, advertising jobs with contracts stating hours “will vary according to the needs of the business” is legally sensitive. Such vague terms may be interpreted as zero-hours contracts. There’s growing scrutiny around casualised labour, and workers on these types of contracts still have certain protections under the Employment Rights Act 1996, especially around predictable hours and income.

Advice: Be transparent. If lower pay is part of the role, explain why. Use objective criteria skills, responsibilities, qualifications to justify any wage differences. Also, if offering variable hours, consider including a minimum guaranteed number per week. That creates a clearer framework and reduces risk of future disputes.

iii) Cancelling the Christmas Bonus

Here’s where things get a bit hazy. If the Christmas bonus is truly discretionary, meaning it’s never promised, and has varied over the years then cancelling it isn’t likely to be unlawful.

But if it’s been paid consistently and staff reasonably expect it, it may be considered an implied term of the employment contract. Especially if it’s been paid without fail, in full, over several years. Taking it away now could lead to claims that contracts were varied unfairly, or that pay was withheld.

Advice: Communicate clearly. Don’t just drop the bonus without explanation. Jean could talk openly with staff, perhaps explain the budget issues and propose a temporary suspension rather than permanent cancellation. That softens the blow, and protects trust, too.

iv) Selecting Staff for Redundancy Based on Start Date

This is perhaps the riskiest proposal on the table. Making people redundant purely because they’re the most recent hires may seem fair in terms of business simplicity. But it lacks the legal rigour required in redundancy processes.

The law expects a fair, objective and consultative approach to redundancy. Selection should be based on skills, performance, or even attendance records not just start date. If employees are dismissed without a proper process, they could claim unfair dismissal and win.

Even for those with under two years’ service (who don’t have full protection), dismissing someone without process can still carry risks if discrimination is perceived or if consultation obligations are ignored.

Advice: Jean must apply clear, written redundancy criteria and engage in a genuine consultation process. There should be documented meetings, fair scoring systems, and a right of appeal. It’s more work, yes but skipping these steps can lead to expensive claims.

v) Cutting Hours for Senior Staff, With Unequal Outcomes

Jean proposes reducing her own hours and Margery’s too. On paper, it looks like a shared sacrifice. In reality, the difference is striking. Jean offsets her pay cut with a profit-related bonus, while Margery is left financially worse off. That imbalance might seem unfair to outsiders and possibly to Margery herself.

This raises two questions: Was Margery consulted? And was she given a choice? If her hours are reduced unilaterally, that could be seen as a breach of contract. Staff can’t usually have their hours (and therefore pay) reduced without consent. Even if she agrees under pressure, it may not hold if challenged.

Advice: Have a written agreement with Margery, showing that she was consulted and agreed to the changes voluntarily. Otherwise, she might later claim that her contract was changed without consent especially if the bonus system was only available to Jean.

vi) Retaining Tanya at a Lower Wage After Age 21

This one’s potentially illegal. The National Minimum Wage is not optional. Once Tanya turns 21, she’s entitled by law to the new rate of £11.44 per hour.

Asking her to agree to stay on the lower rate is unlawful. Even if she agreed in writing, it wouldn’t stand up in court. Offering her continued employment under those conditions would be, at best, unethical. At worst, it would be wage theft.

Even more risky: sacking her simply to avoid paying the higher rate could trigger a claim for automatic unfair dismissal, particularly if Tanya could argue that the reason for dismissal was related to asserting her statutory rights.

Advice: Pay Tanya the legal rate. If the business genuinely can’t afford it, then review how junior roles are structured. But trying to sidestep wage law is never worth the short-term saving.

Bradley might think these changes are just practical steps, the cost of keeping the home running. And Jean, in her position, is trying to find quick solutions in a deeply uncomfortable situation. Still, almost every move here touches on areas of employment law that are tightly regulated and closely scrutinised.

What’s more, these decisions aren’t just legal questions. They affect real people care workers, nurses, admin staff many of whom are already under strain. Small injustices, even if accidental, can build resentment. They can turn a loyal team into a demoralised one.

What would we recommend? Be open. Involve staff in discussions. Be honest about the home’s finances and explore options with the team, not just to them. And when making changes, especially to pay and contracts, always put them in writing clearly, fairly, and with room for feedback.

It’s not about getting everything perfect. It’s about showing that people matter, even when times are hard. That kind of integrity well, it might not fix the budget, but it often buys goodwill. And sometimes, that’s the difference between keeping a home going and watching it quietly unravel.

FAQs on 7OS01 Advanced Employment Law in Practice

1. What is AC 3.1 in 7OS01 really asking us to evaluate?
It focuses on how ethical theories think utilitarianism or duty-based approaches influence the decisions made in employment tribunals. You’ll need to weigh how those theories translate (or fail to) into fair outcomes.

2. How is ‘ethics’ different from ‘law’ in tribunal contexts?
Good question and not always clear-cut. Ethics often shapes what seems fair, while the law outlines what’s legal. Tribunals sometimes land somewhere in between, especially when legislation leaves room for interpretation.

3. What does AC 4.2 involve in a real-world sense?
It looks at the growing global nature of work. For instance, how employers adapt their responsibilities across regions with very different expectations around pay, working hours, or rights to unionise.

4. Are these units purely theoretical, or do they have workplace relevance?
They’re deeply practical. We’ve seen managers rethinking contracts or dispute strategies after reflecting on these issues. It’s not just ‘study’ it’s a kind of preparation.

5. Do these assessments require legal knowledge or moral reasoning?
Bit of both. You’ll draw on employment law, yes, but also on ethical judgement and a sense of what’s fair in varying cultural or legal settings. Sometimes that mix can feel messy, but that’s part of the work.