business law topic 2 employment contracts

employment and freedom of contract

freedom of contract is not genuine when there is an imbalance of power

Employment contracts are treated differently from ordinary commercial contracts because

of the inherent imbalance of power between employers and employees

employment law includes

statutory protections, common law duties, and judicial tests designed to protect the weaker party: the employee.

5 points for employment law answer

unequal bargaining power (historical and legal), statutory protections, common law duties, employment status and tests used, dismissal protections and remedies

under roman law

employment offered no protection

in the Middle Ages

systems like serfdom were based on status not contract

even as contract law began

to govern employment in the 19th century it failed to account for the economic dependence of workers

reference for historical and legal background

Adam smith in wealth of nations 1776

Adam Smith in Wealth of Nations 1776

recognised that while employers could survive without workers, workers could not survive long without employment

this imbalance justifies the special legal treatment of

employment relationships because a purely contractual approach would leave employees vulnerable

employment contracts are subject to

asymmetric statutory rules that cannot be opted out of

minimum floor of rights in employment contracts

minimum wage, working time limits, health and safety, anti discrimination, unfair dismissal protection, minimum notice

act for minimum wage

national minimum wage act 2015

act for working time limits

organisation of working time act 1997

act for health and safety

safety, health and welfare at work act 2005

act for anti discrimination

employment equality acts 1998-2015

act for unfair dismissal protection

unfair dismissal acts 1977

act for minimum notice

minimum notice and terms of employment act 1973

these rights override any contract terms eg

even if an employee agrees to work for less than min wage it is legally invalid

reference for minimum floor of rights quote

Mac donnell 2021 chapter 7

Mac donnell 2021 chapter 7

these statutory protections exist because freedom of control is not meaningful when one party is economically dependent on the other

common law duties

employers duties, employees duties

employers duties

provide a safe workplace, pay wages and provide work, act fairly and responsibly

employees duties

exercise reasonable care and skill, obey lawful and reasonable orders, act in good faith and maintain confidentiality

common law duties (implied terms) reflect a

trust based relationship that is different to commercial contracts

officious bystander test case

Shirlaw v Southern Foundried 1939

officious bystander test helps courts

imply terms that are so obvious they don’t need to be stated

employment status

before protections apply, the individual must be classified as an employee under a contract of service

how to determine employment status

courts use multiple tests

tests courts use to determine employment status

control test, mutuality of obligation, integration test, economic reality test

control test case

roche v patrick kelly ltd 1969

control test

does the employers control how the work is done

mutuality of obligation case

nethermere Ltd v Gardiner 1984

mutuality of obligation

are both parties obliged to provide and performs work

integration test case

Stevenson Jordan v MacDonald & Evans 1952

integration test

is the worker part of the business

economic reality test case

Market Investigations Ltd v Minister of Social Security 1969

economic reality test

is the person in business on their own account

Irish Supreme Court test case

Barry v Minister for Agriculture 2015

Barry v Minister for Agriculture 2015

Supreme Court confirmed that no single test is determinative, courts must look at the overall relationship

dismissal allowed

ordinary contract law allows dismissal if proper notice is given

under the unfair dismissals Act 1977 employers must show

substantive justification, procedural fairness

redress includes

reinstatement, re-engagement or compensation

constructive dismissal

an employee can resign and claim constructive dismissal if the employers behaviour made it unreasonable to stay

case deciding on constructive dismissal

Western Excavating v Sharp 1978

Western Excavating v Sharp 1978

court held that a breach of contract can justify constructive dismissal