#16791 - Contract Of Employment - Labour Law

Contract of employment characterized by a number of factors:

1. Personal and relational- personal service required:

• Company B employing Company A is not an employment contract. Death = automatic termination.

• Relational in the sense that it establishes a relationship between 2 parties.

• Nokes v Doncaster Amalgamated Collieries - employer cannot transfer contract to another employer

2. Consensual- common law contract doctrines e.g on variation apply

3. Mutuality/reciprocity- in the implied terms context - concept functions to ‘ensure adequate and reasonable degree of mutuality/reciprocity between rights and obligations of the employee/employer.

4. Indefinite in duration- used to be that employment contract was for annual hiring (look below @ Browning v Crumlin)- presumption of entire contracts but ten:

• Richardson v Koefod (1969): presumption in favour of the open-ended employment contract/’indefinite employment contract’.

• However, ‘unrestricted reasonable notice rule’- employee/employer can terminate on reasonable notice.

5. Incomplete- employer deliberately makes express terms general to ensure high level of flexibility due to changing labour market and product market pressures:

• Brown and Rea – distinguish employment contract from sale. There are both ex ante and ex post rules and ex ante fails to cover everything because expectation that parties will amend/fill in ex post. This is because:

1. Complex and undesirable to specify the precise conduct of the task that will be required

2. Normally they are long and difficult for one contract to cover the whole time [high transaction costs].

3. The problem of incompleteness is solved by granting the employer unilateral rights of direction over the employee.

6. Asymmetrical authority/power relation:

• ‘Managerial prerogative’ which describes employers general power to assign tasks and functions to employees – allows employer to co-ordinate labour.

• The authority and power of the employer translates into the submission and subordination of the employee. Hence the managerial prerogative is relied upon by the employer to co-ordinate labour.

AGREEMENT:

• ERA 1996 s230 (2): contract of employment may be formed expressly or impliedly and may be oral or in writing.

EXPRESS TERMS:

• Where an express term gives rise to an obligation, its breach will sound an action in damages.

• Part 1 Employment Rights Act 1996 (ERA).

Scope of statutory written statement:

1. Information which must be contained in a single document –

• ERA 1996 s.1- The employer must issue a ‘written statement of particulars of employment’ not after 2 months after the beginning of employment as a single document containing

(a) basic info about the employment relationship: names, date employment starts on etc

(b) certain particulars: scale or rate of remuneration/method of calculation/interval of payment/holiday pay/job title/employee’s place of work or employer’s name+ address etc

2. Information which may be contained in a separate document issued to the employee.

• Includes info concerning the period for which the contract is expected to continue or the date fixed for it to end; any collective agreements ‘which directly affect the terms and conditions of the employment’; if required to work abroad – details of that.

3. Information which may be contained either in a written statement or in another reasonably accessible document which is reasonably accessible to the employee – (s.6 ERA) – e.g incapacity for work, pensions schemes and benefits, details of length of notice etc.

4. Disciplinary and grievance procedures and contracting-out certificates (s3 ERA)– Must be specified to employee in a written statement or in another reasonable accessible document.

5. Timing of notification – Relevant information must be notified to all employees whose employment continues for one month or more, and statement must be issued within 2 months of the employment beginning.

6. Changes to particulars –s4 ERA - employer must issue a further written statement ‘at the earliest opportunity’ if there are changes, not later than 1 month after the change took place.

7. Use of a written contract of employment or letter of engagement to issue particulars (s7A+7B 1996- introduced by Employment Act 2002)::

• The employer may now issue ‘a document in writing in the form of a contract of employment or letter of engagement’ if that document contains all the written particulars which the employer is obliged to notify. This now avoids the unnecessary duplication of notification.

8. Remedies – Failure to comply with s.1 leads to employment tribunal under:

• S11 ERA: ‘amend those particulars, substitute other particulars as it may determine to be appropriate’.

• NB The tribunal can’t substitute its view of what terms should be but construe contract to establish whether the statement is in alignment with it.

• Not a crim offence not to provide a written statement but:

• S38 ERA:- sanction on employer for failure to provide a written statement.

• if employee wins another claim (could be unfair dismissal etc) and it is found that the employer had failed to issue a written statement as required, the Tribunal can award b/w 2-4 weeks pay as compensation.

LIMITED NORMATIVE EFFECT OF SECTIONS 1-4 ERA:

• The statement is declaratory; it has no ‘normative’ effect.

• The terms+ conditions must be derived from the contractual agreement or from incorporation or from an external source e.g legislation or common law implied terms.

• Does this defeat purpose? Employer can avoid obligation to record contract terms by failing to agree to them?

• If there are no terms e.g on pension entitlements, there’s nothing to report in the statement:

Eagland v BT [1992] – written statement contained no reference to holiday/sick pay/pension etc. No breach of s.1 – the contract terms didn’t include such entitlements so the statement is valid.

• This means s104 ERA don’t require employers to observe a ‘floor or rights’ to the employment relationship, merely to formalize those rules of the employment relationship which otherwise have legal or contractual force b/w the parties.

• This was justified due to context in which legislation arose (At time, sector level agreements/collective bargaining provided the floor- this has now gone in practice so is there adequate protection now?).

• NB: s3(1)(b) ERA: There is a difference for disciplinary/grievance procedures which must be reported to the employee whether or not they form part of the contract terms+ conditions.

• NB: This position is preserved in the EU Directive 91/553.

DISTINGUISHING CONTRACT AND STATEMENT:

• As declaratory only, the statement isn’t a normative source of terms for the contract of employment.

• So while in practice parties may regard them as one and the same- the statement can’t prevail over contract terms. It is just a statement of employer’s view of the contract (only evidence of what they’ve agreed [potentially?]).

• If it conflicts with terms drawn from e.g a collective agreementpresumption in the employee’s favour that the terms of the CA would normally apply but if the statement is more favourable to the employee, employer may have difficulty rebutting a presumption that the statement was accurate:

This is problematic coz s1 needs a statement of existing contract terms- how can this be an offer of new terms simultaneously?

CURRENT POSITION: ER will not easily be able to present the statement as evidence of terms derogating from those which would otherwise apply. But if statement favours EE, it will be "strong prima facie evidence" of contractual terms - basically weighted in EE's favour!

Although in Hardarson v Askar Capital (2013)- The court held that the agreed wage cut was effective even though not formally notified to the employee.

Does s7+7A EA 2002 make it easier for employer to effect changes through formal written contract?

• No. if you issue a written statement and it has all the terms in it and you call it a contract,...