Employment Law Exam Notes
The Employment Relationship
ss.1 – 3 Employment Rights Act (“ERA”) 1996
s1(1) Where a worker begins employment with an employer, the employer shall give to the worker a
written statement of particulars of employment.
S2 if there are no particulars to be entered that fact should be stated.
S3 A statement under s1 shall include a note about disciplinary procedures and pensions.
Employee: s230(1) ERA ‘an individual who…works under…a contract of employment’.
Zero-hour contracts: St Ives Plymouth Ltd v Mrs D Haggerty [2008]: the EAT found that while there
was a zero hours contract, there were mutual obligations, such that Ms Haggerty was an employee.
- Must be a contract of employment.
Worker: s230(3). Identifying factors – personal performance.
SOS for Justice v Windle --- definition of employee and worker both require there to be a contract in
existence. For contract to exist there must be expressly or impliedly, an offer, acceptance,
consideration, or intention to create legal relations.
Employment protections that apply to both employee and worker: The National Minimum Wage
Regulations 1999, the Working Time Regulations 1988, the Part-time Workers (prevention of less
favourable treatment) Regulations 2000.
The employment contract
A “Contract of Employment” is “a contract of service… whether express or implied and (if it is
express) whether oral or in writing” (s230(2)).
May be written, oral or a mixture of both.
The Court will look at the true nature of the agreement, not just what is written down
(Autoclenz ltd v Belcher).
Where no employment contract, the law requires employers to provide a written statement
of terms to their employees.
Written statement of terms: the right to receive a WS covers workers as well as employees. Following
particulars – identity of the parties, date employment began, date continuous employment began,
whether contract subject to probationary period, scale or rate of remuneration and intervals of pay
and fringe benefits, hours of work, terms relating to holiday pay, sickness and sick pay, pension and
pension schemes. Details of training provided, length of notice required to determine contract, if
fixed term end date, job title or brief description of work, place(s) of work.
(statement only needed if no contract).
Fails to give written statement/dispute as to accuracy of WS:
EA 2002 states tribunal must award compensation of 2-4 weeks’ pay (up to a maximum of
£571 per week) to the employee, where the absence of particulars becomes evident upon a
successful tribunal claim being brought under any of the tribunal jurisdictions listed in
schedule 5 to EA 2002.
Defective contract of employment:
Under s38(2) and (3) Employment Act (“EA”) 2002, when a Tribunal finds in favour of an
employee for any claim in Schedule 5 and the employer was in breach of the s1 ERA 1996
duty, the employment tribunal “must, subject to s5, make an award of the minimum amount
to be paid by the employer to the employee and may, if it considers it just and equitable in all
the circumstances, award the higher amount.”
, Under s38(4) EA 2002 the “minimum amount” is 2 weeks’ pay and the “higher amount” is 4
weeks’ pay.
Under s5 EA 2002 there is scope not to make an award where there are “exceptional
circumstances” that would make an award “unjust or inequitable”.
After any complaint – review written contract(s) to ensure they are s1 compliant.
Amendments to a contract to be in compliance with s1 requirements
- Place of work: alter to ‘may be required to work at any other office operated by the
Employer in or within a five mile radius of [ ]’ – this allows flexibility, if still within the radius
the mobility clause will apply.
- Remuneration and expenses: method of payment and date.
- Clause or sub-clause dealing with payments of expenses.
- Make sure the hours of work are correct to fit in with the client’s needs/instructions.
- Make sure the minimum holiday entitlement under the Working Time Regulations i.e. 5.6
weeks (so 28 days for a full-time worker) is given. This includes bank holidays.
- Clauses relating to the use of the internet and email, the right of the Employer to monitor
communications, equal opportunities, health and safety etc. However, if they appear in the
contract they become contractual. This makes them difficult to amend without consent. They
might instead, be drafted as workplace policies.
Implied terms:
Even where written statement or contract, terms will be implied into the contract.
Newcastle upon Tyne Hospital NHS Foundation Trust v Haywood --- term will be implied into
contract that notice of termination will start to run from date employee receives written
notice of their dismissal, and had reasonable opportunity to read it.
Terms implied by statute: Working Time Regulations 1998, National Minimum Wage Act
1998, Equality Act 2010.
Implied by common law:
- employers’ duties – duty to pay wages and provide work, duty to indemnify employee,
duty to take reasonable care of employee’s safety and working conditions, duty of
mutual trust and confidence, duty to take reasonable care in giving references (Caparo
Industries v Dickman), duty to notify on termination without notice, duty to give
reasonable notice (s86 ERA).
- Employees’ duties – duty to give personal service (may not delegate performance), duty
to obey reasonable orders, duty of reasonable care and indemnity, duty of fidelity or
good faith, secret profits, competition, conflict of interest and duty, trade secrets and
confidential information.
Example of confidential/trade secrets: Revealing trade secrets or information which
is by its nature confidential, or has been impressed upon the employee as being
confidential (Faccenda Chicken Ltd v Fowler). Making a list of existing customers with
the intention of using it after the termination of the employment relationship (Roger
Bullivant Ltd v Ellis).
Mutual trust and confidence:
Employers must not: “Without reasonable and proper cause: Conduct themselves in a manner
calculated or likely to Destroy or seriously damage the relationship of mutual confidence and trust
between employer and employee”.
(Woods v WM Car Services (Peterborough) Ltd).
Examples –
Unjustified imposition of a final written warning - Stanley Cole (Wainfleet) Ltd v Sheridan.
Serious breach of the employer’s duty to make reasonable adjustments - Greenhof v
Barnsley Metropolitan BC.
, Sex discrimination - Shaw v CCL Ltd.
Pay:
Remuneration clause should state how employee’s remuneration is calculated (hourly wage/annual
salary) and when payment is due (weekly/monthly).
Contract specify fringe benefits.
S8 ERA 1996 – employees should receive itemised payslips showing gross and net amounts and
where different amounts are paid in different ways.
Sick pay:
s1(4)(d)(ii) ERA 1996.
Contract should state if employer pays sick pay and if paid, for what period, how much and whether
SSP is deducted in calculating it. Employee off for period of 3 consecutive days entitled to SSP from
employer. Rate of SSP is £99.35 payable for maximum period of 28 weeks in any 3 years.
Confidentiality:
Faccenda Chicken Ltd v Fowler --- during employment, implied term that an employee shall not
reveal any confidential information.
After employment – only trade secrets and equivalent highly confidential information are protected
by implied terms.
Pensions and pension schemes:
s1(4)(d)(iii) ERA - All employers are obliged to offer workers who are: Aged between 22 and the State
Pension age, earn at least £10,000 a year, work in the UK, access to a workplace pension.
Restraint of trade clauses
Restrictive covenants:
Employers insert express restrictive covenant into employee’s contract to prevent unfair competition
after employment ends.
A restrictive covenant restraining an ex-employee from working in a competing business or soliciting
ex-customers is prima facie void as being in restraint of trade.
For RC to be enforceable – (a) employer must have legitimate business interest to protect (trade
secrets, highly confidential info that if disclosed to competitor would cause real or significant damage
to owner of secret- Lansing Linde Ltd v Kerr). (ii) trade connections eg employer’s relationships with
their customers and clients (goodwill), show breach would result in actual or potential harm to
employers business (Jack Allen v Smith). (iii) the employer’s interest in maintaining a stable and
trained workforce. (B) the restraint must also be reasonable in time and area and must be no wider
than necessary to protect employer’s business interests.
Is the restrictive trade covenant enforceable?
There is an implied term in the contract that the employee does not release any confidential
information. After employment – only trade secrets/highly confidential protected (Faccenda
Chicken Ltd v Fowler).
Questions to consider whether information falls within category of not being disclosed: What
was nature of employment? Nature of information? Did employer tell employee information
was confidential? Can this information be isolated from other info employee free to use?
Express terms: any clauses in the contract which restrict the use of this information. First,
legitimate business interests to protect? Lansing Linde Ltd v Kerr – if disclosed to competitor
would be likely to cause significant damage to owner of secret.
Seek to impose time restraints that are reasonable: A covenant which seeks to restrain an
employee working for a competitor for more than 1 year is usually only justifiable in
exceptional circumstances.
The restriction must be no wider than the geographical area within which the employer did
business. Hollis & Co v Stocks.
, Court will take into account the seniority of the employee – PAT Systems v Neilly: 12 month
non-compete clause was unreasonable on account of the employee’s very junior role.
Are the clauses reasonable?
- If they are wide, blue pencil test – words that can be taken away to make them
enforceable to sever the part of the clause too wide and leave remainder as enforceable
clause.
- Restrictive clause – too wide: WRN Ltd v Ayris – when clause prevents from having
contact with customers they had no previous dealings with this is too wide.
Commercial considerations: costly, weigh up disclosure of harm to business to court
proceedings.
Non-competition:
For specified number of months or years after end of employment prohibits employee from carrying
on business in which employer engaged, within specified number of miles of employer’s premises.
Thomas v Far Plc --- clause preventing manager from competing with company for 12 months
enforceable. Adequately protected the employer and necessary.
Non-solicitation:
Prohibits employee seeking business from person’s who were customers of employer within
specified period. Customers employee had personal contact during period before termination (WRN
Ltd v Ayris).
Non-poaching:
Prevent employee from persuading other employee’s to go with him to the new employer. Employer
has legitimate interest to protect in the stability of its workforce (TSC Europe Ltd v Massey).
Non-dealing:
Prevent employee’s from dealing with clients even if that client approaches the employee.
Must be reasonable in time: Beckett Investment Management Group Limited v Hall – 12 months is
reasonable any more than this is unreasonable.
ENFORCEMENT:
The ‘Blue pencil’ test – if clause drafted too widely and found to be in restraint of trade, court may
be able to apply BP test to sever that part and leave remainder unenforceable.
TFS Derivatives Ltd v Morgan: a clause that purported to restrict an employee from being employed
was “blue-pencilled” as follows: “in either any business which is competitive with or similar to a
relevant business within the territory”.
3 stage approach to apply test:
Tillman v Egon Zehnder [2019] – 1. Can the unenforceable provision be removed without needing to
add to or modify the wording of what remains? 2. Are the remaining terms supported by adequate
consideration? 3. Does the removal change the character of the overall effect of all the post-
employment restraints in the contract?
Mode of enforcement –
Injunction: to prevent ex-employee carrying on competing business, soliciting customers or
poaching staff, whichever appropriate. Planon v Gilligan. Employee can be requested to hand
over eg copies of lists of customers and details of trade secrets. USB Wealth Management
Ltd v Vestra Wealth LLP – injunction to prevent rival business, its founder and 4 staff from
doing business with and attempting to poach clients and other staff.
Damages: if suffered pecuniary loss. Marathon Asset Management LLP v Seddon and
Bridgeman – damages awarded where D unlawfully took company’s confidential information.
