#13955 - Recruitment Issues And Employment Contracts - Employment Law

Worker is employed under a ‘contract for services’

Worker may be regarded as ‘carrying on a business’ (Byrne Brothers (Formwork) Ltd 2002)

Employees entitled to:

• Redundancy payments

• Present claim for unfair dismissal

(see eg Hall v Lorimer [1994] IRLR 171).

Matters that may be relevant to consider as to whether the person is an employee are:

(a) How is the individual paid?

(b) Who pays tax and National Insurance?

(c) Who provides the tools and equipment?

(d) How integral to the business is the individual’s role?

(e) Is the individual paid for sickness and holiday?

(f ) Is the individual subject to the disciplinary and grievance policy?

(g) Is the individual a member of a company pension scheme?

(h) Where does the economic risk lie?

(i) How did the parties view the relationship at the outset

( j) How was the arrangement terminable?

A worker is defined under s 230(3) of the ERA 1996 to mean an individual who has entered into or works under (or where employment has ceased worked under)

(a) a contract of employment; or

(b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.

The reference to a contract of employment in para (a) above means that an employee is also a worker. The same definition appears in the National Minimum Wage Regulations 1999 and the Working Time Regulations 1998.

There are thus four requirements that need to be satisfied in limb (b):

(a) the worker has to be an individual who has entered into or works under a contract;

(b) with another party for work or services;

(c) the individual undertakes to do or perform personally the work or services for the other party;

(d) that other party must not, by virtue of the contract, have the status of a client or customer of any profession or business undertaking carried on by the individual who is to perform the work or services.

Worker has benefit of:

• Working Time Regs 1988; and

• Discrimination legislation

Practical LawEmployment

General

The points follow the order of the clauses in theStandard document,Section 1 statement of termsand theStandard document,Employmentcontractforajunioremployee.

Parties

• Names and addresses of the employer and theemployee.

Commencement ofemployment

• Date when theemploymentbegan, or is to begin.

• Date on which theemployee's period of continuousemploymentbegan or will begin (if different from above). Does anyemploymentwith a previous employer (or the same employer after a break) count towards theemployee's continuous serviceforstatutory purposes?

• If theemploymentisfora fixed term or is temporary, when does the fixed term or the temporary period expire? Is there any procedurefora renewal of theemployment?

• Should theemployeebe subject to a probationary period and, if so,forhow long? Does the employer wish to have the right to extend the probationary period?

Job title

• Theemployee's job title and a brief job description (if appropriateforthe particular case).

• Who should theemployeereport to?

• Can the job be performed jointly with other individuals?

Place of work

• Where is theemployeeto be employed? Will theemployeespend any time working from home? SeePractice note, Homeworkingformore information.

• Will theemployeebe required to work at different locations?

• Will theemployeebe required to live at a particular place in order to carry out the job?

• Will the employer need to be able to change the location of theemployee's workplace and, if so, what is the relevant geographical areaforsuch relocation?

• Is theemployeerequired to work abroadfora period of more than one month? If so, in which currency will theemployee be paid? Will theemployeereceive additional pay (forexample, a living allowance or bonus)? What terms and conditions apply to theemployee's return to the UK?

Salary

• How much is theemployeepaid? Is this payable weekly, monthly or over some other period? Is it payable in advance or arrears? At what point in each period will it be paid?

• Will the salary be reviewable and, if so, how often and by whom? Does the employer want to identify any factors which might be taken into account in deciding whether to award a pay rise (forexample, based on individual performance)?

• Does the employer operate a grade system which will entitle theemployeeto an automatic salary increase on attaining a higher grade?

• What deductions, if any, might the employer wish to be able to make from the salary (forexample, overpayments, loan repayments)?

Hours of work and office rules

• What are theemployee's normal hours of work (if any)?

• Will theemployeehave to work any overtime? What rates of pay, if any, are paidforovertime? Or will theemployeebe entitled to take time off in lieu of any overtime worked?

• Will theemployeebe working full-time or part-time?

• Does the employer operate a shift system and will theemployeebe required to work shifts?

• Is theemployeelikely to work more than an average of 48 hours each week over a 17 week reference period? If so, consider a separate opt-out agreement.

• Is there an office manual or staff handbook or other rules and procedures?

Holidays

• What is the employer's holiday year?

• Willemployees be allowed to carry non-statutory holiday into the next holiday year or will holiday which has not been taken in a particular holiday year beforfeited?

• What rules apply with regard to taking holiday (forexample, notice requirements and number of days that can be taken at one time)?

• Will holiday entitlement increase with years of service?

• Will theemployeebe entitled to take holiday during a probationary period? (Holiday will continue to accrue in any event).

• Does the employer wish to reserve the right to require theemployeeto take any outstanding holiday during any period of notice given to terminate theemployment(including any garden leave period)?

• Will theemployeebe required to work on public holidays? If not, willpublic holidaysbe included within theemployee's annual entitlement or be additional days' holiday?

• Does the employer have any annual shut-down periods? Will theemployeebe required to take holiday during these periods?

Incapacity

• If the employer operates a sick pay scheme consider:

• If there should be a waiting period before theemployeeis eligible (forexample, after completion of the probationary period);

• If there will be acontractual amount of sick pay (forexample, full pay or half pay) or whether sick pay will be solely at the employer's discretion?

• If theemployeeis to be a member of any pension scheme, what do the scheme rules say about paying contributions during periods of absence due to incapacity?

• Does the employer wish to reserve the right to require theemployeeto undergo a medical examination by a doctor of the employer's choice?

Termination and notice period

• Are notice periods to be longer than the employer is obliged to give undersection 86ofERA 1996(the statutory minimum)?

• If there are restrictive covenants, does the employer wish to have the right to terminate theemploymentby payment in lieu of notice (see Standard document,Payment in lieu of notice clause).

• Identify grounds upon which theemploymentcan be terminated summarily.

• Any retirement age should be set out in thecontract, and will need to be objectively justified: seePractice note, Default retirement age: implications of its abolition.

Disciplinary and grievance procedures

• Does the employer have any disciplinary and grievance procedures. If so, where can they be found?

Pensions

• What is the name of the pension scheme (if any) that theemployeemay join, and where can theemployeeobtain details of it?

• Will the employer make contributions to theemployee's pension?

• Is there acontracting-out certificate inforce in respect of pensions?

Collective agreement

• Are there any collective agreements inforce? If so, who are the parties to such agreements and where are copies kept?

Confidential information

• Does the employer have specific types of confidential information which it would wish to protect after theemployee's employmenthas been terminated?

Company property

• Will theemployeehave any company property (forexample, car, phone, computer, pass, credit card) which should be returned on termination ofemployment?

• Other issues

• These issues relate to additional standard clauses that can be inserted into anemploymentcontract(seeAdditional Standard Clauses:Contracts ofemployment).

Director

• Will theemployeebe a director of the company? If so, include details of the additional duties to which theemployeewill be subject (seeStandard document,Director clauses (fordirectors of private and listed companies)).

Benefits

• Will theemployeebe entitled to receive a bonus? If so, how will the bonus entitlement be calculated (forexample, by reference to individual performance or company performance or a mix of both)?

• Will theemployeehave a company car? If so, the following issues should be considered:

• does the employer have its own fleet of cars or does it lease carsforemployees from a leasing company?

• who should be permitted to drive the car?

• what level of insurance cover is to be provided (comprehensive or third party only or a combination of both dependent on who is driving)?

• is the ability to drive an essential part of theemployee's...