#14963 - Employment Status - Employment Law

LPC

EMPLOYMENT LAW AND PRACTICE

REVISION NOTES – Employment Status /Employment Contract

- ELECTIVE 2016 -

Employment status

Employee = S230(1) ERA 1996 - an individual who ... works under ... a contract of employment

How do we assess employee status?

1. How is the individual paid?

2. Who pays tax and National Insurance?

3. Who provides the tools and equipment?

4. How integral to the business is the individual’s role?

5. Is the individual paid for sickness and holiday?

6. Is the individual subject to the disciplinary and grievance policy?

7. Is the individual a member of a company pension scheme?

8. Where does the economic risk lie?

9. How did the parties view the relationship at the outset?

10. How was the arrangement terminable?

Employment contracts

Section 230(2) - a contract of service ... whether express or implied, and (if it is express) whether oral or in writing

Mutual obligations - employee to work and the employer to pay for that work

Written contracts - must have clauses for: duration, duties/mobility, qualifications, remuneration/illness/holidays, pensions, confidentiality, inventions/discovery, restrictive covenants

Express and implied terms

Express terms

S1 ERA 1996 - employers must give their employees a written statement of the main terms of their contract within 2 months of commencing.

Must contain:

• Parties;

• Commencement date;

• Salary and pay day/frequency;

• Hours;

• Terms relating to (i) holidays/holiday pay; (ii) sickness/sick pay; (iii) pensions;

• Notice period (and/or fixed term expiry);

• Job title and/or job description;

• Place/s of work;

• Provisions for working outside UK;

• Disciplinary/dismissal rules/grievance procedures;

A statement of terms and conditions is not a contract, but instead confirms the main express terms of the employment contract - not definitive of entire contract, but it does provide an evidential basis of the most important terms.

Must state job title or brief description to comply with s1

s1(3) and s1(4) minimum contractual requirements = pay; job description; hours of work; place of work; relocation; holiday; pension; sickness provisions; notice period; disciplinary; grievance procedures; confidentiality

Both sides agree the terms - may be written or oral, but it is sensible to put them in writing can be unlimited or fixed term and can be full or part time

Terms may be express/implied

• courts will sometimes imply terms into a contract

• E.g. mutual trust and confidence - When breached, it may entitle either side to terminate. If the employer breaches = employee (with 2yrs continuous employment) may resign and claim constructive unfair dismissal.

Implied terms

1. Statutory - National minimum wages, working time regulations, equality

2. Common law -employee/employer

Employer = duty to pay wages and provide work, duty to indemnify employees, duty to take reasonable care of safety/working conditions, duty of mutual trust/confidence, duty to take reasonable care in giving references, duty to notify on termination without notice, duty to hive reasonable notice

Employee = duty to give personal service, duty to obey reasonable orders, duty of reasonable care and indemnity, duty of fidelity/good faith, secret profit, competition, conflict interest/duty, trade secrets/confidential info

Minimum rights of employment

Statutory minimum notice - s86(1)

Protection of wages - Pt II of the ERA 1996

• protects an employee if an employer fails to pay the wages due under the contract, and

• prevents an employer from making deductions from an employee’s wages unless they are authorised

• For claims presented after 1 July 2015, there is a maximum of 2 years’ deductions that can be claimed

National minimum wage / national living wage

Working hours - Working Time Regulations 1998

• set out maximum weekly working hours

• provide for certain minimum rights to have breaks and paid annual leave

• Post-1/7/15 a maximum of 2 years’ back pay

Restraint of trade

Protect an employer’s business after the employee has left.

They may be expressly included in a contract - must be reasonable in time and area and necessary to protect the employer’s business interests

Prima facie – unenforceable as a matter of public policy

Burden of proof on the employer to show they are compliant (balance of probabilities)

Enforceable if:

1. Legitimate business interests

• Trade connections/goodwill (employer must show breach would cause actual/potential harm to business)

• Trade secrets / highly confidential info (that if disclosed to a competitor, would be liable to cause real or significant damage to the owner of the secret which the owner had tried to limit dissemination of(Lansing Linde v Kerr))

• Employers’ interest in maintaining stable and trained workforce (only enforceable as against someone that could be expected to know this info)

2. Reasonable in time and area

• No wider than necessary to protect the legitimate business interest

• Proportionate in terms of activity prohibited, duration of any restriction and of the geography of the restriction

3. Terms must be sufficiently clear

Types of ROT:

1. Non-competition

• Must not be wider than to cover the work he was employed to do

• Time restraint of 1 year unless exceptional circumstances apply, and

• Must not be wider than the area that the employer did business

• Implied terms

  • During contract – must not compete with employer, cannot moonlight for a competitor if it causes harm

  • After contract – no implied terms

• Express terms

  • During contract – used to increase the employee’s duty to devote full time to employer, and to expressly prohibit moonlighting

  • After contract – must be a reasonable covenant to protect a LBI for employee to not work for competitor within specified time/place

2. Non-solicitation - (prohibit the employee from seeking business from persons who were customers of the employer within a specified period prior to the employee leaving employment)

• Restricted to customers employee had contact with,

• Restricted to what is reasonable,

• Limited to those customers of employer in short time of employee leaving ( will depend on nature of business and how many employees come/go)

• Implied terms

  • During contract - not to copy customer lists and not to solicit customers or employees

  • After contract – no implied terms

• Express terms

  • During contract - clarify the implied position, and/or to extend the duty to the employer

  • After contract – needs to be a reasonable covenant protecting a legitimate business interest to not solicit customers with whom the employee had contact

3. Non-poaching - (prevents employee from taking clients)

• Restricted to senior employees

• Where employee is known to client and where employer has legitimate interest to protect stability of workforce.

• Needs to consider how long how long influence lasts (balance of convenience test)

• Implied terms

  • During contract - not to copy customer lists and not to solicit customers or employees

  • After contract – no implied terms

• Express terms

  • During contract - clarify the implied position, and/or to extend the duty to the employer

  • After contract – needs to be a reasonable covenant protecting a legitimate business interest to not solicit customers with whom the employee had contact

4. Non-dealing - (prevents employee dealing with client even if they approach employee)

• 12 months

• Must reflect employee’s...