employment and other working relationships

What three conditions have to be fulfilled in a contract of service?

• the servant agrees that, in consideration of a wage or other remuneration, he will provide own work and skill in the performance of some service for his master

• he agrees, explicitly or impliedly, that in the performance of that service he will be subject to other’s control in a sufficient degree to make that other master

• the other provisions of the contract are consistent with its being a contract of service

irreducible minima

if conditions 1 or 2 are missing from the previous, they cannot be an employee. If both are there, does not automatically make them an employee

What finally determines their status as an employee?

part 3: the economic reality test. This is a multi factorial test in which factual attributes are considered. cannot be applied alone has to be in combination with irreducible minima. It looks at how far the person is integrated into the organisation (yes: employee) and whether the person is in business of their own account (no: self-employed)

What are the four factors for irreducible minima?

1. mutuality of obligation

2. wage

3. personal service

4. control in sufficient degree

Where are terms of an employment contract derived from?

• terms of contract

• correspondence 

• staff handbooks

• collective bargaining agreements

• articles of association

• custom and practise

• employment protection legislation

What duties does an employee have to their employer under common law?

• faithful service

• duty to obey instructions

• perform work

• to account for money and property

• personal service

• not to give out trade secrets

What duties does an employer have to an employee under common law?

• to indemnify the employee against expenses and losses incurred

• to pay reasonable remuneration

• to provide work but only in certain circumstances

• to take care of health and safety

• trust and confidence

Why is employee status important?

• only employees enjoy full rights under employment protection legislation

• employers can be held liable for wrongful acts of employees only

• social security benefits for employees

• PAYE for employees only

• only employees and workers can have employer pension contributions

• employees and workers protected from whistleblowing

• employees do not have to register for VAT

What is the statutory notice period?

one week for each year of continuous employment up to 12 weeks.

What is a reasonable notice?

Can exceed but not be less than the statutory notice period

How can employment be terminated by breach?

• summary dismissal without cause (unjustifiable)

• constructive dismissal: employee is forced to resign due to unreasonable changes in employment contract

What is an employee who is wrongfully dismissed entitled to?

damages - but they must mitigate their losses by trying to get a new job etc

What is wrongful dismissal?

an employee’s contract of employment comes to the end as a result of a breach of contract by their employer. 

How long must an employee work before they qualify for unfair dismissal?

2 continuous years, however there is no qualifying period at all for many of the automatically unfair reasons for dismissal

What is unfair dismissal?

the procedure for dismissal was unfair or the reason for dismissal was unfair 

Who does an employee contract about a claim for unfair dismissal?

ACAS and the claim may proceed to the employment tribunal

What are the three forms of award for unfair dismissal?

• basic award: calculated same way as statutory redundancy pay

• compensatory award: based on employees losses (inc future losses) but employee has to mitigate

• punitive additional award: when employer has not complied with an order for re-instatement or re-engagement 

How are compensation for unfair dismissal and redundancy payments taxed?

Not as employee’s earnings but as residual termination payment 

When is an employee classed as being dismissed for redundancy?

when the only or main reason for dismissal is that:

• the employer has ceased or intends to cease the business in which the employee was employed or

• the requirements for employees to perform work of a specific type, or to conduct it at the location in which they are employed, have ceased or diminished or are expected to do so

When must a statutory redundancy payment be made and how is it calculated?

An employee has two or more continuous years of service - payment is calculated in accordance with statutory scale and based on employee’s age, weekly pay and length of service

office holder

an individual may provide services to a business as an office holder, generally not ipso facto regarded as being employed however an office holder can be an employee too 

Three categories of office holder

• an office holder whose rights and duties are defined by the office they hold and not by any contract

• has the title ‘office holder’ but holds no office and is merely an employee with a contract of service

• an office holder who is also an employee with a contract of service

How are office holders taxed?

same way as employees unless legislation specifically provides otherwise

What type of contract is an apprenticeship?

contract of employment - an apprenticeship agreement should be treated as a contract of service not contract of apprenticeship

What is an agency worker?

a worker who has a contract with an agency but who provides their services to the agency’s client which has a separate contract with the agency. Normally controlled in terms of their working activities by the agency’s client but this arrangement is not a contract of service between worker and client 

What is a worker?

not an employee but a dependant contractor, not fully independent but fall short of being employees, should still have some benefits and protections 

what employment rights do workers have?

• right to written terms

• right to be paid minimum wage

• entitled to paid holidays

• payslips

• protection from whistleblowing

• protection against unlawful discrimination

• right not to be treated unfairly if working part time

What are workers not entitled to?

• sick leave

• maternity/paternal leave

What are workers classed as for tax purposes?

self employed

for tax purposes, what are the two main types of contract for businesses to engage with their workforce?

1. contract of service = creates employment relationship

2. contract for services = individual works as a self-employed person for the business