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Contract and Employment law
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Contract and Employment law

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  1. Contract and Employment law CONTRACT OF EMPLOYMENT

  2. 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;

  3. 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;

  4. 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

  5. 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

  6. 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

  7. 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.

  8. 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

  9. 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

  10. 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;

  11. 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)

  12. 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.

  13. Atypical workers- application of the multiple test • Work from home- home workers; • Casual basis work – casual workers; • Agency workers;

  14. 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

  15. 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;

  16. 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

  17. 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

  18. 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;

  19. 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;

  20. 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;

  21. 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;

  22. 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;