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

 Case: Mersey Docks v Coggins

Stevedores hired a crane with its driver from the

harbour board under a contract which
provided that the driver should be the
employee of stevedores. Owing to the drivers
negligence a checker was injured.
Held: issue must be settle on the facts and not
on the terms of the contract

Integration test- counters the deficiencies of

the control test
The question to be asked is how far is the

servant/employee integrated into the

employers business

Fully integrated into the employers business-

Whittaker v Minister of Pensions and National

Insurance (1967)

Employer could avoid tax and national

insurance provisions, liability for accidents

 Cassidy v Ministry of Health

Facts: medical officer at a hospital carried out a

surgical operation in a negligent fashion.
Patient sued the Ministry of Health as
employers. Ministry resist the claim arguing
that it had no control over the doctor in his
medical work.
Held: the proper test was whether the employer
appointed the employee, selected him for his
and so integrated him into the organisation.

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 others control in a sufficient degree by
the employer;

The other provisions of the contract are consistent

with its being a contract of service;

 Case: Ready Mixed Concrete v Ministry of

Pensions
Facts:driver of a special vechicle worked for
one company in the delivery of liquid concrete
to building sites. Vechicle was painted in the
companys colours and the driver were its
uniform.
Held ; whether the worker is working on his
own account.

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 OKelly 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;

To provide work
The employer normally will be expected to

provide work for the employee and where the

employee is skilled and needs practice to
maintain those skills, there may be an
obligation to provide a reasonable amount of
work

To provide work
Langston v Amalgamated Union of

Engineering Workers (1974)).

Facts: claimant refused to join the trade
union. As a result of union pressure, his
employers were forced to suspend him from
work on full pay.
Held: there is an obligation to provide a
reasonable amount of work.

 Case: Clayton and Waller v Oliver

Facts: an actor was engaged for the leading

role in a show. The management engaged

someone else but agreed to pay the actor for
his lost but he also sued for loss of
reputation.
Held: he was entitle to damages

To provide work
Collier v Sunday Referee
The plaintiff was a chief sub-editor with the

defendant. He sought the right to work and be

paid for working.
Held: The employee had the right to work.

To provide work
The employer may be liable for failing to provide

work, if a reduction in the employees earnings

occur.
Devonald v Rosser & Sons [1906] 2 KB 728 is a
UK labour law case concerning the
contract of employment. It held that an implied
term of employment contracts is that when there is
no work available to be done, the employer must
bear the risk by continuing to pay wages.

 William Hill Organisation Ltd v Tucker (1998)

facts:Tucker had been involved in developing a

new approach to betting. When he gave notice of
his intention to resign, William Hill tried to put him
on garden leave (to stay away from work while
on full pay) for six months. During that period he
would not be allowed to work.
Tucker challenged this on the basis that he
needed to keep practising his skills, and six
months was too long a period to be away from
work. He was successful in his claim.

To pay wages
Normally, the rate of pay is expressly stated

in the contract of employment. However, in

the absence of an express provision, the law
will impose the duty to pay a reasonable
remuneration for the work done.
an employer must pay employees their
wages even if there is no work available,
although an express term to the contrary may
be included in the contract of employment.

To pay wages
Where workers, in the pursuit of an industrial

dispute, offer only part performance by

working to rule or adopting a go-slow policy,
the employer can refuse to accept such part
performance and can refuse to make any
payment for work done.

To pay wages
Case: Miles v Wakefield

claimant was a superintendent registrar of Births

Deaths and Marriages. His union instructed him
not to conduct weddings on Saturdays. He now
complained of the deductions made from his
wages for compliance with that instruction.
Held: His position was akin to an employee even
if he was not strictly such but rather an office
holder. His right to be paid depended upon his
doing the work he was employed to do. The
deductions were proper.

To pay wages
Availability of work.

There is an entitlement to pay eventhough

employees cannot work because no work is
available. Time workers are paid for being
ready, willing and able to work for their agreed
hours.
Case: Turner v Sawdon, it was held that the
employer had a duty only to pay wages, not to
provide work to a man employed as a
salesman.

To indemnify the employee

Where the employee in the course of his or her

employment incurs any legal liability or necessary

expenses on behalf of the employer, the employee is
entitled to be indemnified or reimbursed.
Case: Burrows v Rhodes
Facts: D was the organisers of the Jameson raid. They
induced P to re-enlist in the armed forces of the British
South Africa Co., this they did by means of a fraudulent
statement. P believed that the venture in which he was
to take part was lawful
Held: he was entitled to damages from his employers for
injuries received.to damages from his injuries received.

Mutual respect
The employment relationship is assumed to be based on

mutuality of respect, trust and confidence and the employer

must not act in a way calculated to damage such mutuality.
As will be seen, this is a reciprocal relationship, but it is
clear that employers cannot treat their employees in an
abusive manner (Isle of Wight Tourist Board v Coombes
(1976))
and must be prepared to address any grievances they might
have (WA Goold (Pearmak) Ltd v McConnell & Another
(1995))

 Case: Donovan v Invicta Airways

Facts: P, an airline pilot, was subjected to

abusive conduct by his employer. As a result,

P, resigned.
Held: the incidents were not substantial
enough to justify treating the contract as
having been broken.

 Case: Isle of Wight Tourist Board v Coombes

Facts: a director was heard to describe his

personal secretary as ,an intolerable bitch on

a Monday morning.
Held: there was a breach of mutual respect
and conduct, that entitle her to resign.

 In Malik v BCCI SA, it was stated that the

employer should not conduct itself in a

manner likely or seriously damage the
relationship of confidence and trust between
employer and employee.
Failure to exercise a discretion in good faith
may amount to a breach of implied terms of
trust and confidence-Horkulak v Cantor
Fitzgerald

To provide a safe system of work

At common law, the employer is required to take reasonable

care for the health and safety of his employees. Failure to

comply will render the employer liable for an action in
negligence. The duty extends to the provision of competent
fellow
employees, safe plant and equipment, a safe place of work
and a safe system of work. If the employer has taken all
reasonable steps to comply with the duty of care, then they
will not be liable for any injury sustained (Latimer v AEC
Ltd (1953)).

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 employers 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;