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;
 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;
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 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
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
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;
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)
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;
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;
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;