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LRD guides and handbook September 2013
Contracts of employment - a guide to using the law for union reps
Relentless coalition government assaults on employment rights mean there has not been a more important time in recent years to be an active trade unionist. The aim of this legal guide is to help trade union reps protect their members from attacks on their terms and conditions by explaining the key features of employment contract law in a clear way. The booklet equips reps with enough knowledge of the rules and key issues, including recent important legal cases, to enable them to identify a contract breach, to challenge changes to contract terms, and to understand their legal rights if change is imposed.
Introduction
Introduction (836 words)
Ongoing coalition government attacks on employment rights mean there has not been a more important time in recent years to be an active trade union ...
Open access
Chapter 1
1. WHAT MAKES A CONTRACT OF EMPLOYMENT? (42 words)
This Chapter looks ... Open access
Introduction (161 words)
To have a contract of employment, you first need a contract. A contract is an agreement between at least two parties that can be enforced in a court ... Open access
Offer and acceptance (422 words)
An offer of employment must be clear enough for a prospective employee to be able to accept it, and must be communicated to the intended recipient. ...
Subscribers only
Conditional offers of employment (365 words)
Offers of employment are often conditional on something happening. Depending on the job role, typical conditions could be the supply of satisfactory ... Subscribers only
New Data Subject Access Request Code of Practice — References (222 words)
Employers often refuse to hand over negative references to their employees, citing data protection laws. Reps should note that in August 2013, the ... Open access
Acceptance (139 words)
An offer remains open until it is accepted, rejected or withdrawn. If an employee is given a time limit in which to accept, the offer will lapse ... Open access
Consideration (193 words)
Contracts are based on a principle of “exchange”. In other words, to have a binding contract, each party must offer something “in return ... Open access
Consideration and volunteers — some more examples from case law (166 words)
Several cases have explored the issue of consideration in the context of volunteers. In Melhuish v Redbridge CAB [2005] IRLR 419, the EAT decided ... Open access
Intention to create legal relations (467 words)
There will be no legal contract if the two parties did not intend to create legal relations, in other words, a legally enforceable agreement. It is ... Subscribers only
Certainty (565 words)
The terms of a contract must be sufficiently clear and certain to be enforceable by the Courts. Clear language is needed so that courts and ... Subscribers only
Illegality (817 words)
If the employer proposes something illegal in the contract, such as a way to avoid tax by paying “cash in hand”, or paying part of the salary as ... Subscribers only
Chapter 2
2. DECIDING WHO IS AN EMPLOYEE (56 words)
This Chapter looks ... Open access
Introduction (168 words)
Only an employee can have a contract of employment. A number of important statutory rights are also only available to employees (see the box at the ... Open access
Employee, worker or genuinely self-employed? (214 words)
The question whether an individual is an employee, worker or self-employed is complicated, but it is best to start with the statutory definition ... Open access
Mutuality of obligation (295 words)
Put simply, mutuality of obligation in an employment context is the basic obligation of the individual to carry out some work, and the obligation of ... Subscribers only
An obligation to carry out work personally (680 words)
Another requirement common to both workers and employees is an obligation to carry out the work personally. Anyone who is genuinely free to provide ... Subscribers only
The employer’s right of control (218 words)
Mutuality of obligation and an obligation to carry out work personally are core requirements of both “employee” and “worker” status. The ... Open access
Self-employment (535 words)
Genuinely self-employed workers have few statutory employment rights. They are not entitled to the National Minimum Wage, sick pay or holiday pay, ... Subscribers only
Bogus self-employment (433 words)
A 2012 report by construction union UCATT, The Great Payroll Scandal, has exposed how some payroll companies are being used by employers in the ... Subscribers only
Chapter 3
3. EMPLOYMENT STATUS AND IRREGULAR PATTERNS OF EMPLOYMENT (41 words)
This Chapter looks at the employment contract in the context ... Open access
Introduction (117 words)
One explanation for an apparent increase in the overall size of the UK workforce is that it conceals what the TUC describes as a “crisis of ... Open access
Zero-hours contracts (144 words)
The use of zero-hours contracts has risen sharply across all sectors, although the increase in some areas of the economy, such as retail, ... Open access
Zero-hours contracts and the law (71 words)
New employment models tend to be adopted enthusiastically by employers who want increase their flexibility and freedom to minimise the “cost” of ... Open access
Employment status (609 words)
Employment status is decided by examining the contractual relationship between the parties and by applying the established tests of mutuality, ... Subscribers only
Using statutory rules to bridge gaps in employment continuity (250 words)
There are various rules and principles of employment law that may help zero-hours contract workers and other casual workers to bring employment ... Subscribers only
Zero-hours contracts and the Part-time Workers Regulations (161 words)
Workers on zero-hours contracts qualify as part-time workers under the Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000 ... Open access
Legal challenge to Sports Direct zero-hours contracts (163 words)
Using crowd-sourced funding organised by campaign group 38 Degrees, a Sports Direct employee has launched a legal challenge to the company’s use ... Open access
Other statutory employment rights available to zero-hours workers (177 words)
All workers, including casual workers and those on zero-hours contracts, are entitled to many basic statutory employment rights, including the right ... Open access
Zero-hours contracts and the National Minimum Wage (256 words)
One important issue for zero-hours contract workers is whether they are entitled to be paid the minimum wage when available for work but not working. ... Subscribers only
Interns (68 words)
According to figures provided by Intern Aware, a national charity campaigning for interns to be paid, the Institute for Public Policy research ... Open access
What is the employment status of an intern? (351 words)
An intern is not a legal concept, so once again, the employment status of an intern will depend on whether they satisfy the tests as to mutuality of ... Subscribers only
Temporary agency workers (93 words)
Under the Agency Workers Regulations 2010, qualifying agency workers have statutory rights to equal treatment with comparable directly employed ... Open access
Can an agency worker ever be an employee? (384 words)
From time to time, agency workers bring tribunal claims arguing that their employment status is that of an employee, typically in order to claim ... Subscribers only
Temporary (fixed-term) contracts (554 words)
Employees on fixed-term contracts (also known as temporary employees) are entitled to equivalent rights and treatment as permanent employees under ... Subscribers only
Chapter 4
4. THE WRITTEN STATEMENT OF EMPLOYMENT PARTICULARS (50 words)
This Chapter looks at the statutory written statement of employment particulars that must be provided by law, ... Open access
Introduction (46 words)
Under sections 1 and 2 of the Employment Rights Act 1996 (ERA 96), employees have the right to a written statement of particulars of their ... Open access
What details must be provided? (442 words)
The details the employer must provide are as ... Subscribers only
What if the employer fails to provide a written statement? (233 words)
An employee can bring a claim for a written statement of employment particulars in the employment tribunal at any time while they are working for ... Open access
The legal status of a statutory statement of particulars (135 words)
A statutory written statement of employment particulars, issued under section 1 and 2 of ERA 96, is not the contract of employment, but it is ... Open access
Chapter 5
5. INTERPRETING CONTRACT TERMS (51 words)
This Chapter looks ... Open access
Introduction (128 words)
The employment contract is made up of contract terms and conditions that govern the relationship between employer and employee. These terms can be ... Open access
Express terms (418 words)
Express terms are all the terms that have been specifically agreed by the employer and employee, regardless of whether they have been written down. ... Subscribers only
Interpreting express terms (88 words)
Express contract terms must be interpreted objectively and sensibly. The context in which the agreement was entered into must be taken into account ... Open access
Express terms and uncertain language (27 words)
As discussed in Chapter 1, contract terms must not be too uncertain for courts and tribunals to be able to enforce them. ... Open access
Implied terms (123 words)
Many employment contract terms are not expressly stated and instead are left unsaid. These are known as implied terms. Where an employment contract ... Open access
The relationship between express and implied terms (213 words)
A term cannot be implied to contradict an express term, but an express term can be made subject to an implied term. For example, in United Bank ... Open access
Incorporating terms through custom and practice (264 words)
A custom or established practice, applied often and regularly enough, can eventually become the source of an implied contractual term. This happens ... Subscribers only
Checklist: Incorporation through custom and practice (425 words)
A new judgment from the Court of Appeal, Park Cakes Limited v Shumba [2013] EWCA Civ 934, supported by the Bakers Food and Allied Workers Union, ... Subscribers only
Some examples from the cases (303 words)
In Duke v Reliance Systems [1982] ICR 449, an employer had a long-standing policy of requiring female workers to retire at 60, but there was no ... Subscribers only
Common implied terms of the employment contract (104 words)
There is an implied duty in every contract of employment not to act in a way calculated or likely to destroy or seriously damage the duty of mutual ... Open access
Will an employer who discriminates always breach the implied duty of mutual trust and confidence? (175 words)
Not necessarily. Although in many, perhaps even most, discrimination claims, an employer discriminating unlawfully will also breach the implied duty ... Open access
Implied duties relating to health and safety (183 words)
Employers have an implied duty to take reasonable steps to ensure an employee’s health and safety and to provide a safe working environment. This ... Open access
Implied duties when exercising discretion (76 words)
Where an express term gives an employer discretion, for example to decide whether or not to pay a bonus, there is an implied term that the ... Open access
Implied duty to provide redress for grievances (44 words)
There is an implied contractual duty in every employment contract to act reasonably and promptly to provide an opportunity for employees to obtain ... Open access
Implied duty to conduct disciplinary procedures fairly (36 words)
There is an implied duty in every employment contract to conduct disciplinary procedures fairly and without undue delay (Lim v Royal Wolverhampton ... Open access
Implied duty to pay wages (363 words)
There is an implied duty to pay wages to any employee who is ready, willing and able to work. As the Court of Appeal explained in Cantor Fitzgerald ... Subscribers only
Implied duty to pay wages to employees fit, able and willing to return after sickness absence (254 words)
The implied common law duty to pay wages to any employee who is ready, willing and able to work explains why an employer is not allowed to keep an ... Subscribers only
Implied duty to pay wages during suspension (41 words)
Any suspension while investigating a disciplinary allegation should always be on full pay, save in exceptional circumstances, and only where the ... Open access
Implied duty to pay wages during lay off or short-time working (190 words)
Employees who are laid off or placed on short-time working should receive their normal pay (Miller v Hamworthy Engineering [1986] IRLR 461) unless ... Open access
Statutory guarantee pay (87 words)
Even if a contract purports to allow the employer to lay off workers or to put them on short-time working without pay, remember that workers must be ... Open access
Is there an implied duty to provide work? (222 words)
Sometimes, there is an implied duty to provide work as well as pay. This duty can be excluded by an express term. This often takes the form of a ... Open access
No implied duty to take care of employees’ economic wellbeing (101 words)
There is no general implied duty to take care of employees’ economic wellbeing. For example, in Crossley v Faithful & Gould Holdings [2004] ... Open access
Implied duty to bring terms to an employee’s attention (605 words)
Where an employee “cannot in all the circumstances reasonably be expected to be aware of a term unless it is brought to his attention”, for ... Subscribers only
Implied duty to take reasonable care when explaining rights (149 words)
It is a breach of the implied contractual duty of trust, confidence and good faith to negligently misrepresent a situation, leading employees to ... Open access
Implied duties connected to notice and pay in lieu of notice (40 words)
There are a number of implied duties connected to notice and pay in lieu of notice. These are looked at in Chapter 9: Termination of the employment ... Open access
Employees’ implied contractual duties (169 words)
Every employment contract includes a number of implied duties owed by the employee, in ... Open access
Imposed (i.e. statutory) terms (58 words)
Some terms are imposed on all employment contracts by law, whether or not they have been agreed between the parties. These terms derive from statute. ... Open access
Unenforceable (void) terms (153 words)
Some terms are unenforceable even if they appear as express terms in the employment contract. In ... Open access
Checklist: Main statutory employment rights of workers and employees (239 words)
Employees and workers have a number of statutory rights and protections, irrespective of the express contract terms. Here is a checklist of the main ... Open access
Chapter 6
6. INCORPORATED TERMS (47 words)
This Chapter looks ... Open access
Introduction (130 words)
An incorporated term is a contract term deriving from another source that is incorporated into the individual contract of employment by agreement ... Open access
Incorporation (155 words)
In the most straightforward cases, it is obvious which terms of a collective agreement have been incorporated into the employment contract because ... Open access
Interpreting terms in collective agreements (464 words)
As with any agreement, the basic aim of courts and tribunals, when interpreting terms incorporated from collective agreements, is to work out the ... Subscribers only
Is an express term in a collective agreement “apt” for incorporation? (878 words)
Even if a collective agreement is referred to expressly in the employment contract, it does not follow that all its terms will be part of that ... Subscribers only
Contractual disciplinary, grievance and capability procedures (448 words)
Collectively agreed procedures such as disciplinary and grievance, capability or performance management procedures can be expressly incorporated ... Subscribers only
The legal effect of collectively agreed terms (722 words)
Changes agreed in negotiations are binding on all employees within the bargaining unit covered by the collective agreement, even if they might not ... Subscribers only
Chapter 7
7. USING THE LAW TO RESIST CHANGES TO CONTRACT TERMS (80 words)
This Chapter looks ... Open access
Introduction (118 words)
A contract of employment is an agreement between two parties – the employer and the employee. This means that any change to the employment ... Open access
Acceptance of contract change (451 words)
Employment contracts can be changed lawfully if both parties agree to the change. An agreement to contract change can either be express (for ... Subscribers only
Implied acceptance (427 words)
The law says an employee will be taken by their conduct to have impliedly accepted new contract terms if that is the “only sensible explanation” ... Subscribers only
Non-contractual changes (209 words)
Only changes to contract terms need to be agreed. Changes to non-contractual working practices and policies do not need to be agreed, although there ... Open access
New statement of employment particulars (39 words)
If contract terms change, the employer must issue a new statement of employment particulars detailing the changes within a month (section 4, ERA 96). ... Open access
Express terms permitting contract change (809 words)
It is increasingly common for employers to award themselves wide powers in the employment contract to make future changes to terms and conditions. ... Subscribers only
Express mobility clauses (238 words)
Employers often reserve themselves wide powers to require employees to change work location – permanently or temporarily. These terms are known as ... Open access
Unfair Contract Terms Act (55 words)
However wide and unfair an express variation term may be, there is no scope for any argument based on the Unfair Contract Terms Act 1977. In ... Open access
Contract change and collective consultation (211 words)
In workplaces with a recognised union, contract changes should occur through collective bargaining (see Chapter 6). ... Open access
Resisting unilateral changes to contract terms (149 words)
If an employee does not agree to proposed changes, imposing change unilaterally is a breach of contract, unless the contract contains an express ... Open access
Forcing through contract changes in breach of contract (190 words)
An employer that forces through a contract change, such as a pay reduction, that is not permitted by the contract, without the consent of the ... Open access
Status quo agreements (165 words)
Reps should note that unless there is a clear status quo agreement in place, there is no rule that just because a grievance has been taken out ... Open access
What if the employer terminates the contract and offers new (worse) terms? (409 words)
Employers who fails to secure the consent of their workforce to a change in contract terms are increasingly likely to seek to force through the ... Subscribers only
Is a dismissal for refusal to agree new contract terms unfair? (433 words)
Although ending a contract and offering new less favourable terms and conditions is a dismissal, it does not necessarily follow that a tribunal will ... Subscribers only
Changes to contract through statute (163 words)
Provisions that are contained in legislation, for example minimum rights to holiday or rest periods under the Working Time Regulations, are ... Open access
Chapter 8
8. CONTRACT CHANGE FOLLOWING A BUSINESS TRANSFER (61 words)
This Chapter looks ... Open access
Introduction (111 words)
Where a business is transferred from one employer to another, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) ... Open access
Contract change is generally prohibited (126 words)
Under regulation 4 of TUPE, changes to an employee’s terms and conditions as a result of a TUPE transfer (apart from changes to pensions) are ... Open access
What about contract changes that benefit the employee? (339 words)
Sometimes employers make transfer-related changes that benefit the employee. The law allows the employee in this situation to enforce the beneficial ... Subscribers only
Time limits (235 words)
There is no time limit to the right to maintain terms and conditions under TUPE. An employee whose contract terms have transferred from the old ... Open access
TUPE and collectively agreed terms (492 words)
Collective agreements by a recognised union with the old employer transfer to the new employer under regulation 5 of TUPE. They are treated as if ... Subscribers only
What contract changes are permitted by TUPE? (135 words)
Contractual variations that are unconnected to the transfer are allowed under TUPE, although they must be agreed following the normal rules (see ... Open access
Changes to non-contractual working practices (112 words)
TUPE only gives transferred employees the same rights as they had against the original employer, not better rights. For example, a genuinely ... Open access
Changes to the contract terms of new joiners (162 words)
Only the contract terms of employees who transfer under TUPE are entitled to protection from TUPE-related contract change. New employees taken on ... Open access
Changes for an economic, technical or organisational reason (567 words)
Changes can be agreed for a reason connected with the transfer if it is an economic, technical or organisational reason entailing changes in the ... Subscribers only
Statutory obligation to consult collectively (170 words)
If an employer envisages that it, or the new owner of the business after the transfer, will make changes to contract terms, working conditions or ... Open access
Chapter 9
9. TERMINATION OF THE EMPLOYMENT CONTRACT (64 words)
This Chapter looks ... Open access
Introduction (38 words)
Either party can terminate a contract of employment. Here are the main ways in which an employment contract will come to an ... Open access
Termination by dismissal (120 words)
It is usually obvious when an employee has been dismissed, but there is sometimes ambiguity, particularly where words are exchanged in the heat of ... Open access
Dismissal with notice (176 words)
Under section 86 of the ERA 96, employee and employer have statutory rights to minimum amounts of notice if the contract is terminated. ... Open access
Express contract terms about notice (242 words)
It is not possible to agree an express contract term that gives an employee less than this minimum statutory notice entitlement (or equivalent pay ... Open access
Pay in lieu of notice (PILON) (220 words)
Many contracts include an express term allowing the employer to make a payment in lieu of notice (PILON) instead of making the employee work the ... Open access
The employer’s obligation to use clear language (111 words)
Where a contract gives the employer the right to make a payment in lieu of notice, there is an implied duty to tell the employee clearly and ... Open access
Wrongful dismissal (141 words)
If the employer has not given proper notice, the employee can bring a claim for breach of contract. This is known as a wrongful dismissal claim and ... Open access
Termination without notice or notice pay (66 words)
An employer is entitled to dismiss an employee summarily (without notice or notice pay) only in cases of gross misconduct. In all other cases, ... Open access
Notice pay during sickness absence (67 words)
An employee absent on sick leave during any part of their notice period is entitled to full weekly pay, even if all contractual sick pay has been ... Open access
Non-renewal of a fixed-term contract (61 words)
Fixed-term contracts normally end automatically when they reach the agreed end date. The employer does not have to give any notice. However, the ... Open access
Termination by resignation (69 words)
Resignation need not take a particular form or be in writing, but it must be communicated to the employer. ... Open access
Termination by agreement (395 words)
The parties to a contract of employment are entitled to end the contract on agreed terms. However, an employee or worker cannot give up statutory ... Subscribers only
Protected conversations (320 words)
As part of the coalition government’s drive to make it easier for employers to dismiss employees, it has used its Enterprise and Regulatory Reform ... Subscribers only
Constructive dismissal (373 words)
A constructive dismissal takes place where an employee resigns in circumstances where the employer’s behaviour amounts to a breach of contract so ... Subscribers only
Chapter 10
10. ENFORCING CONTRACTUAL RIGHTS (33 words)
This Chapter looks ... Open access
Which Court? (213 words)
A claim for breach of the employment contract cannot be brought in the employment tribunal unless the employment has ended. While an employee is ... Open access
Tribunal fees (280 words)
From 29 July 2013, a fee will need to be paid in order to bring any claims in the employment tribunal, regardless of the value of the claim. The fee ... Subscribers only
Enforcing collectively agreed contract terms in the civil courts (120 words)
Unions often use the civil courts to enforce collectively agreed contract terms. As explained in Chapter 6, collective agreements are not directly ... Open access
Enforcing the National Minimum Wage (123 words)
Workers who are not being paid the National Minimum Wage should contact the Pay and Work Rights Helpline on 0800 917 2368. The helpline is able to ... Open access
Further information
Further information (498 words)
Copies of relevant statutes can be obtained online at: ... Subscribers only