Nature of Employment
The employment relationship arises when one person (the employee, worker) supplies his skill and labour to another (the employer) in return for payment. The employment may be of a permanent nature, a short period of time or until a particular piece of work is completed.
The basis of the relationship is the individual contract entered into between the two parties involved.
Definition of an employee
There is no generally accepted definition of a contract of employment or of the parties to it. This creates difficulty in determining if a worker is an employee or contractor. A number of tests are used these are:
- The Control Test - which looks at the extent of control that an employer has over the manner in which the worker carries out the work
- The Organisation Test - is the worker an integral part of the organisation.
- The Multiple Test - looks at both the above.
The Importance of the Distinction
In the construction Industry were a lot of sub-contract labour is used, it is important to determine if the worker is employed or not for the following reasons:
- An employer is normally liable vicariously for the torts committed by an employee during the course of their employment, but not for the torts of independent contractors.
- An employee has certain statutory rights such as a minimum period of notice compensation for unfair dismissal and compensation in the event of redundancy.
- Payments and benefits under National Insurance legislation eg unemployment benefit, industrial injuries scheme.
- Deduction of tax.
- Employees have beneficial rights in the event of a business failing.
- Employers have rights over the inventions of their staff.
- The duties of an employer to provide safe working conditions are more stringent for employees.
- Employers pay a training levy based on the number of their employees.
Duties of an Employer
An employer owes the following duties to his employees:
- To provide reasonably safe premises. He is not absolutely responsible for the safety of the premise providing he has done what could be reasonably expected of him to make the premises safe.
- To provide safe equipment, tools and materials. Once again his duty is limited to doing what is reasonable to ensure they are safe.
- To provide a reasonably safe system of work. The employer's organisation must be efficient and co-ordinated to avoid injuries to people engaged on separate tasks. It must also provide reasonably efficient fellow workers.
- To employ proper staff. To treat them with respect and to pay the agreed wages and any necessarily incurred expenses.
Formation of a Contract of Employment
A contract for employment can be either verbal or in writing and is subject to the same requirements as the formation of any contract. Though within 13 weeks the employer must give the employee a written statement of the following matters:
- identification of the parties and the date employment began
- the scale or rate of remuneration, or the method of calculating it, and the intervals at which it is paid
- the terms and conditions relating to the hours of work, entitlement to holidays, incapacity for work and any provisions for sick pay and any pension rights
- the length of notice the employee is entitled to give and receive to bring the employment to an end or the date when a contract for a fixed term is to expire
- a person who the employee can apply for the purpose of redress of any grievance relating to the employment, the manner in which application should be made and the procedure to be followed.
Terms of Employment
The rights and duties of the parties to a contract of employment may come from the following sources:
- Express Terms. These are specifically included in the agreement between the parties.
- Implied Terms. These are implied common law duties, which apply on both employer and employee unless there is an express term to the contrary. An example of an implied term is that the employee will exercise reasonable skill.
- Statutory Terms. An example is that the employer must provide the employee with written particulars as to the terms of employment.
- Collective Agreements. These are made between an individual employer or an employers' association on the one hand and a trade union on the other. Although not binding on an individual (Privity of Contract) they can become incorporated as the terms of the individual contract, e.g. the rates of pay.
There are a number of pieces of legislation relating to equality in employment which require that people are not discriminated against for any reason, ones that you should be aware of are:
- The Equal Pay Act 1970
- The Sex Discrimination Act 1975
- The Race Relations Act 1976
- The Disability Discrimination Act 1995
- The Race Relations Amendment Act 2000
- Religious/Belief Discrimination Regulation 2003
- The 2003 Sexual Orientation Regulations
- The Employment Equality (Age) Regulations 2006
More can be found out about these by visiting the links below.
Termination of Employment
If a contract is for a fixed period of time or a particular piece of work, it will normally end automatically on the expiration of the time, or on the completion of the work. If, however, the person is employed "on the books" it is usual for the employment to be for an indefinite period which continues until some event puts an end to it. Notice of Termination If the employment is for an indefinite period, either party may terminate by giving notice to the other, the length of notice is frequently an express term in the contract. Even in a fixed period contract, there may be a term entitling one or both parties to terminate earlier by notice. If there is no prior agreement on notice period, reasonable notice must be given.
At common law, what is reasonable notice will depend on such matters as trade practice, length of service, the period by which wages or salary is calculated, and the seniority of the position held.
These common law rules are subject to statutory minimum periods, which imposes obligations upon both parties as regard the length of notice to terminate the employment.
These are that an employer must give at least one-week notice if the employee has been employed for four weeks. If he has been employed for two years he will get at least two weeks, thereafter he will receive an additional week for each year up to a maximum of twelve weeks.
An employee is required to give one-week notice to his employer after he has been employed for four weeks.
Notice can be wavered by the parties agreeing that pay in lieu of notice is acceptable.
Employees should be told on joining the company what constitutes an action that can lead to dismissal, who can give warnings and who can dismiss them. Although by law only one oral and one written warning is required, ACAS advises four stages:
- Oral warning.
- Written warning.
- Final written warning.
Gross misconduct carries instant dismissal.
Warnings must be recorded and confirmed by employee.
If in doubt of the facts of an incident the employee should be suspended on full pay while an investigation is carried out.
Employees must have the right to appeal against a warning that could lead to dismissal. An appeal must not be made to the person who issued the warning or dismissal.
A Grievance procedure should be set up by the company for individuals that it employs. Details on this can be obtained by going to the Employment Matters link and searching on Grievance procedure.
Termination without Notice
The employer may treat the contract as being at an end and dismiss the employee on the spot if the employee is in serious breach of a term (either express or implied) of his contract. The employee will not be entitled to notice, or payment of wages other than the amount due up to the time of the dismissal. The employees conduct must, however, be a serious breach. Occurrences, which may count as justifying instant dismissal, are:
- Disobedience. The order must be lawful and one which the employer was competent to give. The disobedience must be serious, and an isolated occurrence may not be enough.
- Negligence. One careless act will normally not be sufficient, but repeated negligence might justify summary dismissal, particularly if the employee has been warned in the past. Much will depend on circumstances.
- Incompetence. When an employee is engaged he expressly or impliedly undertakes that he has the skills and ability to do the job. If the employer later discovers that the ability is lacking, he may immediately dismiss the employee.
- Misconduct. This can cover any serious misbehavior, which is inconsistent with the position held, and the proper performance of the employees duties. It can include dishonesty, physical attack on another person, immorality.
Similarly, an employee may leave his job immediately if the employer is in serious breach of any of his duties.
An employer should exercise great care before dismissing an employee or the latter may make a claim for unfair dismissal to an Industrial Tribunal. The Advisory, Conciliation and Arbitration Service (ACAS) which it is advisable to follow lay down a code of discipline practice and procedures.
The Business Link web site provides guidance on dealing with disciplinary problems.
In all aspects of law it is imperative that you keep up to date with development and changes in the law as numerous new pieces of legislation are introduced each year and things like the minimum wage must be kept current. A good place to maintain your currency is on the Department for Business Enterprise and Regulatory Reform website which deals with employment matters; this can be accessed by clicking on their link below.