Contract and employment law
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Contract and Employment law. CONTRACT OF EMPLOYMENT. What is the contract of employment. The importance of the employment contract The distinction b/n an employee and an independent contractor; Tests used by the courts/tribunals to interpreter this distinction;

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Contract and Employment law

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Contract and Employment law


What is the contract of employment

  • The importance of the employment contract

  • The distinction b/n an employee and an independent contractor;

  • Tests used by the courts/tribunals to interpreter this distinction;

  • The status of special categories of worker

  • Contents of the employment contract – express and implied terms, terms implied by statute;

What is the contract of employment

  • The right to a written statement – s 1 of the ERA 1996;

  • Restraint of trade clauses;

  • Qualifying for employment rights – continuity;

  • Changing terms of employment

  • Flexible working arrangements;

Contract of employment

  • Contract of employment and contract of self-employment – fundamental importance

  • Only employees qualify for employment rights – unfair dismissal, redundancy payments, minimum notice on termination etc.

  • Employees – contract of employment or contract of service

  • Self-employed persons (independent contractors )– contract for services

Types of contract

  • Full - time contract

  • Part-time contract

  • Fixed-term contracts

  • Regulations (Prevention of Less Favourable Treatment) 2000 and 2002 under the ERA 2002 to prevent employees

The distinction b/n an employee and an independent contractor

  • Courts and tribunals may have to decide;

  • Tests applied;

    control test

    integration/organisation test

    multiple test

Who is an employee? - statutes

  • Section 296 of the Trade Union & Labour Relations (Consolidation) Act 1992 – ‘an individual who works or seeks to work …under a contract of employment’… or under ‘ any other contract whereby he undertakes to do or perform personally any work or service for another party…’

  • Section 295(1) of the 1992 Act and s 230(1) of the ERA 1996 (limited guidance in the legislation) – ‘an individual who has entered into or works under a contract of employment’

  • Section 230(2) in this Act ’contract of employment’ means a contract of service or apprenticeship, where express or implied, and (if it is express) whether oral or in writing.

Tests developed through case law for determining the employee’s status

  • Control test – does the person who is to be regarded as the employer control the employee or servant?

  • Control extends to not just what the employee does, but how it is done

  • If the answer is in the affirmative – there is employer/employee relationship

  • Independent contractor – might be told what to do, but not how to do the work

  • One problem – interpreted strictly it results in skilled and professional people

Integration test- counters the deficiencies of the control test

  • The question to be asked is – how far is the servant/employee integrated into the employer’s business

  • Fully integrated into the employer’s business- Whittaker v Minister of Pensions and National Insurance (1967)

  • Employer could avoid tax and national insurance provisions, liability for accidents

Multiple test-much wider

  • The servant agrees that, in consideration of a wage or other remuneration, he or she will provide his or her own work and skill in the performance of services;

  • He or she agrees expressly or impliedly, that in the performance of that services, he or she will be subject to the other’s control in a sufficient degree by the employer;

  • The other provisions of the contract are consistent with its being a contract of service;

Multiple test – wide application

  • Proved to be most adaptable;

  • Control is always to be considered, but not as a sole determining factor; Market Investigations Ltd v Minister of Social Security (1969);

  • Continuous to be flexible to the changes in the labour environment (casual or seasonal workers);

  • “Mutuality of obligation” – O’Kelly v Trusthouse Forte plc (1983)

  • Wickens in Montgomery v Johnson Underwood Ltd (2001)

Multiple test – all facts to be considered

  • The degree of control by the employer;

  • Wear company uniforms;

  • Obey orders;

  • Pay all running costs;

  • The degree to which the worker is integrated into the business;

  • Examples; Market Investigation v Minister of Social security (1969) etc.

Atypical workers- application of the multiple test

  • Work from home- home workers;

  • Casual basis work – casual workers;

  • Agency workers;

Loaning or hiring of employees

  • The courts are reluctant to find that there has been a transfer of employment where employees are loaned or hired out , unless there is consent on the part of the employee or there is an agreement which clearly states the position in the event of liability;

  • CASE LAW – Sime v Sutcliff Catering (1990)-exception where the court declared the employee has become an employee of the ‘second ‘employer

The impact of EU law

  • R v Secretary of State for employment ex p Seymour-Smith (1999), ECJ;

  • Employment Relations Act 1999 – qualifying period for unfair dismissal was reduced to one year;

Continuity: periods away from work

  • In order to acquire employment protection rights, there should be continuity of employment

  • Important to consider the impact of weeks away from work;

  • Section 212 of the ERA 1996 – main legislative provision

  • Pregnancy, childbirth, sickness or injury, temporary cessation of work or custom or practice will generally count in computing the period of employment

Formation of the contract of employment – types of terms

  • Written statement of terms - Pt 1 of ERA 1996 – names, rate of pay, hours of work etc.

  • The Trade Union Reform and Employment Rights Act 1993 – non-permanent employment, collective agreements etc.

  • Specimen statement of terms of employment

Terms of the employment contract

  • Express terms – written into the contract and agreed upon by the employer and the employee;

  • Breach of an express term of the contract may result in the dismissal of the employee, while breach on behalf of the employer , may enable the employee to resign and bring an action for constructive dismissal;

Implied terms – the purpose is to make the contract more effective (trust and respect)

  • Are not written into the contract;

  • May arise out of the custom and practice of a particular industry;

  • Have to be read subject to any express terms

  • Standard implied terms – duties imposed on the respective parties;

  • Breach by the employee may result in disciplinary action or even dismissal;

  • Brach by the employer may result in legal proceedings before a tribunal;

Duties of the employer-implied terms

  • To Pay the employee;

  • To provide work;

  • Treat the employee with mutual trust and confidence;

  • Take reasonable care for the safety of the employee;

  • Deal promptly with grievances;

  • Reimburse the employee for any expenses properly incurred while at work;

  • Write references;

Duties of the employee-implied terms

  • Be ready and willing to work;

  • Use reasonable care and skill at work;

  • Obey reasonable and lawful orders;

  • Take care of their employer’s property;

  • Act in good faith – mutual respect;

Statutory terms

  • The ‘equality clause ’equal pay’ – s 1 Equal Pay Act 1970;

  • The right not to be unfairly dismissed – s 94 ERA 1996;

  • The right to be given a copy of disciplinary and grievances procedures implied by s 30 of the ERA 2002;

  • Various provisions – s 203 of ERA 1996;

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