Employment Status
Jane Klauber
020 8394 6483
[email protected]
Employment Status
A
Employment Status
It is essential to correctly identify employment status as rights and obligations will stem from
this. Although some legislation in the last 15 years has extended employment rights, notably
the minimum wage and the Working Time Regulations to other workers, employment still
brings a raft of protections for the employee and obligations upon the employer. The main
groups to distinguish employees from are:A1
Self-employed
A number of tests have been employed by the Courts to determine employment status
including:•
Personal service.
•
Mutuality of obligation.
•
Control.
•
The independent business test.
•
Intention.
The risks of getting it wrong are twofold:
•
Claims by HMRC for unpaid tax going back six years.
•
Potential unfair dismissal claims if the worker has been incorrectly identified as self
employed.
The distinction between employed and self employed workers is significant:
1.
Employers deduct PAYE at source.
Tax is consultants’ responsibility.
2.
National Insurance contributions from
employer as well as employee.
No employer’s National Insurance
contributions, National Insurance
contributions on a self employed rate.
3.
Paid salary or wages. No VAT.
Pays a fee for which she invoices the
employer. May be registered for VAT.
4.
Employer liable “vicariously” for acts of the
employee in the “course of employment.”
Employer not “vicariously” liable.
5.
Employer required to take out compulsory
Responsible for own insurance.
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employer’s liability insurance.
6.
Implied contractual obligations such as the
duty of trust and confidence, employee duty
to obey reasonable instructions and
employers duty of care towards employees.
No implied contractual obligations.
7.
Statutory employment protections including
unfair dismissal and redundancy.
Limited statutory protection – protection
against discrimination.
8.
Statutory duties and health and safety
legislation.
No specific health and safety provisions but
employers must safeguard the health and
safety of self employed contractors working
alongside employed staff.
9.
Statutory sick pay, maternity pay, paternity
pay, parental leave, adoption pay.
Not applicable.
10.
Protection under TUPE.
No TUPE protection.
The tests for tax purposes are not identical. HMRC’s employment status indicator (ESI)
provides assistance.
A2
Workers
There are different definitions of a worker in different pieces of legislation. The definition in
the Employment Rights Act 1996 is:
“An individual who has entered into or works under (or, where the employment has ceased
worked under):
(a)
A contract of employment or;
(b)
Any other contract whether expressed or implied, oral or in writing, whereby the
individual undertakes to do or perform personally any work or services for another
party to the contract.
Workers are not protected from redundancy or unfair dismissal and do not enjoy the same
legal protections as employees in relation to health, safety and welfare at work. They are
however subject to the National Minimum Wage Act 1998, the Working Time Regulations
1998, the Equality Act 2010, the Part Time Workers (Prevention of Less Favourable
Treatment) Regulations 2000 and have the right to be accompanied at disciplinary and
grievance hearings under the Employment Rights Act 1999.
3
B
Atypical workers
B1
Fixed-term employees
The Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002
(the Regulations) define fixed-term employees as those who are employed under fixed-term
contracts.
A fixed-term contract is a contract of employment that will terminate on:
•
the expiry of a specific term;
•
the completion of a particular task;
•
the occurrence, or non-occurrence, of any other specific event other than the employee
attaining a retirement age.
Why use fixed-term employment
Fixed-term contracts are useful where employers have a temporary need for work to be
done or where the availability of continued work is uncertain. Using fixed-term employment
can provide employers with greater flexibility by setting expectations about work or the likely
duration of employment from the outset.
Common examples include contracts that:
•
end on a particular date, for example where there is a short-term need for employment;
•
expire on the completion of a specific project;
•
cover periods of employee absence, such as maternity leave or long-term sickness
absence, and will end on that employee returning to work;
•
rely on a particular funding source and will end on the expiry of the funding.
Rights of fixed-term employees
Fixed-term employees have the same statutory employment rights as permanent
employees. This includes protection from unfair dismissal and the right to a statutory
redundancy payment subject to having two years' continuous employment.
The Regulations also provide fixed-term employees with the right not to be treated less
favourably than comparable permanent employees on the basis of their fixed-term status.
There is no minimum period of qualifying service for this right.
Protection from less favourable treatment
The Regulations provide that fixed-term employees should not be subjected to the following
because of their fixed-term status:
4
•
less favourable treatment regarding their contractual terms;
•
any other detrimental treatment;
•
this protection only applies when the reason for the treatment is the employee's fixedterm status and where the employer cannot objectively justify that treatment.
In particular, fixed-term employees should not be treated less favourably in relation to:
•
any period of service qualification relating to a particular condition of service;
•
the opportunity to receive training;
•
the opportunity to secure any permanent position in the organisation.
Fixed-term employees should therefore have access to the same rights and benefits as
permanent employees, unless the employer can objectively justify a difference in treatment.
For example if a permanent employee gets an extra two days' paid holiday after two years'
service, fixed-term employees should get the same increase after the same period.
Comparing treatment
Fixed-term employees have protection where they are treated less favourably than a
'comparable permanent employee'. For these purposes, a permanent employee is an
employee who is not employed under a fixed-term contract.
An appropriate comparator is a permanent employee who is employed:
•
by the same employer;
•
in the same or broadly similar work having regard, where relevant, to whether they have
a similar level of qualification and skills;
•
works or is based at the same establishment (or at a different establishment if no
comparator exists at the same establishment).
An employee is not a comparable permanent employee if the employment has ended. The
comparator must be an actual, not a hypothetical, comparator.
Less favourable treatment
Less favourable treatment can occur in various ways such as
•
being given less favourable contractual terms than permanent employees, such as less
pay;
•
not receiving the same benefits or opportunities as permanent employees, such as
bonuses, whether or not they are contractual;
•
certain conditions being imposed on fixed-term employees that are not applied to
permanent employees, for example offering better promotion opportunities to permanent
employees or selecting fixed-term employees for redundancy.
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Identifying less favourable treatment
Employers may find it helpful to consider the four-stage test set out in the case Hendrickson
Europe Ltd v Pipe [2003] UKEAT 0272 [BAILII]. Although this case relates to part-time
workers, the principles are the same when establishing if less favourable treatment exists.
Courts will ask:
•
What is the treatment complained of?
•
Is the treatment less favourable than that of a comparable permanent employee?
•
Is the treatment on the ground of the employee's fixed-term status?
•
If so, is it justified on objective grounds?
Reason for treatment
If the reason for the treatment is not the employee's fixed-term status then an employee's
claim will fail under the fixed-term employees regulations. If the difference in treatment is
because of the fixed-term status, the employer should consider if that treatment is objectively
justified.
Employers should also consider the possibility of any other discrimination claim that could be
brought in relation to the difference in treatment that may require justification.
The pro rata principle
Employers should apply the pro rata principle to the contractual terms, unless this is
inappropriate in the circumstances. This should help to ensure that the fixed-term employee
is not treated less favourably. In most cases, this will simply mean offering the same terms
in relation to pay or benefits to the fixed-term employee as are offered to permanent
employees, having regard to any service qualifications or conditions that would usually
apply.
For example, where an employer offers six weeks' paid annual leave to permanent
employees, a fixed-term employee who works for six months of the holiday year should
receive a pro rata share, which will be three weeks' annual leave. Where other benefits are
offered annually, such as season ticket loans or gym membership, employers could consider
applying the pro rata principle to provide the benefit in proportion to the length of the
contract.
Objective justification
Once it has been identified that fixed-term employees have been treated less favourably on
the basis of their fixed-term status, employers must consider if that treatment is objectively
justified i.e. to achieve a legitimate aim or business objective and the treatment is a
necessary and appropriate way to achieve this objective.
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In some cases, the pro rata principle will be difficult to apply, particularly where the benefit is
of a type that cannot easily be apportioned. In those circumstances employers may need to
consider other options available or whether it is possible to justify less favourable treatment.
Employers can potentially justify the treatment of fixed-term employees through a:
•
term by term' comparison;
•
package' comparison.
Note that if the less favourable treatment relates to a non-contractual provision, the
“package” comparison is not available.
‘Term by term’ approach
Employers can compare each individual term of employment. They should be the same for
fixed-term and permanent employees, or at least on a pro rata basis. If this is inappropriate,
the employer must consider any objective grounds for the non-provision, or less favourable
provision, of a particular term.
‘Package’ approach
Alternatively, employers can compare the fixed-term employee's contract as a total package
against that of a permanent employee. Where a difference in treatment is identified, the
employer could address the less favourable treatment by either providing the same
treatment, or providing an appropriate compensatory amount, or providing another form of
benefit. Using the package approach, employers can balance a less favourable term against
a more favourable one, provided the fixed-term employee's overall employment package is
not less favourable than that of the comparable permanent employee.
For example, where a fixed-term employee is paid the same salary as a permanent
employee but does not receive a company car that is provided to a permanent employee,
the employer could alternatively increase the salary of the fixed-term employee by an
amount equal to the value of the car. The fixed-term package would, therefore, be
comparable with the permanent package.
Written statement – less favourable treatment
Fixed-term employees may request a written statement from their employer to explain the
reasons for any less favourable treatment. Employers must provide this statement within 21
days of the request, explaining the reasons for any difference in treatment or deny the
difference and provide an explanation.
Conversion to permanent
Employees who have been continuously employed for four years or more on successive
fixed-term contracts are automatically deemed to be permanent employees, unless a
continued fixed-term contract can be objectively justified.
7
In effect, this means that from the point at which the employee reaches four years'
continuous service, he or she will become permanent. All other terms remain unchanged,
unless otherwise agreed. The terms should not, however, be changed in a way that
disadvantages the employee. Employers should also take account of any continuous
employment service as a fixed-term employee for the purposes of establishing his or her
contractual terms as a permanent employee.
This right does not apply where there has only been one fixed-term contract, regardless of
duration. However, if this contract lasts for four years or more and is subsequently renewed,
the contract will be treated as permanent at the point of renewal, unless a further fixed-term
is objectively justified.
The continued use of fixed-term contracts when an employee attains four years' continuous
service must be objectively justified. Employers should assess each case individually to
consider if the treatment in question is proportionate to their business aim.
For example, if an employee has been employed on a series of fixed-term contracts to
complete a particular project, and a two-month extension past the four-year period is
required to complete the project, it is likely that this short fixed-term extension would be
objectively justifiable.
Where there is collective or workforce agreement it is possible for employers and employees
representatives to agree objective reasons as part of an agreement.
Written statement – variation
An employee who believes that the renewal of their contract has been converted from fixedterm to permanent can request a written statement from their employer to confirm the
change to permanent status. The employer must respond within 21 days, either providing
confirmation of the variation or explaining why the contract remains fixed-term.
Ending a fixed-term contract – dismissal
The non-renewal of a fixed-term contract is a dismissal. Dismissal in itself is not less
favourable treatment on the basis of fixed-term status but the employer must take care to
ensure that any dismissal is not because employees have asserted any statutory rights in
connection with their fixed-term status. Employers should also ensure that the reason for the
non-renewal is fair because fixed-term employees with two years' continuous employment
will have the right to claim unfair dismissal.
Ending a fixed-term contract – redundancy
The non-renewal of a fixed-term contract is often because the need for the employee to
perform a particular type of work has ended. The reason for dismissal will, therefore, be
redundancy. Employees with two years' continuous employment would also qualify for a
statutory redundancy payment.
The selection of fixed-term employees for redundancy may be unlawful if this is simply on
the basis of their fixed-term status, unless the employer can objectively justify their selection.
8
Employers may, for example, justify this reason if fixed-term employees were engaged for a
short period to complete a particular task or to cover a period of peak demand that is now
complete.
Employers should ensure that a fair process is followed in managing a redundancy of a
fixed-term employee. This should include reasonable consultation, even though the fixedterm contract is due to end. Employers should consider the availability of suitable alternative
employment. Where employers provide permanent employees with enhanced redundancy
payments and rights, fixed-term employees should also be included in such enhanced
schemes unless their exclusion can be objectively justified.
Under the Trade Union and Labour Relations (Consolidation) Act 1992, where an employer
is proposing to make 20 or more employees redundant they must consult with trade unions
or elected representatives. The Trade Union and Labour Relations (Consolidation) Act 1992
(Amendment) Order 2013 provides that when an employer proposes 20 or more
redundancies within 90 days at one establishment those with fixed term contracts that are
ending at their contractual expiry date are excluded from the calculation. Where, however,
the fixed term contract has not expired they will be included in the number for collective
consultation purposes.
Ending a fixed-term contract – some other substantial reason (SOSR)
Employers often use fixed-term contracts to cover periods of staff absence, for example,
during periods of maternity leave or long-term sickness absence. In these circumstances,
fixed-term employees should be informed at the outset that the purpose of their contract is to
cover the employee's absence and that it will end when the employee returns to work.
Where the reason for the non-renewal of a fixed-term contract is because the purpose of the
contract was to cover the absence of an employee and the contract is ending because the
permanent employee is returning to the same position, this is not a dismissal by reason of
redundancy. There is, and remains, a need for an employee (the permanent employee
returning from absence) to perform the particular work. The reason will, therefore, be a
dismissal on grounds of some other substantial reason.
Procedure to end a fixed-term contract
The Acas Code of Practice on Disciplinary and Grievance Procedures does not apply to the
non-renewal of fixed term contracts on their expiry.
However, the non-renewal of a fixed-term contract is a dismissal. To avoid an unfair
dismissal, employers should ensure that the dismissal is reasonable and should, therefore,
consider following a fair procedure when managing the non-renewal of a fixed-term contract.
Following a process similar to the Acas code would be a good practice approach.
Notice
Where it is intended that a fixed-term contract will end upon the expiry of the fixed-term,
without the need for further notice, employers should make this clear in the contract. This will
9
avoid any need to provide further notice to terminate the contract. Employers should,
however, check their contractual arrangements to identify if any notice is due on termination
to avoid any breach of contract.
Early termination
Employers should include a contractual provision allowing for the early termination of a fixedterm contract by giving notice. Where there is no notice provision that entitles the employer
to terminate the contract early, the employer would be in breach of contract and could be
liable for damages equal to the employee’s salary for the remainder of the contract, subject
to employees' duty to mitigate their loss.
B2
Part-time workers
The rights and protections available to part-time workers will largely depend on their status.
Part-time employees have the same statutory employment rights as full-time employees,
regardless of the number of hours they work. Where part-time members of staff are not
employees but workers, the statutory rights available are more limited.
In either case, the Part-time Workers (Prevention of Less Favourable Treatment)
Regulations 2000 provide part-time workers, not only employees, with the right not to be
treated less favourably than comparable full-time workers on the basis of their part-time
status. There is no minimum period of qualifying service for this right. Although the protection
applies equally to men and women, in practice women may be more likely than men to bring
such claims as a significantly higher proportion of women work part-time. Employers must,
therefore, carefully consider their working practices and the rights and benefits that are
afforded to part-time workers. By justifying difference in treatment, employers may be able to
defend claims for less favourable treatment and discrimination.
Meaning of a ‘part-time’ worker
The Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 define
a part-time worker as someone who is paid wholly or in part by reference to the time he or
she works and is `not identifiable as a full-time worker`. There is no threshold of working
hours that must be met to differentiate between full-time and part-time working. This
depends on what the employer regards as full-time work.
Part-time workers are, therefore, workers who are contractually required to work less than
the hours the employer identifies as full-time.
Protection from less favourable treatment
Part-time workers should not be subjected to the following because of their part-time status:
•
less favourable treatment regarding their contractual terms;
•
any other detrimental treatment.
These protections apply only if the reason for the treatment is the worker's part-time status
and where the employer cannot objectively justify the treatment. Part-time workers should,
10
therefore, have access to the same contractual rights and benefits as full-time workers, pro
rata unless the employer can objectively justify different treatment.
Protection for workers
The part-time workers regulations apply to workers, as well as employees. Those working
under contracts of employment or any other contract for the personal performance of work or
services will, therefore, have protection. The regulations do not apply to self-employment.
Those who may be covered include:
•
part-time employees;
•
casual workers;
•
'bank' workers;
•
homeworkers;
•
zero hours staff;
•
contracts of apprenticeship.
Comparing treatment – the comparator
Part-time workers are protected from less favourable treatment when compared with a
`comparable full-time worker`. For these purposes, an appropriate comparator is someone
who works:
•
for the same employer;
•
on the same type of contract;
•
in the same or broadly similar work having regard, where relevant, to whether they have
a similar level of qualification, skills and experience at, or is based at, the same
establishment (or at a different establishment where no comparator exists at the same
establishment).
The comparator must be an actual, not a hypothetical, comparator
Comparing treatment – same type of contract
Treatment is only comparable if both the part-time and full-time workers are working under
the same type of contract.
Fixed-term and permanent contracts of employment are treated as the same. Part-time
fixed-term employees can, therefore, compare their treatment with full-time permanent
employees. However, part-time workers who are not employees cannot compare treatment
11
with full-time employees, even if they are performing similar work, because the type of
contract is different.
Casual workers could have difficulty in claiming protection from less favourable treatment
unless they can identify a comparable full-time worker who works on the same type of
contract. For example, where part-time workers are engaged to work `on demand`
according to the needs of the business and are paid for their hours worked and have the
option of refusing work, their treatment would not be comparable with full-time workers who
are required to work fixed hours for fixed salaries and who cannot refuse work.
Temporary agency workers who are engaged through an employment agency to perform
temporary work for a hirer cannot compare treatment with full-time employees directly
employed by the hirer. They may, however, have alternative rights to equal treatment under
the Agency Workers Regulations 2010.
Comparing treatment – same or broadly similar work
Case law guidance (Matthews and others v Kent and Medway Towns Fire Authority and
others [2006] IRLR 367) is helpful when considering how to identify the same or broadly
similar work. The Law Lords said courts should concentrate on:
•
the similarities between the jobs rather than the differences;
•
the importance of the work of both groups to the organisation as a whole;
•
whether any differences are so important that they prevent the work being considered
overall as the same or broadly similar, when a substantial part of the work of both groups
is the same.
Employers should, therefore, focus on the similarity of the work carried out by both groups
rather than focusing on the differences. If a substantial part of the work is the same or similar
for both groups, any other differences such as additional skills, duties or responsibilities,
must be of significant importance and must actually contribute something different to the
work being done.
Defining and identifying less favourable treatment
Less favourable treatment generally involves treatment that would, or might, lead a
reasonable worker to take the view that he or she had been disadvantaged. For example,
part-time workers might receive less favourable contractual terms than full-time workers,
such as less pay, benefits or holidays. Alternatively they might be excluded from bonuses
that are provided to full-time workers. Less favourable treatment could also occur where
employers impose conditions on part-time workers that are not applied to full-time workers,
for example, by offering less promotion opportunities to part-time workers.
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Identifying the reason for less favourable treatment
If the treatment in question, or at least the effective and predominant cause of the treatment,
is not a result of the worker's part-time status then a worker's claim will fail for the purposes
of the part-time workers regulations.
If the difference in treatment is because of the part-time status, the employer should
consider if that treatment is objectively justified i.e. if it can be shown that the treatment is
necessary and appropriate to achieve a legitimate business objective.
The pro rata principle
Employers should apply the pro rata principle to contractual terms to ensure that the parttime worker is not treated less favourably. In most cases, this will simply mean offering the
same terms or benefits to the part-time worker as are offered to comparable full-time
workers.
For example, where a part-time worker is required to work three days a week and a full-time
working week is five days, the part-time worker would generally have the same contractual
rights and benefits as a full-time worker, subject to a pro rata reduction to three-fifths of the
value of those benefits.
Objective justification
Once it is identified that a part-time worker has been treated less favourably on the basis of
their part-time status, employers must consider if that treatment is objectively justified i.e. if it
is to achieve a legitimate aim or business objective and the treatment is a necessary and
appropriate way to achieve this objective.
In some cases, the pro rata principle will be difficult to apply, particularly where the benefit is
of a type that cannot easily be apportioned. In those circumstances employers may need to
consider other options available or whether they can justify the less favourable treatment.
Term-by-term approach
When considering the treatment of a part-time worker, it is necessary to adopt a 'term-byterm' approach rather than looking at the contract as a whole package (Matthews and
others v Kent and Medway Towns Fire Authority and others [2006] IRLR 367). Less
favourable treatment cannot be offset or cancelled out by more favourable treatment of a
different kind.
Employers should, therefore, consider each term or benefit that applies and whether any
different treatment can be justified. It may be difficult to objectively justify a difference in
treatment unless it can be shown, for example, that it would not be feasible to give the same
benefit on a pro-rata basis or to provide an alternative benefit or compensation in place of
that particular term.
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Written statement – less favourable treatment
Where part-time workers believe that they have been subjected to less favourable treatment
on grounds of their part-time status, they may make a written request to obtain a written
statement of the reasons for the treatment from their employer. Employers are required to
provide this statement within 21 days of the request.
Pay
Part-time workers should receive the same basic and enhanced hourly rates of pay as
comparable full-time workers. This could include payments such as shift allowances,
bonuses, unsocial hours payments or other additional payments.
Overtime
Part-time workers are not treated less favourably if they are only eligible to receive enhanced
overtime payments once they work the same number of hours as full-time workers are
required to work before being eligible for enhanced rates. Part-time workers who work
additional hours will, therefore, continue to be paid at their normal rate of pay until they work
the equivalent full-time hours.
Holidays and public holidays
Part-time workers can be granted the same amount of holidays as a comparable full-time
worker on a pro rata basis. The pro-rata approach is also relevant to public holidays. This
will ensure part-time workers are not disadvantaged in comparison to comparable full-time
workers.
As the majority of public holidays fall on a Monday, this often raises questions about the
treatment of part-time workers who do not work on Mondays. If employers operate a policy
of only providing part-time workers with paid time off for bank-holidays that fall on their
ordinary working days, this would mean that part-time workers who do not work on Mondays
could be treated less favourably than comparable full-time workers. They would not receive
a pro rata share of full-time workers.
To address this issue the employer could attempt to objectively justify the difference in
treatment. Alternatively they may even be able to establish that the reason for the difference
is not part-time status, for example where the employer operates a 7-day operation and no
employees receive holidays for non-working days.
However, the most straightforward and least risky way is for the employer to adopt the prorata approach and provide the part-time worker with a proportionate amount of holidays.
Time off could be granted in lieu on days that the worker would ordinarily work.
Redundancy
Selecting part-time employees for redundancy before full-time employees on the basis of
their part-time status is likely to be less favourable treatment and may also constitute indirect
sex discrimination, in the absence of any objective justification. Employers should, therefore,
ensure that any redundancy selection criteria are objectively justified. Where employers
14
have a particular need for a specific pattern of work, they should also consult fully with parttime workers to identify if any flexibility can be achieved.
Redundancy payments will be calculated on the basis of the employee's pay at the date of
termination, even though this may in effect disadvantage part-time workers by failing to take
into account the fact that they may have previously worked full-time.
Occupational pension schemes
Part-time workers should have the same rights to access any pension scheme and to the
right to benefits of the scheme
B3
Annualised hours contracts
These are contracts which stipulate the number of hours that must be worked over the
course of a year with a degree of flexibility as to when the hours are worked. They meet the
objectives of employers whose work is subject to seasonal variation. Workers under
annualised hours contracts will generally be employees as the employer is likely to retain
control over when the hours are worked and a fixed number of hours will be guaranteed.
B4
Homeworkers
There is no statutory definition of homeworking and workers may be employed or selfemployed, may work wholly or partly at home.
Requests for flexible working may include homeworking.
Benefits to an employer include:
•
reduced overhead costs;
•
better motivation;
•
skills retention.
However many organisations perceive disadvantages including:
•
impact on team working and culture;
•
loss of control/supervision;
•
lack of team cohesion.
Practical considerations
There are numerous considerations including:
•
Health and safety – employers remain responsible for the health and safety of
employees and must conduct a risk assessment to identify hazards;
•
Equipment – if the employer provides equipment then the contract must reserve the
ability to recover on termination.
15
•
Consent – employers should ensure the employee has their mortgagor/landlord and
insurer’s consent to homeworking. Any equipment provided by the employer will need to
be covered by the employer’s insurance policy or if that is not possible the employee
should be required to maintain sufficient insurance over.
•
Household expenses and travel costs - a homeworker who is an employee may be
entitled to claim a deduction against taxable income for certain household expenses and
travel costs;
Contractual provisions
Place of work – the contract should specify whether the employee’s principal place of work
is their home or the employer’s premises. The employer will normally want to be able to
require the homeworker to attend the office from time to time and this needs to be reserved
in the contract. The employer may also wish to reserve the ability to recall the employee to
the office on a permanent basis.
Hours of work
Office hours or core hours need to be agreed and specified. Employers should consider
arrangements for monitoring working time.
Expenses
Consideration should be given to which expenses the employee can claim including travel
expenses to attend meetings at the office, phone, heating, lighting, increased insurance
premiums etc.
Confidentiality
Homeworkers should be required to keep confidential information secure and employers
may wish to consider suitable precautions such as passwords and encryption ,a secure filing
cabinet and facilities for confidential disposal.
IT
The IT policy needs to make clear that it covers policing the use of any home systems the
employee has at their disposal.
Right to enter
The employer needs to reserve the right to retrieve its property at the end of the contract and
to carry out risk assessments for health and safety purposes.
Data protection
Appropriate, technical and organisational measures will need to be taken to avoid
unauthorised or unlawful processing of data that identifies individuals. From 6 April 2010 the
ICO had the power to impose fines of up to £500,000 on data controllers for serious
breaches of the DPA which have a potential to cause substantial damage or distress and
which were committed knowingly or negligently. A risk assessment should be undertaken
and appropriate measures put in place.
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B5
Secondment
Secondment may be external or internal.
In the case of external secondment the secondee remains employed by their original
employer during the secondment and following the termination of the secondment. There is
a risk the secondee may become the host’s employee if respective obligations are not
clearly agreed and documented.
In Fitton v City of Edinburgh [2008] UKEATS/0010/07 a secondee was held to be
employed by the host. The secondee was under no obligations to the original employer, was
not controlled by it and did no work for it. She was line-managed by the host and arranged
holiday with it. While she was paid through the employer’s payroll it was charged back to the
host.
The risk is that the employer will retain residual obligations and if the intention is to transfer
liabilities to the host this should be documented, including suitable indemnities.
In order to avoid the risk of the secondee being found to become the host’s employee the
parties need to document:
•
the secondee does not owe any duties to the host, but only to the seconder;
•
the host does not owe any duties to the secondee, but only to the seconder;
•
the seconder retains overall control;
•
the seconder deals with any matters that involve the secondee during the secondment,
e.g. disciplinary and grievances under its own procedures;
•
the secondee does not become integrated into the host’s organisation, e.g. remains
managed by the seconder;
•
even if the secondee does not become an employee of the host, they may be held to be
a worker and the host may have vicarious liability in relation to third parties if it becomes
the “temporary deemed employer”.
The employment contract
Unless the contract entitles the employer to second the employee, the secondee will need to
consent. Even if there is a right to second, employers need to consider the implied term of
mutual trust and confidence and the risk of discrimination claims.
In Meade-Hill v British Council [1995] IRLR 478 it was held that enforcing a mobility
clause was direct discrimination on the basis that a greater proportion of women would find it
hard to relocate.
The secondment agreement
This may be:•
a letter of secondment between employer and employee;
17
•
an agreement between the employer and the host (with a separate letter to the
employee);
•
a tripartite agreement.
TUPE
If the work done by seconded staff could, on its own, amount to an undertaking, there is a
risk that TUPE may apply. In North Wales Training and Enterprise Council Ltd (t/a
Celtec) v Astley [2006] UKHL 29 the House of Lords held that civil servants transferred
under TUPE in 1990 when Celtec took over responsibility for vocational training. This was
despite the parties believing that civil servants remained employed with the DoE and were
only seconded on a voluntary basis to Celtec until 1993.
Conversely TUPE cannot be circumvented by a secondment agreement. If there is a
transfer this will be inconsistent with secondment even if the secondment is limited to the
employee working out their notice period (Capita Health Solutions Ltd v McLean and
another [2008] IRLR 595).
Duties
The secondee can only be required to carry out work that falls within their contractual duties.
The secondee will owe a duty of good faith to the host during the secondment as well as to
their employer.
The secondment agreement
Ensure that the agreement includes:
•
how and by who performance will be monitored;
•
reporting and supervision arrangements;
•
who will approve requests for annual leave;
•
who will pay for additional leave such as maternity during the period of secondment.
•
if the secondee stops providing services by reason of illness or maternity or resignation,
who will be responsible for payment during any periods of leave and will the seconder be
obliged to provide a substitute;
•
If a salary review falls during the secondment will any resulting pay increase be reflected
in fees paid by the host;
•
who will deal with grievance, performance and conduct issues;
•
how will conflicts of interest be dealt with;
•
data protection and consent to sharing personal data and sensitive personal data should
be included;
18
•
consider confidentiality of information acquired during the secondment and, possibly,
restrictive covenants;
•
on the basis the secondee remains employed by the seconder, any intellectual property
rights belong to the seconder in the absence of appropriate provisions in the secondment
agreement;
•
the secondment agreement needs to specify:
-
the notice required to end the secondment;
-
whether, if the secondee terminates the secondment arrangement, that notice will
also terminate their employment;
-
whether summary termination of the secondment agreement will terminate the
secondee’s employment.
Discrimination
Both the seconder and the host may be liable for discrimination claims. For discrimination
law purposes seconded workers count as “contract workers” in respect of the host
organisation.
While contract workers are protected against discrimination, they cannot claim equal pay
under the Equality Act to compare their pay and other terms with those of the host’s
employees unless the host is an associated employer. Even if it is an associated employer,
if the host’s workplace is a different “establishment” the secondee must show that common
terms and conditions apply at both workplaces.
B6
Casual workers
These are one group of workers.
The hallmark of a true casual is the absence of mutual obligation. However case law has
established that individual pieces of work can constitute employment even where there is no
obligation to offer further work.
The meaning of 'casual worker' is not defined in employment law and this can lead to
confusion about the legal status of the individual. Whether the individual will be a worker or
an employee will depend on the true nature of the arrangement and needs to be established
at the beginning of the relationship.
Casual workers will usually perform work only on an ad-hoc basis, or 'as and when' there is
work available. There is usually no regular pattern or length of work. In most cases
employers will have no obligation to offer work and casual workers will have no obligation to
perform the work offered. This is what is meant by the absence of mutuality of obligation.
However if the written agreement excludes mutuality of obligation, a court will look at the
reality of the arrangements if the written agreement does not reflect the intentions of the
parties.
19
Why casual workers are used
Casual working arrangements are often used where the:
•
requirement for a particular service fluctuates, for example, in health and social care
services;
•
availability of work is unpredictable and may depend on factors outside the employer's
control, for example, in tourism or construction where the weather or economy could
affect the availability of work;
•
nature of the work only requires seasonal activity, for example, in agriculture or
horticulture.
For employers, the advantages of using casual workers may include:
•
having greater flexibility in allocating work;
•
engaging additional resource only when there is a business need, which is more costeffective;
•
having no obligation to guarantee or offer work;
•
having no obligation to pay workers during periods of inactivity (unless otherwise
agreed);
•
having no obligation to give notice to end the arrangement (unless otherwise agreed);
•
less risk of legal challenge where workers have fewer statutory employment rights
(particularly in relation to unfair dismissal and redundancy payments).
Mutuality of obligation
For casual workers, the importance of establishing mutuality of obligation is twofold. It will
inform the decision on whether the casual worker is an employee during a specific
engagement and it will also determine if any periods between the engagements can be
linked by sufficient mutuality of obligation to create a continuing employment relationship. In
the absence of mutuality of obligation a casual is unlikely to establish employment status
even if the other features of employment, personal service and control, are present.
To understand if mutuality of obligation exists in the relationship it is useful to consider if:
•
the employer is obliged to provide work;
•
the individual is obliged to perform the work;
•
the individual is considered to be employed during the periods of work;
•
there are any obligations on parties during periods of inactivity;
20
•
periods of work can be linked, by establishing sufficient mutuality of obligation, during
periods of inactivity.
An absence of mutuality of obligation is the element that will be most likely to cause claims
for employment status by casual workers to fail. Usually casual workers will be engaged only
on short-term contracts that are not intended to create mutual obligations on the parties.
Where workers are re-engaged, there are usually gaps between periods of engagement and
no specific obligation on workers to accept work if offered or to be available for work during
periods of inactivity.
Employment status during and between periods of engagement
During periods of engagement, casual workers may be either employees, workers or selfemployed. The usual tests of employment status should be applied to determine their status
during each assignment. Employers should review this over time as the status could change.
Establishing employment status between engagements has wider implications for
employers. Employment rights such as the right to claim unfair dismissal or a statutory
redundancy payment require a qualifying period of service. Ordinarily, casual workers
working on short-term engagements will not achieve these rights. However, if the periods of
engagement can be linked over a longer period of time, this could potentially give rise to a
qualifying period of service (Drake v Ipsos Mori UK Ltd[2012] UKEAT 0604).
Casual work often involves workers being engaged on a number of short-term contracts with
gaps in between. If there is sufficient mutuality of obligation in the gaps during which no work
is performed an umbrella contract may be inferred (St Ives Plymouth Ltd v Haggerty
UKEAT/0107/08)
Where individuals are employed on a series of work engagements, it may be clear that they
are treated as employees while working. However, there may also be an overarching
(umbrella) contract between parties during periods of inactivity. If it can be established that
there is a sufficient degree of mutuality of obligation during periods of inactivity, this may give
rise to a continuing period of employment, even through periods of inactivity (Drake v Ipsos
Mori UK Ltd [2012] UKEAT 0604)
In a truly 'casual' arrangement it would be unlikely that either party would intend to have
obligations during this time. However umbrella contracts could be implied where there is a
relationship of such a long-standing nature that, even though the work is offered and
performed on a casual basis, in reality there may be a continuing expectation that work will
be provided and performed.
In Clarke v Oxfordshire Health Authority [1998] IRLR 125 CA it was held that a nurse
who was retained by a health authority to fill temporary vacancies in a hospital did not have
a global employment contract spanning her various individual engagements because there
was no mutuality of obligation during the periods when she was not working. The fact she
was bound by an ongoing duty of confidentiality even during non-working periods was
insufficient. The Court accepted though that the mutual obligations required for an umbrella
contract of employment need not necessarily consist of obligations to provide and perform
21
work. For example, an obligation on one party to accept work offered and an obligation on
the other party to pay a retainer during periods when work was not offered would be likely to
suffice.
In the leading case of Carmichael v National Power plc [1999] ICR 1226 the House of
Lords held that a casual tour guide had no contractual relationship with the operator because
there were no mutual obligations to offer and perform work. However a course of dealings
that gives rise to mutual expectations that work will continue to be provided may amount to
sufficient mutuality of obligation. There must however be an irreducible minimum of
obligations.
In Cornwall County Council v Prater [2006] ICR 731 the Claimant worked as a home tutor.
Although there was no obligation on the Council to provide work or on a tutor to accept it,
once a pupil enrolled there was a mutual expectation that the tutor would complete the
assignment and the Council would pay the tutor for that work. The Claimant began working
as a tutor in 1988 and became an employee in 1998. She was paid for all but fourteen
months over that period. The Court of Appeal upheld a Tribunal’s decision that the
Claimant’s employment stretched back to 1988. Although there was no global contract it
was accepted that the individual engagements, once entered into, constituted contracts of
employment and there was therefore no need for her to establish an overarching mutuality of
obligation throughout the ten year period. Any gaps between assignments were temporary
cessations of work which preserved her continuity of employment.
In Pola v R (Health and Safety Executive) [2009] EWCA Crim 655 the Court of Appeal
considered whether a casual worker who was not obliged to turn up to work on any particular
day was properly characterised as an employee during the periods he did work for the
purposes of health and safety. The Court found that the relevant workers were expected to
work for the whole of any day on which they turned up and would be paid for the day in full.
On that basis they were employees during each day on which they worked.
Avoiding disputes over employment status
Employers should:
•
clarify the individual is a worker, not an employee;
•
clarify in the contract that there is no obligation to provide work and no obligation on the
worker to accept work;
•
ensure the arrangement reflects this in practice;
•
avoid engaging the same workers on a regular pattern;
•
allow gaps between periods of engagement (at least one full week including a period
from Sunday to Saturday);
•
keep records of engagements and refusals to accept work.
22
Holidays
All workers have a statutory right to 5.6 weeks' holiday each year. Where workers leave
employment, they must be paid in lieu for any accrued but unused holiday, at their normal
rate of pay.
Casual workers do not tend to have regular hours, nor is it usually known how long they will
be engaged for. If workers are engaged on a series of individual contracts then they are
entitled to holiday (or a payment in lieu) for each engagement and the amount of holiday pay
due must be calculated on each occasion.
Statutory sick pay
Casual workers may be eligible for statutory sick pay if they are 'qualifying employees'. For
these purposes, 'employees' include all those whose earnings are liable for Class 1 National
Insurance contributions and where they are absent for four or more days consecutively.
Statutory maternity, paternity and adoption pay
Casual workers may be eligible for payments if their normal weekly earnings attract Class 1
National Insurance contributions. This creates an anomaly in that casual workers could have
the right to receive a statutory payment but not the related leave because leave is only
available to employees. Thus, in order to take advantage of the right to statutory pay, they
would need to rely on a contractual arrangement to take time off work.
Pensions
In many cases, employers may aim to distinguish the rights of casual workers to access
pension and other benefits from the rights of their employees. However employers should
consider their obligations under automatic enrolment rules. These requirements can extend
to employees, temporary and casual workers (including zero-hours workers), agency
workers and contractors and consultants who are not genuinely self-employed, subject to
meeting the relevant age and earnings thresholds.
Part-time worker status
Casual workers may have protection from less favourable treatment on the basis of part-time
status under the Part-time Workers (Prevention of Less Favourable Treatment) Regulations
2000. However this right only applies where a comparable full-time worker is working on the
same type of contract. Casual (part-time) workers who are not employees cannot compare
treatment with full-time employees.
Even if they are employees, they can only compare treatment with those engaged on the
same type of contract or work. This will be difficult to challenge where workers are engaged
on an 'on demand' basis and aim to compare treatment with those on regular, fixed hours of
work.
23
Ending the arrangement
The manner of ending a casual working arrangement will be driven by the status of the
individual in question. In the absence of employment status, the worker will have no statutory
claims in relation to unfair dismissal or redundancy pay, thus making the manner of
termination more flexible and potentially less open to challenge.
Employers should consider any contractual terms that may have been agreed in relation to
notice or the manner of termination. In some cases the employer may simply be entitled to
stop providing work. In others, they may have agreed to provide a minimum period of notice.
Care must also be taken to ensure that the reason for ending the arrangement could not be
construed as an act of discrimination contrary to the Equality Act 2010 as this may still give
the individual a right to challenge the arrangement.
If the worker could claim to have employment status, and a sufficient period of continuous
employment to claim unfair dismissal, the employer should carefully consider the reason for
termination and whether or not this is reasonable in the circumstances. Where the employer
believes there could be a risk of challenge, it should consider following a fair process to
manage the dismissal and to minimise the risk of an unfair dismissal claim. The employer
should also consider any statutory or contractual notice rights that may be due.
Depending on the reason for termination, employers may also need to consider the
possibility of a claim for statutory redundancy payment where the employee has at least two
years' continuous employment.
‘Bank’ arrangements
These arrangements are often used where employers require a pool of workers (a 'bank')
that can be called on as necessary when work becomes available. In typical bank
arrangements, employers are not obliged to provide work and workers are not obliged to
accept it. In the absence of mutuality of obligation, bank workers are unlikely to have
contracts of employment.
On-call contracts
Many organisations in the health and social care sector depend on workers being “on-call”.
For the purposes of the Working Time Regulations any time that a worker is required to be
present at a place of work determined by the employer will constitute working time.
(Landenshauptstadt Kiel v Jaeger 2004 ICR 1528)
There have been a number of recent cases relating to entitlement to the National Minimum
Wage. Generally workers will be entitled to be paid when they are available at or near a
place of work for the purpose of doing work and are required to be available for work unless
they are entitled to spend the on-call time at home. Where a worker is entitled to sleep at or
near the place of work when on-call and is provided with facilities for sleeping, only time
when the worker is awake for the purpose of working is treated as working time for NMW
purposes. However recent case law suggests that where the employer is required to provide
24
staff at all times and when a worker is required to work during a sleep-in NMW will be
payable for all hours worked.
B7
Zero hours workers
A zero hours contract does not have a specific meaning in law, but it could be summarised
as an agreement between two parties under which there is no set minimum number of
hours. The contract will stipulate the level of pay individuals will get if they perform work and
should deal with the circumstances in which work may be offered and, possibly, turned
down.
The exact nature of zero hours contracts may differ between organisations. For example,
those who work under zero hours contracts:
•
may be engaged as employees or workers;
•
may or may not be obliged to accept work if offered;
An individual on a zero hours contract is unlikely to be self-employed and will usually be an
employee or a worker applying normal tests of employment status.
Employment status change
Employers should check regularly that individuals are being managed in line with the status
specified in their contract.
Over time, the way the relationship works may change. For example, someone originally
engaged as a worker may over time have become increasingly integrated into the
employer's business, so he or she now bears many characteristics of an employee.
To avoid this, managers should receive training to ensure they understand the way they treat
an individual could change that individual's status. If status does change, a new contract
should be issued to reflect this, so both the employer and the worker are clear about their
respective rights and obligations.
The issue of continuing relationships
If the employer does not want a continuing relationship between engagements, it should not
prohibit the individual from working elsewhere between engagements and should not create
an expectation of further work. From 26 May 2015 exclusivity clauses have been banned.
The contract should confirm:
•
there is no contract between the parties between assignments;
•
each assignment shall be regarded as separate;
•
the fact that the employer has offered work does not meant there is any entitlement to or
any expectation of future work.
25
The existence of a continuing relationship is particularly important for employees as the
length of continuous service for employees is relevant to the accrual of many statutory rights.
Zero hours contracts may be structured as overarching or `umbrella` contracts. This is a
continuing contractual relationship with ongoing obligations between the employer and
individual regardless of whether the individual is working at the time. It makes it easier for
the employer to administer holiday pay and benefits, such as health cover, even when
individuals are not working on an assignment.
Calculating holiday for zero hours employees and workers
Legislation calculates holiday in terms of 'weeks', providing for accrual of holiday in the first
year as being at a rate of 1/12 of the annual entitlement each month. However, where hours
worked are irregular and the annual entitlement cannot be predicted with certainty, this
formula is of little assistance.
It is important to deal with the accrual of holiday in the contract itself. Where hours are
irregular it is usually easiest to calculate holiday entitlement based on the number of hours
worked. On this basis, holiday accrues at the rate of 12.07% per hour worked. This
percentage is reached by taking the 5.6 week statutory holiday entitlement and dividing it by
46.4 weeks (46.4 being the sum of 52 weeks in a year minus the 5.6 week statutory holiday
entitlement). This means that the amount of holiday accrued by an employee or a worker
can be calculated at any time by multiplying the number of hours they have worked up to
that point by 12.07%.
The timing of when accrued holiday can be taken can be decided by the employer. For
example, if a zero hours employee or worker has worked 10 hours, they will have accrued
1.2 hours' of holiday entitlement (10 hours x 12.07%). However, the employer may not be
willing to allow individuals to take holiday during an assignment. An employer can decide
both the length and timing of holidays taken by its employees or workers, provided it does
not prevent the employee or worker from taking the holiday for the entire holiday year.
If the employer wants a zero hours employee/worker to take holiday on specified dates, it
must specify in the contract or otherwise give the individual notice of at least twice the length
of the period of leave the person is being required to take.
Rolled up holiday pay
This is a problematic area. The ECJ held in 2006 that the practice of making payments
staggered over an annual period of work and paid together with remuneration for work done
rather than in the form of a payment in respect of a specific period during which a worker
actually takes leave is incompatible with the Working Time Directive. The present
government guidance on the BIS website states “Payments for statutory annual leave should
be made at the time when annual leave is taken.” In practice many employers continue to
use rolled-up holiday pay and in Lyddon v Englefield Brickwork Ltd UK EAT/0301/07 the
EAT upheld a Tribunal’s decision that an employer was entitled to offset rolled-up holiday
pay against a worker’s entitlement under the WTR 1998 where there was a transparent
26
agreement between the parties identifying the specific sum attributable to the periods of
holiday.
As there is a question mark over the legality, an alternative is to simply withhold holiday pay
until the worker requests it or make payment on termination.
Auto-enrolment
Organisations should consider their pension auto-enrolment obligations which may include
zero-hours workers subject to meeting the relevant age and earnings threshold.
B8
Agency workers
Courts have occasionally found an `implied contract` between an agency worker and the
organisation to which the worker is supplied if necessary i.e. employment is the only
relationship consistent with arrangements between a worker and end-user. Mostly there will
not be sufficient mutuality of obligation as most agency contracts do not allow an end-user to
stipulate a particular worker.
Having regard to existing case law, it is possible that an agency worker might not be an
employee of either the employment business or the client (with obvious consequences on
the rights and protections available to such workers).
The Agency Workers Regulations (AWR) 2010 came into force on 1 October 2011, which
gave effect to the Temporary Workers Directive. It is not possible to contract out of the AWR
(reg. 15).
The AWR seeks to protect temporary agency workers in the following three key ways:
1. hirers must ensure that agency workers must be able to access to collective
facilities and amenities as comparable employees or workers (unless less
favourable treatment can be objectively justified). Collective facilities and
amenities for the purpose of the AWR includes but is not limited to canteens,
childcare facilities, transportation services etc. This list is non-exhaustive.
(Day 1 right);
2. hirers must inform agency workers of any relevant vacancies during an
assignment so that they may be given the same opportunity as a comparable
employee or worker to find permanent employment with the hirer. The hirer
need not personally inform the agency worker – it can make a general
announcement in a suitable place in its establishment. (Day 1 right);
3. temporary work agencies and hirers must ensure that an agency worker who
has completed a 12-week qualifying period receives the same basic working
and employment conditions as he or she would be entitled to for doing the
same job had he or she been recruited directly by the hirer. The right to equal
treatment only extends to the terms and conditions that would have been
ordinarily included in the agency workers’ contract had he or she been
recruited directly by the hirer to do the same job (reg. 5(2)). They include
27
terms and conditions relating to pay, rest periods, rest breaks, annual leave
and duration of working time. (Week 12 right).
The first two apply to agency workers from the first day of their assignment, whereas the
third right has a 12 week qualifying period requirement. Once an agency worker qualifies for
equal treatment the obligation not to treat them less favourably is ongoing. Therefore, if after
the 12 week period a hirer enhances terms and conditions for its staff e.g. introducing
service-related increases to annual leave, it must ensure that agency workers are not treated
less favourably in this regard. Calculation of the 12 week qualifying period will restart when
an agency workers stops working for one hirer and begins working for another (reg. 7(2)). A
new hirer for these purposes must be a different legal entity/person.
There are certain absences from work which will not prevent a worker from continuing to
accrue weeks towards the 12 week qualifying period e.g. pregnancy/childbirth, maternity,
paternity or adoption leave. There are certain absences which will suspend continuity such
as where the break is for any reason but is no more than six calendar weeks and the worker
returns to the same role with the hirer. Other examples include sickness absence of up to
28 weeks, jury service for up to 28 weeks and strikes.
It is not clear whether a term-by-term approach or package approach is required in
considering equal treatment and as yet there is no case law on this.
The definition of “agency worker” under the AWR excludes those who are genuinely selfemployed i.e. where the TWA or the hirer has the status of a client or customer of a
profession or business undertaking carried on by the individual (reg. 3(2)).
The AWR
Guidance supports the position that an individual providing services through their own
personal service company who manages themselves and can provide a substitute will fall
outside of the scope of the AWR 2010. Nevertheless, the mere fact that an individual is
putting earnings through a limited company for tax reasons would not necessarily mean that
AWR 2010 do not apply to them; the usual employment tests as mentioned above would
need to be used to determine if the individual is in business on their own account.
Further agency workers who are on permanent assignments are excluded under the AWR
(see Moran and others v Ideal Cleaning Services Limited and anor UKEAT/0274/13).
The Temporary Workers Directive allows Member States to derogate from the right to equal
treatment in two respects:
1. They can derogate from the right to equal treatment in respect of pay where the
agency worker is employed on a permanent contract of employment that provides for
pay between assignments (“the Swedish derogation”);
2. They can derogate in collective or workforce agreements between workers and
employers’ representatives.
Only the Swedish derogation is reflected in the AWR.
28
B9
Apprentices
The primary purpose of a contract of apprenticeship is training (whereas the primary object
of a contract of service is the performance of work). It is unclear whether there is a legal
requirement for a contract of apprenticeship to be in writing although it is clearly advisable.
Common law apprenticeships e.g. trainee solicitors or accountants
•
•
•
•
Training is the primary purpose of the apprenticeship.
Enhanced damages for early termination: In Dunk v George Waller & Sons [1970]
2 QB 163, the Court of Appeal held that apprentices are entitled to damages for the
loss of earnings and training for the remainder of the agreed term for the
apprenticeship in addition to damages for the loss of future career prospects.
Employers have less scope to dismiss an apprentice employed under a common law
apprenticeship agreement in comparison to ordinary employees. An employer will
need to be able to establish that the apprentice is effectively unteachable
Apprentices cannot be dismissed by reason of redundancy in the usual way, unless
the employer’s business is closing or undergoes a fundamental change in its
character (Whitely v Marton Electrical Limited [2003] IRLR 197).
On completion of a common law apprenticeship: It is unclear as to whether this
amounts to a dismissal for the purposes of s.95 and 136 of the Employment Rights
Act (ERA) 1996. Apprenticeships are excluded from the Fixed Term Regulations
(see reg. 20) so some commentators believe that they are excluded from the ambit of
s. 95 ERA.
ASCLA 2009 apprenticeships
•
•
•
The Apprenticeships, Skills, Children and Learning Act (ASCLA) 2009 came into
force on 1 October 2011.
ASCLA apprenticeships have to be in a prescribed form e.g. written statement of
terms or contract, governed by the laws of England and Wales and state that it is
entered into in connection with a qualifying apprenticeship framework (e.g.
curriculum). There are different curriculums in England and Wales.
Normal principles for breach of contract and unfair dismissal apply. Consequently,
employers can performance manage under-performing apprentices in the same
manner as any employee in the business.
An apprenticeship rate of the National Minimum Wage was introduced in October 2010.
Currently the rate is £3.30.
C
Flexible Working
Since 30 June 2014 all employees with 26 weeks continuous service have the right to apply
to work flexibly and the right is no longer limited to parents or carers. The detailed
procedure for considering requests has been abolished and the employer simply has to
consider requests in a reasonable manner and within three months from receipt of the
request unless an extension is agreed.
29
There is no longer an obligation to hold a meeting nor a statutory right to be accompanied.
The same business grounds for refusal still apply:
•
Burden of additional costs.
•
Inability to reorganise work.
•
Inability to recruit additional staff.
•
Detrimental impact on quality.
•
Detrimental impact on performance.
•
Detrimental effect on ability to meet customer demand.
•
Insufficiency of work.
•
Planned structural changes.
It remains good practice to allow an employee to appeal against refusal or part refusal.
An employee may complain to a Tribunal if the employer has not followed the correct
procedure or has rejected the application on a ground outside the permissible reasons or
based on incorrect facts. The Tribunal can order the employer:•
To reconsider the request and/or;
•
Pay the employee up to 8 weeks pay subject to the statutory cap (presently £475)
Flexible working covers:•
Part time working;
•
Home working;
•
Term time working;
•
Job share.
There may be competing discrimination issues that arise and it will be important to monitor
case law as it develops. The ACAS guide states that requests should be considered in the
order they are received and organisations need to be aware that by prioritising certain
requests e.g. from mothers, sex discrimination claims from men might arise or even claims
of constructive unfair dismissal. Employees wishing to care for children or elderly may be
able to bring claims of discrimination by association.
30
D
Volunteers and Interns
Volunteers are proving increasingly prepared to challenge their legal status. Arrangements
and volunteer agreements need to be scrutinised to ensure that a legally enforceable
contract conferring worker if not employment status is not created. In particular avoid:• Any consideration except payment of out of pocket expenses;
• One off payments (honoraria) which do not reflect actual expenses;
• The language of mutual obligation;
• Access to employment policies such as disciplinary/grievance procedures.
E
Documenting the relationship
E1.
The Employment Contract
The relationship between an employer and an employee is a contractual one. Whether or not
a contract exists does not depend on whether there is any written document but most
contracts of employment are reflected to some extent in writing even if some of the terms are
only oral or implied.
The Employment Contract
• Express terms;
• Implied terms;
• Oral or written variations;
• Collective agreement;
• Terms incorporated into a contract;
• Statutory provisions;
• Terms implied by custom and practice.
Required particulars
A statement of particulars must be provided within 8 weeks of employment containing:
1.
Name of employer.
2.
Name of employee.
3.
Date when employment began and the date when continuous employment began.
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4.
The amount of salary or method of calculating it and any other benefits, payments in
kind etc. The intervals which remuneration is paid e.g. weekly, monthly.
5.
The terms and conditions relating to hours of work including terms and conditions
relating to normal working hours.
6.
Holiday entitlement including how public holidays are treated and sufficiently detailed
particulars to enable any accrued holiday pay due on termination of employment to
be calculated.
7.
Sick pay or the lack of it and any other rules about notification procedures or
certification including deductions from sick pay where statutory sick pay is being
received. These details may be dealt with in some other document which the
employee has reasonable access to or opportunity to read.
8.
Pension details if any including a statement as to whether or not the employer's
pension scheme (if any) is contracted out of the state scheme. As for sick pay these
details may be contained in some other document.
9.
Notice required to be given by the employer and employee to terminate the contract.
10.
Job title or a brief description of the work of the employee.
11.
For temporary employment the fact that it is temporary and the date on which it is to
end.
12.
The place of work or where the employee is going to be working.
13.
Details of any collective agreements which directly affect the terms and conditions of
employment.
14.
Where an employee is going to be required to work outside the United Kingdom for
more than one month details of the period, the currency in which pay will be made
outside the U.K, any additional pay or benefits, the terms and conditions relating to
return to the UK.
15.
A statement of the disciplinary rules applying or referring to another document setting
them out which is reasonably accessible or the employee has a reasonable
opportunity to read in the course of his employment.
Specifying to whom to appeal against any disciplinary decision or with whom
grievances can be raised and specifying any further step consequent on such an
application.
Implied terms
The law also implies various duties into the contract on the part of both the employer and the
employee. Briefly the key employer’s duties are:
•
To provide work;
•
To pay wages;
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•
To provide a safe system of work.;
•
To pay the employee’s out of pocket expenses;
•
To maintain trust and confidence.
The employee’s duties are:
•
Loyalty;
•
Not to compete or obtain secret profits;
•
To pass copyright in written materials to the employer;
•
To maintain confidentiality;
•
To obey reasonable instructions;
•
To do the job with reasonable care and competence;
•
To provide a personal service.
•
Trust and confidence.
Incorporated terms
Incorporated terms are those which are in the contract because the parties agreed that they
will accept an outside source for contractual terms. Examples of the source of such
incorporated terms are staff handbooks or office manuals. A manual or handbook however
may simply be regarded as guidance as to how the contract is to be carried out rather than
part of the contract itself. It is vital to consider whether you want policies and procedures to
be contractually binding as this will severely inhibit your ability to make changes.
Terms may be incorporated into a contract where an employer and employee agree to be
bound by the terms of a national collective agreement.
Statutory provisions
These are numerous and will be implied in any event and therefore do not necessarily need
to be set out in the contract unless you provide enhancements above statutory requirements.
Relevant statutory provisions include:
•
Family friendly legislation (maternity, paternity, parental leave, time off for dependants,
adoption leave and the right to request flexible working);
•
Statutory sick pay entitlement;
•
National Minimum Wage;
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•
Working Time Regulations;
•
Redundancy legislation;
•
Health and safety requirements;
•
Equality legislation.
In order to avoid dispute and afford the organisation additional protection there are a number
of additional clauses that should be considered as follows:
Place of work
If the employer does not include a clause allowing flexibility it has no right to require an
employee to work at a relocated address. Even with such a clause a move may constitute
redundancy.
Hours of work
Under the Working Time Regulations workers cannot exceed an average of 48 hours work
per week. Effective systems must be in place to monitor working time. It is lawful to include
an opt-out of the regulations.
Holidays
Under the Working Time Regulations 1998 as amended a minimum of 28 days’ paid holiday
(pro-rated for part timers) must be available. The first 20 days may not be carried over to the
next leave year and statutory leave outstanding at termination must be paid.
Sick pay
There is no legal requirement to pay salary during sickness. If a contract contained no
provision for sick pay a court would try and infer what had been agreed. In the complete
absence of any such evidence the court would then generally assume that salary was
payable during a period of sickness or other incapacity for a reasonable period.
Every employer is required by law to pay statutory sick pay.
The ability to require the employee to be medically examined is very important in practice.
Deductions
The Wages Act 1986 prevents an employer from making deductions from wages except in
limited circumstances unless the contract or other agreement allows prior to the deduction
so a contract should allow deductions.
Notice
Ability to make payment in lieu and garden leave are useful.
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Suspension
Unless the contract contains a provision allowing suspension on less than full pay such a
suspension would be in breach of contract.
Copyright
While it is implied that copyright material created during employment belongs to the
employer a contractual clause provides additional clarity and protection for the employer.
Confidentiality
All organisations are concerned about confidentiality and the duty should extend beyond
termination of employment.
Competition and Restrictive Covenants
Charities have been relatively slow to recognise that the services they develop often have a
commercial value and appropriate protections should always be included.
Disclosure
While not common such a clause helps alert the employer to any potential conflicts of
interest.
Data protection
An employee must consent to the processing of “sensitive personal data” under the Data
Protection Act 1998.
Use of email and internet
It is useful to reserve the ability to intercept as there may be valid reasons to do so for
example if abuse is suspected.
Variation
Such a clause while useful to prevent disputes about minor changes should be used with
caution. Variation of the contract by an employer without the employee's consent can give
rise to breach of contract and unfair dismissal claims.
E2
Consultancy Agreements
1.
The first consideration is whether the individual is truly self-employed.
2.
Ensure the parties are correct. Problems frequently arise where the identity of a
contracting party is not clearly recorded.
3.
The strength of these agreements generally depends upon the detailed specification
of the outcomes you require and appropriate deadlines.
4.
Consider whether the contractor is free to subcontract.
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5.
Consider intellectual property rights. Generally you will want the consultant to assign
all rights under the agreement and waive the right to be identified as the author of
any work carried out under the agreement.
6.
Liability and insurance. Always include an indemnity clause in relation to any losses
suffered as the result of any act or default of the consultant. Whether you are going
to rely on the consultant’s insurance is a matter for you but if you are depending on it
you need to satisfy yourself that it gives adequate cover and will be kept in force for
long enough to provide you with the basis to claim if the problem does not surface for
months or even years after the event. If you have any doubts about the consultant’s
ability to indemnify you, you should always ensure your own policies of insurance are
adequate.
7.
Tax liabilities. It is vital to record that the consultant has the status of a selfemployed person and is liable for all income tax, national insurance etc and
indemnifies you against any claims.
8.
Consider obligations that survive termination such as confidentiality and any other
restrictions you wish to impose such as working for clients similar to you or using
their work for you in advertising.
9.
Ensure your data protection obligations are passed on to the consultant.
10.
Proper termination and notice provisions
E3
Contracts with casuals
The contractual documentation describing the working relationship will be crucial in
determining status. If employers do not intend to form an employment relationship, or for
there to be mutual obligations on the parties, they should make this clear in the contract.
The contract should specify that the individual is regarded as a worker and is not an
employee. It should also clarify that the employer is not obliged to provide work and the
worker is not obliged to accept work.
While clear documentation is important, employers should also ensure that this reflects the
reality of their working arrangement. Where the true nature of the arrangement is
challenged, consideration will be given to the conduct of the parties and how the working
relationship actually operated (Autoclenz Ltd v Belcher and others[2011] IRLR 820).
Employers will also find it helpful to retain a clear distinction between casual workers and
employees, for example, by not providing workers with the same benefits as employees.
What a zero hours contract should include
Zero hours contracts should contain the following basic terms (this list does not include all
mandatory or advisable terms in an employment or worker contract, such as place of work,
working time opt-out, governing law provisions). Contracts should:
•
State whether the individual is an employee or a worker. If the latter, it is good practice to
include confirmation this is not an employment contract and does not confer employment
rights on the individual;
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•
Specify the business need for zero hours arrangement. For example, the contract could
state it is because of the fluctuating demands of the business. This is a useful for
showing the zero hours arrangement is being used for legitimate reasons and shows the
parties' intentions when entering into the contract, which may be relevant when
determining issues such as whether there is an umbrella contract;
•
State the rate of pay, typically an hourly rate, although other arrangements may be
used;
•
Explain how holiday will be dealt with. Zero hours employees and workers have the right
to 28 days paid holidays pro rata under the Working Time Regulations 1998. Zero hours
employees and workers are treated as part-time workers, and so will be entitled to a prorated proportion of the full-time statutory minimum. However, because zero hours
workers work irregular hours it can be difficult to calculate their holiday entitlement;
•
State whether or not the relationship continues between engagements;
•
Include a detailed explanation of the notification/acceptance of work mechanism so both
parties are clear. If the employer wishes the worker to be obliged to accept work if
offered, it must say so in the contract. This is likely to confer employment status. Explain
how the relationship will be brought to an end. The contract could state the contract will
end automatically after each engagement, or by notice given by either party. Any notice
provisions will, in the case of employees only, be subject to the statutory minimum notice
periods.
SUPPORT AND INFORMATION
Jane Klauber is happy to deal with telephone queries, Direct Dial 020 8394 6483.
A regular update of law relating to charities and other voluntary organisations appears on our
website at www.russell-cooke.uk or you can choose to have it emailed to you monthly.
Disclaimer
This material and the talk does not give a full statement of the law. It is intended for
guidance only, and is not a substitute for professional advice. No responsibility for loss
occasioned as a result of any person acting or refraining from acting can be accepted by the
authors or Russell-Cooke.
Jane Klauber
Partner
+44 (0)20 8394 6483
[email protected]
This material does not give a full statement of the law. It is intended for guidance only and is not a substitute for professional advice. No
responsibility for loss occasioned as a result of any person acting or refraining from acting can be accepted by Russell-Cooke LLP. ©
Russell-Cooke LLP. February 2015
www.russell-cooke.co.uk
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