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

2

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

3

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

4

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

5

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

6

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

7

• 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

8

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

9

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

10

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

11

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

12

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

13

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

14

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

15

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

16

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

17

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

18

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

19