A copy of my presentation to users of the City Business Library on 20.10.09

1. Contracts of Employment
What you need to know
Michael Scutt
Dale Langley & Co
60 Lombard Street
London EC3V 9EA
www.dalelangley.co.uk
www.michaelscutt.co.uk

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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

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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

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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

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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

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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)

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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

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Employed v Self-employed
• 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

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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?

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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

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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

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Camel or Horse?
• “If parties agree to create a horse but instead
create a camel, the fact that they intended to
create a horse and even call what they have
created a horse is of little assistance in
determining whether it is in fact a horse.”
• Levy McCallum Ltd v Middleton EAT [2005]

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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

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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

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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

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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

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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

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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

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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