Contracts Of Employment 20.10.09.F

Contracts of Employment

What you need to knowMichael ScuttDale Langley & Co60 Lombard StreetLondon EC3V 9EA

www.dalelangley.co.uk

www.michaelscutt.co.uk

Definition of Employee

• An employee is “an individual who has entered into or works under ... A contract of employment”

• S.230(1) Employment Rights Act 1996

(c) Michael Scutt 2009

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Contracts of employment – what

you need to know

• What is an Employee?

• Why does it matter?

• Employees v Workers

• Legal Formalities

• Statute/Common Law/Implied terms

• Disciplinary/Grievance procedures

(c) Michael Scutt 2009

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Why does it matter?

• Different categories of “worker”;

• Employees – “mutuality of obligation”

• Agency Workers

• Casual/Home Workers

• Answer: different obligations and legal remedies available

(c) Michael Scutt 2009

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Employees’ statutory rights

• Unfair dismissal

• Redundancy

• Minimum period of notice

• Statutory Maternity Pay/ Stat. Sick Pay

• TUPE protection

• Apply to employees only

• Additionally, an employer can be vicariously liable for an employee’s negligent act

(c) Michael Scutt 2009

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Workers’ Statutory Rights

• Discrimination (sex, race, age, disability, religious belief, sexual orientation)

• National Minimum Wage

• Working Time Regs (48 hours max)

• Right to rest breaks and min. annual holiday (28 days)

(c) Michael Scutt 2009

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Workers’ Statutory Rights (cont’d)

• Whistleblowing

• Right to be accompanied at a disciplinary/grievance hearing

• All apply to employees as well

• None of the above applies to the genuinely self-employed

(c) Michael Scutt 2009

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• Usual problem is: is the person self-employed?

What do Employment Tribunals look at?

• Description in job advert

• What does job offer letter or contract say?

• Tax status of worker – important but not conclusive

Employed v Self-employed

(c) Michael Scutt 2009

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Employed v Self-employed (cont’d)

• What happens if the worker can’t perform his duties?

• How much does the employer control the worker?

• How are similar workers treated?

• Who provides the equipment?

• Who pays for any professional insurance?

(c) Michael Scutt 2009

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Example

• Joe – telesales operator

• Works hours set by employer

• Receives (net) pay

• Job is done at direction of employer

• There is a staff handbook

• Disciplinary/Grievance procedures apply

(c) Michael Scutt 2009

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Case Study 2

• Sue – HR Consultant

• Works from own premises

• Works for other businesses

• Issues invoices for payment

• Paid on commission only

• Provides own equipment

Remember: it is for the “master” to determine whether the “servant” is employed/self-employed

(c) Michael Scutt 2009

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Camel or Horse?

• “If parties agree to create a horse but insteadcreate a camel, the fact that they intended tocreate a horse and even call what they havecreated a horse is of little assistance indetermining whether it is in fact a horse.”

• Levy McCallum Ltd v Middleton EAT [2005]

(c) Michael Scutt 2009

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Legal Formalities

• Contracts of employment not legally required but cf: S.1 ERA 1996 – written statement of terms and conditions to be supplied within two months of employment commencing

• http://www.bailii.org/uk/legis/num_act/1996/ukpga_19960018_en_1.html#pt1-pb1-l1g1

(c) Michael Scutt 2009

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Legal Formalities cont’d

• No free-standing remedy other than a Declaration by ET, but presented with another claim ET can impose two or four weeks’ pay capped at £380 p.w

• Immigration, Asylum & Nationality Act 2008 -it is an offence to knowingly employ a person aged 16 yrs or more and who is subject to immigration controls and has not been given leave to enter or remain

(c) Michael Scutt 2009

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Legal Formalities (cont’d)

• All employers must have employers liability insurance – Employers’ Liability (Compulsory Insurance) Act 1969

• UNLESS the only employee is the owner

(c) Michael Scutt 2009

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Contract terms implied into every

employment contract

• Mutual duty of trust and confidence

• Employer will provide a safe system of work

• Employee will take reasonable care of themselves

• Employee will obey reasonable instructions

• Employee will carry out their duties personally

(c) Michael Scutt 2009

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Why have a contract of

employment?• Notice provisions – extend statutory notice

• Mobility/Alternative duties clauses

• Right to vary contractual terms

• Contract out of WTR (48 hours p.w)

• Bonus provisions

• Improve SMP/SPP

• Reserve right to obtain medical evidence from independent medic

• Confidentiality and return of property

• Restrictive Covenants

(c) Michael Scutt 2009

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Disciplinary/Grievance Procedures

• Employment Act 2008

• ACAS Code of Practice – www.acas.org.uk

• The statutory dispute resolution regulations have been repealed but some cases still caught by them

• Three step disciplinary process –investigation/meeting/hearing (right to be accompanied)

• 25% uplift/reduction

• Doesn’t apply to redundancies/expiration of fixed-term contracts/claims by part-time workers

(c) Michael Scutt 2009

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Useful Links

• www.hmrc.gov.uk/employment-status/index

• www.acas.org.uk

• www.businesslink.gov.uk

• www.dalelangley.co.uk

• www.michaelscutt.co.uk

• Tel 0207 464 8433

• Twitter = @michaelscutt

• michaelscutt@dalelangley.co.uk

(c) Michael Scutt 2009

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