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Employment Law Condensed Notes
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Chapter 9 – Introduction to Employment Law SGS 16 – Internal Disputes IIEmployment is largely governed by employment contract (contract law and common law principles)
There is statutory control over certain elements like –
Minimum wage – National Minimum Wage Act 1998
Working time – Working Time Regulation 1998
Minimum notice period – Employment Rights Act (ERA) 1996, s.86
Unfair dismissal – ERA, s.94
Status
General An individual could have one of the following statuses –
1. Independent contractors – individuals who sets up own business and provide services under
contract for services
o Self-employed
o Incur independent expenses
o Independent tax affairs with HMRC directly
o No employment relationship with those they perform services for
2. Workers – hybrid between independent contractor and employee
3. Employees – required to work regular hours at set location for a fixed salary on set tasks
o Receives employee benefits like a fixed salary and paid holiday leave
An individual’s status will determine things like –
Statutory employment protection rights (e.g. unfair dismissal)
Tax obligations to the HMRC (e.g. PAYE)
Vicarious liability
Redundancy payment
Employee
Definition An individual who has entered into, or works (worked) under a contract of employment (ERA, s.230(1))
A contract of employment depends on substance not form –
A contract labelled ‘contract of service’ or ‘contract for services’ is not definitive
Employee status is therefore determined by a number of common law test –
1. Personal service test
2. Control test
3. Mutuality of obligation test
4. Economic reality and integration tests (other factors)
Personal service test
Considers whether an individual must perform work personally
Right to send a substitute to perform work in his place may negate employee status
Court will however, also consider –
Any fetter on right to substitute (e.g. substitute from a employer approved list, only if sick, etc.)
Actual exercise of right to send a substitute
Control test
Considers the level of control an employer has over the individual’s work pattern, for example control over –
Who does the work
What work is done (e.g. tasks)
Where the work is done
When the work is done
Number of hours worked
How the work is to be performed
The more control, the more indicative of an employer-employee relationship
Mutuality of obligation test
Considers whether –
Employer has a duty to provide work
Individual has a duty to accept and perform the work given
Economic reality and integration test (or multiple test)
The court will take into account all aspects of the individual work activities such as –
Integration into the workforce (e.g. trainings, meetings, internal email, uniform, equipment)
Individual’s degree of financial risk
How the individual is paid (e.g. regular wage slip, submission of invoice)
Ability to work for others
Description of the relationship by parties
Subject to disciplinary or grievance procedure
, Chapter 9 – Introduction to Employment Law SGS 16 – Internal Disputes II
Paid holiday or sick pay
Requirement to wear uniform or appearance to outer world
Taxation of earnings (e.g. PAYE or individual accounts)
Worker
Definition All employees are also workers, but not all workers are employees
Workers defined under ERA, s.230(3) is an individual who has entered into works under –
A contract of employment or
Any other contract (express or implied, oral or in writing) where an individual undertakes to do any
work or services for another party (other than a client or customer) to the contract
Rights Workers have statutory rights under –
Public Interest Disclosure Act 1998
Working Time Regulation 1998
National Minimum Wage Act 1998
Equality Act 2010
Independent Contractor
Definition Also known as ‘freelance workers’ or ‘self-employed’
An individual who works under a contract for services, rather than a contract of service
Often found in industries like construction, catering, shipping and IT
Contract drafted to provide maximum flexibility –
No obligation to provide services personally
No overt control
Certain degree of financial risk
Wrongful Dismissal
Nature Where an employer dismisses an employee in breach of the terms of the employment contract
Court or Employment Tribunal only concerned that the contractual requirements are complied with
Remedy for wrongful dismissal is damages for breach of contract
Put the claimant in the position he would have been in had there been no breach
Ex-employee under a duty to mitigate (e.g. by seeking new employment)
Damages will be reduced accordingly if claimant finds a new job
Notice Notice required is determined by the contract but also subject to a statutory minimum under ERA –
Employed for more than 1 month but less than 2 years – 1 week
Employed for more than 2 years – 1 extra week for every year (up to a maximum of 12 weeks)
Summary dismissal – no notice required where employee is involved in very serious breach of contract
(e.g. caught red-handed stealing from employer, assaulting another employee)
Court Wrongful dismissal claims may be brought at the –
1. Employment Tribunal
o Damages limit – £25,000
o Time limit – within 3 months of dismissal
o Claims are subject to a mandatory early conciliation procedure using Advisor,
Conciliation and Arbitration Service (ACAS) of up to a month before brought to Tribunal
2. County Court or High Court
o Damage limit – no limit
o Time limit – within 6 years of breach of contract (statutes of limitations)
o No ACAS requirement
PILON A payment in lieu of notice clause (PILON) allows employer to pay the employee rather than require the
employee to work during the notice period
There will be no breach of contract and no claim for wrongful dismissal if PILON clause is exercised
properly
Unfair Dismissal
Can the individual bring an unfair dismissal claim?
Is the individual an employee?
Has he been dismissed (expressly or constructively)?
Has he been employed continuously for 1 (or 2) years (qualifying period of service)?
Is he in an excluded category?
Did the employer have a fair reason for dismissal?
Capability
Conduct
Redundancy
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