Case Study 7OS01
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.
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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:
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.
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’.
Jean proposes to withdraw the Christmas bonus that has nearly always been paid in the past to all staff.
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.
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.
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.
Write a report of 4000 words (+/- 10%) which addresses each of the following questions. You should refer to leading cases as well as employment statutes when justifying your key points.
Question 1 of 7OS01 (AC 1.3)
Explain how the level of legal risk associated with some of these proposals may vary depending on the employment status of the people employed at Rose Hip Lodge.
Question 2 of 7OS01 (AC 2.1)
What potential legal risks can you identify in respect of discrimination law? What defences might the company be able to put forward were any of these matters to come before an employment tribunal?
Question 3 of 7OS01 (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?
Question 4 of 7OS01 (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