Legal Risks and Employment Relations Issues for ABC Ltd

The case study presents a scenario where Paul MacBarrel, a sales team member, is up for promotion despite having close relationships with several top-performing salespeople. Mike Replica proposes four ideas to improve the sales team's performance: introducing a commission-based payment system, dismissing poor performers and replacing them with stronger ones, requiring regular medical checks to ensure fitness levels, and promoting innovative ideas like Paul MacBarrel. The assignment requires students to critically examine the legal risks associated with these proposals (LO2 & LO3), discuss defences available for ABC Ltd if an employee brings a tribunal case (LO2 & LO3), and evaluate employment relations issues that could result from implementing these changes within the organization (LO1).

Assignment Questions
Case Study
ABC Ltd is an independent software house employing 250
staff. Its business involves the production and ongoing
maintenance of specialised software which is used by car
dealerships for stock control and accounting purposes. New
versions of its core products are developed every 18 to 24
months. The business is fiercely competitive, ABC being
relatively small players in a large international market. They
survive by maintaining their 800-strong customer base,
serving these businesses well and involving them in ongoing
developmental and maintenance issues through a 'user
group' which meets each month.
ABC employs a twelve-strong sales team who are seen by
senior managers as being central to the organisation's
success and future survival. Their role is to maintain good
relationships with established customers, to seek out new
business wherever possible, to ensure that clients are happy
to invest in new versions of software packages as they come
on stream and to liaise with the 'user group'. The latter
involves running formal meetings which are always followed
by social events at which ABC managers entertain their
clients late into the night in pubs, clubs and restaurants.
Steve Brown has been the Sales Director at ABC for as long
as anyone can remember. He is widely considered to have
managed the sales team very effectively, while also
maintaining excellent relations with major clients. Despite
attempts to persuade him otherwise he has now decided to
take early retirement. He and his wife plan to use the
substantial commission he has earned over the years to
travel the world in some style. A replacement thus needs to
be found.
It is decided that an exclusively internal recruitment
exercise will take place, that Steve's job will not be
advertised outside ABC, and that a relatively informal
selection procedure will be used to install a replacement
quickly. No formal advertisement is drawn up. Instead a
meeting of the twelve sales staff is called at which Steve
Brown’s retirement is announced by the Chief Executive,
Paul MacBarrel. At the same time he states that while Steve
is working his notice a replacement will be appointed to
work alongside him for a few weeks before he leaves. “If any
of you are interested in being considered for the position”
he says “drop me an email”. Later that day he receives four

emails from long-standing members of the sales team
putting themselves forward. The next day Paul meets with
his Finance Director, his Company Secretary and Steve to
make a decision about who should be promoted to the vital
role of Sales Director.
The first candidate they consider is Joan Keenan. Joan is a
very good recent recruit and one of only two women
currently employed as sales people at ABC. The senior
managers quickly decide to reject her application. She is a
good deal younger than
most of the team she would be managing and they doubt
that a predominantly older male team would take at all
kindly to being managed by a young woman. They are also
concerned about the impact Joan's appointment would have
on the mainly older, male customers who make up the user
group and who are used to being entertained by others of a
similar ilk after the 'user group' meetings.
The second candidate is Aldo Viscida. He is in his early
forties and is a brilliant salesman. He has been employed at
ABC for some years, having emigrated from Milan in the
1980s. He regularly tops the monthly table for sales
commission, having won many bonuses and prizes over the
years. He is respected by the other employees on his team.
However, his written English is poor and the Sales Director's
role involves writing regular reports as well as much more
written communication with clients than is required of the
sales team. Aldo's application is thus also rejected.
The third candidate is David Constant. He is the longest-
serving member of the sales team after Steve, and is
generally considered to be his deputy in all but name. He is
well-liked among the user group members and would do a
competent job in the Sales Director's role. On the downside,
from the panel's point of view, is the fact that David is now
61 and so can be expected to retire soon. He has also
recently told them in confidence that his wife has been
diagnosed with multiple-sclerosis and they fear that he will
have to devote himself to her care sooner than he thinks.
This would inevitably mean that he has less energy to put
into the more senior role.
It is thus decided that the fourth candidate, Mike Replica,
will be appointed to succeed Steve. Mike is 40 years old,
very professional and has long been considered a possible
future senior manager. He has plenty of interesting ideas
about how to develop both the role and the team. The fact

that he is married to the Finance Director's niece and
regularly plays golf with Paul MacBarrel is not considered to
be problematic. After all, why should he be prevented from
being promoted simply because of these relationships? It
would be unfair to bar him on that account, particularly
when he has the innovative ideas required to take the sales
team forward and improve its performance.
Among Mike Replica's ideas are the following:
Move to a payment arrangement that is wholly commission-
based. At present the sales team add, on average, 20% or so
to their monthly salaries in commission payments. Mike
would like all pay to be at risk so that 100% of earnings
were dependant on sales targets being met. Mike plans to
introduce this new system with immediate effect.
Dismiss, as a matter of policy, the poorest performing
members of the sales team each year and replace them. The
identity of the leavers should be determined purely on the
basis of the value of new sales achieved (or not achieved).
Not only should this
policy result in poorer performers being replaced over time
with stronger ones, it should also boost energy-levels
generally and increase the hours the team puts in.
To require all members of the sales team to undergo regular
medicals with the company doctor with a view to
establishing their fitness levels. Those who are overweight
would then be required to diet until they reach a target
weight, while smokers would be required to attend classes
aimed at persuading them to give up.
Using the relevant case laws, answer the following
questions in no more than 2500 words (assignment)
1. a) Critically examine the legal risks that ABC Ltd face in taking the course of action
outlined in this case? (LO2 & LO3) (700 words)(20 marks)
2. b) Critically discuss the defences available for ABC Ltd to deploy should an
aggrieved employee or would-be employee decide to bring a tribunal case? How
strong a case could be mounted? (LO2 &LO3) (700 words)(25 marks)
3. c) Evaluate the employment relations issues that could result within the
organisation if the senior management team were to proceed with the course of
action as described in the case study? (LO1) (500 words)(20 marks)
IN YOUR ANSWERS TO TASKS a, b and c, YOU MUST REFER
TO RELEVANT UK/EU EMPLOYMENT LAW ONLY.
GUIDANCE FOR STUDENTS

The 2000 word report should be in a business report format:
1. Executive Summary (Not part of the word count)
2. Introduction -
3. Task/Assignment Discussion
4. Conclusion
5. Recommendations
.....................................................................................................
An Executive summary
An overview of the assignment discussion including recommendations (the word
count within the executive summary is exempt from the 2000 word count) (5
Marks)
Introduction
In the introduction, you should define recruitment and selection and discuss briefly
what constitutes good practice in this area with a brief outline of the relevant
employment legislation.
Task/Assignment Discussion
You should set your response for each question under separate headings.
Under question a
  Identify the legal risks that ABC Ltd is likely to face based on the course of action
outlined in the case study in relation to the recruitment and selection process and
the CEO’s plan of action
  You MUST explain why these are legal risks using the relevant legislation and case
law
 Discuss the potential defence an employer has in relation to the relevant
legislation under employment law in general.
Under question b
 Analyse the possible defence that ABC Ltd has in relation to the course of action outlined
in the case study in relation to each of the four applicants. Your analysis should include the
weakness in each of the applicants’ claim.
Under question c

  Define employee relations and discuss why effective management of employee
relations is beneficial to organisations in general
  Identify the employee relations issues that could result from within the
organisation if the senior management were to proceed with the course of action
taken. Provide an explanation of how the senior management team could
successfully manage the employee relations
  Explain how the senior management team could apply good practice in
recruitment and selection to achieve their objectives.
Conclusions
You should summarise your report with a conclusion. In this section you may
make general conclusions regarding managing recruitment and selection
practice and the role of HR and line managers in recruitment and selection.
Recommendations
You should ensure that your recommendations relate to future practices for the
company and reflect best practice in employment law and the HRM field as a
whole.
Your report should be properly
referenced using the Harvard referencing
format. It should also include a
bibliography.