Employment Law

Employment law
What is an employee?
• A general rule is that an employee is someone who is

employed under a contract of service, as distinguished
from an independent contractor, who is someone who
works under a contract for services.
• A contract of employment is a contract of service or
apprenticeship, whether express or implied, and (if it is
express) whether it is oral or in writing.
• A worker is any individual who works for an employer,
whether under a contract of employment, or any other
contract where an individual undertakes to do or perform
personally any work or service.
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1
Ferguson v John Dawson & Partners
1976
• The facts: A builder's labourer was paid his wages,
without deduction of income tax or National Insurance
contributions, and worked as a self-employed contractor
providing services. His 'employer' could dismiss him,
decide on which site he would work and direct him as to
the work he should do. It also provided the tools which he
used. He was injured in an accident and sued his
employers on the basis that they owed him legal duties as
his employer.
• Decision: On the facts taken as a whole, he was an
employee working under a contract of employment.
The control test
• The court will consider whether the employer has control

over the way in which the employee performs their
duties.
2
Mersey Docks & Harbour Board v
Coggins & Griffiths (Liverpool) 1947
• The facts: Stevedores (dockworkers) hired a crane with its driver from
the harbour board under a contract which provided that the driver
(appointed and paid by the harbour board) should be the employee of
the stevedores. Owing to the driver's negligence a checker was
injured. The case was concerned with whether the stevedores or the
harbour board were vicariously liable as employers.
• Decision: It was decided that the issue must be settled on the facts
and not on the terms of the contract. The stevedores could only be
treated as employers of the driver if they could control in detail how he
did his work. But although they could instruct him what to do, they
could not control him in how he operated the crane. The harbour
board (as 'general employer') was therefore still the driver's employer.
The multiple (economic reality) test
• Courts also consider whether the employee was working

on their own account and require numerous factors to
be taken into account.
3
Ready Mixed Concrete (South East) v Ministry
of Pensions & National Insurance 1968
• The facts: The driver of a special vehicle worked for one company
only in the delivery of liquid concrete to building sites. He provided
his own vehicle (obtained on hire purchase from the company) and
was responsible for its maintenance and repair. He was free to
provide a substitute driver. The vehicle was painted in the
company's colours and the driver wore its uniform. He was paid
gross amounts (no tax, etc deducted) on the basis of mileage and
quantity delivered as a self-employed contractor. The Ministry of
Pensions claimed that he was, in fact, an employee for whom the
company should make the employer's insurance contributions.
• Decision: In such cases the most important test is whether the
worker is working on his own account. On these facts the driver
was a self-employed transport contractor and not an employee.
Relevant factors
• Significant factors that you should consider when deciding

whether or not a person is employed or self-employed are as
follows.
Does the employee use their own tools and equipment or
does the employer provide them?
Does the alleged employer have the power to select or
appoint its employees, and may it dismiss them?
Payment of salary is a fair indication of there being a
contract of employment.
Working for a number of different people is not necessarily
a sign of self-employment. A number of assignments may
be construed as 'a series of employments'.
4
Why does it matter?
• The distinction between employed and self-employed is

important as to whether certain rights are available to
an individual and how they are treated for tax purposes.
Employment contract: basic issues
• There are no particular legal rules relating to the

commencement of employment – it is really just like any
other contract in requiring offer and acceptance,
consideration and intention to create legal relations.
5
Methodist Conference v Preston 2013
• The case of Methodist Conference v Preston 2013

demonstrates the importance of intention to create legal
relations in an employment contract. In this case, a
Methodist church minister was held not to be an employee
because the arrangements, such as the lifelong
commitment to the church by the minister, and the
payment of maintenance and support, rather than a
salary, was inconsistent with an intention to be legally
bound.
Implied terms
• Implied terms usually arise out of custom and practice

within a profession or industry. In Henry v London General
Transport Services Ltd 2001 it was held that four
requirements should be met before such terms can be
read into a contract.
The terms must be reasonable, certain and notorious
They must represent the wishes of both parties
Proof of the custom or practice must be provided by
the party seeking to rely on the term
A distinction must be made between implying terms
that make minor, and terms that make fundamental
changes to the contract
6
Requirement for written particulars
• Within two months of the beginning of the employment, the

employer must give to an employee a written statement of
prescribed particulars of their employment.
• The statement should identify the following:
The names of employer and employee
The date on which employment began
Whether any service with a previous employer forms part
of the employee's continuous period of employment
Pay – scale or rate and intervals at which paid
Hours of work (including any specified 'normal
working hours')
Requirement for written particulars
Any holiday and holiday pay entitlement (for a person

working five days per week, the holiday entitlement is
5.6 weeks or 28 days, which may include bank and public
holidays depending on the contract of employment)
Sick leave and sick pay entitlement
Pensions and pension schemes
Length of notice of termination to be given on either
side
The title of the job which the employee is employed to
do (or a brief job description)
7
Employee's duties
• The employee has a fundamental duty of faithful

service to their employer. All other duties are features
of this general duty.
Hivac Ltd v Park Royal Scientific

Instruments Ltd 1946
• The facts: In their spare time certain of the claimant's
employees worked for the defendant company, which
directly competed with the claimant.
• Decision: Even though the employees had not passed on
any confidential information, they were still in breach of
their duty of fidelity to the claimants.
8
The implied duties of the employee
(a) Reasonable competence to do their job.
(b) Obedience to the employer's instructions unless they require them
to do an unlawful act or to expose themselves to personal danger (not
inherent in their work) or are instructions outside the employee's
contract.
(c) Duty to account for all money and property received during the
course of their employment except what is customary to be received
or is trivial.
(d) Reasonable care and skill in the performance of their work. What is
reasonable depends on the degree of skill and experience which the
employee professes to have.
(e) Personal service – the contract of employment is a personal one
and so the employee may not delegate their duties without the
employer's express or implied consent.
Employer's duties
There is an overriding duty of mutual trust and confidence

between the employer and the employee.
(a) To pay remuneration to employees. If there is no rate
fixed by the parties, this duty is to pay reasonable
remuneration.
(b) To indemnify the employee against expenses and
losses incurred in the course of employment.
(c) To take care of the employees' health and safety at
work. This is also provided for in statute.
9
Employer's duties
(d) To provide work, where:

The employee is an apprentice.
The employee is paid with reference to work done.
The opportunity to work is the essence of the contract
(for example, for actors).
There is work available to be done (subject to
contractual terms to the contrary) and the relevant
employee is a skilled worker who needs work to
preserve their skills.
Statutory duties
• An employer has statutory duties in the following

areas:
Pay and equality
Time off work
Maternity rights and the 'work/life balance‘
Health and safety
Working time.
10
Varying the terms of an employment
contract
• A contract of employment can only be varied if the
contract expressly gives that right, or if all parties
consent to the variation.
Termination by notice
A contract of employment may be terminated by notice. The

following rules apply.
(a) The period of notice given must not be less than the
statutory minimum, whatever the contract may
specify.
(b) It may be given without specific reason for so doing,
unless the contract requires otherwise.
(c) If the contract states that notice may only be given in
specific circumstances then generally it may not be
given for any other reason.
11
Minimum period of notice
If an employer terminates the contract of employment by

giving notice, the minimum period of notice to be given is
determined by the employee's length of continuous service for the
employer as follows.
(a) An employee who has been continuously employed for one
month or more but less than two years is entitled to not less
than one week's notice.
(b) An employee who has been continuously employed for two
years or more but less than twelve years is entitled to one
week's notice for each year of continuous employment.
(c) Any employee who has been employed for 12 years or more
is entitled to not less than 12 weeks‘ notice.
Termination of employment by breach of

contract
• Breach of the employment contract occurs where there is
summary dismissal, constructive dismissal, inability on the
employer's side to continue employment, or repudiation of
the contract by the employee.
12
Summary dismissal
• Summary dismissal occurs where the employer

dismisses the employee without notice. They may do
this if the employee has committed a serious breach of
contract and, if so, the employer incurs no liability.
Constructive dismissal
• Constructive dismissal occurs where the employer,

although willing to continue the employment,
repudiates some essential term of the contract, for
example by the imposition of a complete change in
the employee's duties, and the employee resigns. The
employer is liable for breach of contract.
13
Wrongful dismissal
• Where the employer has summarily dismissed an

employee without notice (as where the employer
becomes insolvent), there may be a claim for damages at
common law for wrongful dismissal.
Unfair dismissal
• Unfair dismissal is an extremely important element of

employment protection legislation. The remedies
available following a successful action for wrongful
dismissal are limited to damages compensating for
the sum which would have been earned if proper notice
had been given.
14
Unfair dismissal – justification of
dismissal
To justify dismissal as fair dismissal, employers must show their
principal reason relates to either:
(a) The capability or qualifications of the employee for
performing work of the kind which they were employed to do
(b) The conduct of the employee
(c) Redundancy
(d) Legal prohibition or restriction that prevents the employee
from lawfully working in the position which they held. For
example, if a doctor is struck off the relevant professional register,
or an employee loses their driving licence which they need to be
able to do their job
(e) Some other substantial reason which justifies dismissal
Automatically unfair reasons for

dismissal
Some reasons are automatically unfair (known as 'inadmissible
reasons'). Examples include:
Pregnancy or other maternity-related grounds
A spent conviction under the Rehabilitation of Offenders Act 1974
Trade union membership or activities
Dismissal on transfer of an undertaking (unless there are 'economic,
technical or organisational reasons' justifying the dismissal)
Taking steps to avert danger to health and safety at work
Seeking to enforce rights relating to the national minimum wage
Exercising rights under the Working Time Regulations 1998
Refusing or opting out of Sunday working (in the retail sector)
Making a protected disclosure order under the Public Interest
Disclosure Act 1998
15
Remedies for unfair dismissal
• Remedies for unfair dismissal include:

Reinstatement
Re-engagement
Compensation
Compensation
(a) A basic award calculated as follows. Those aged 41

and over receive one-and-a-half weeks' pay (up to a
statutory maximum per week) for each year of service up
to a maximum of 20 years. In other age groups the same
provisions apply, except that the 22–40 age group
receive one week's pay per year and the 21-and-under
age group receive half a week's pay.
16
Compensation
(b) A compensatory award for any additional loss of

earnings, expenses and benefits, on common law
principles of damages for breach of contract. This is to
compensate the employee for financial loss suffered as a
result of unfair dismissal insofar as that loss is
attributable to action taken by the employer. This is
limited to a statutory maximum and may be awarded in
cases where reinstatement or re-engagement are
deemed inappropriate by the tribunal.
Compensation
(c) If the employer does not comply with an order for

reinstatement or re-engagement, and does not show that
it was impracticable to do so, a punitive additional
award is made of between 26 and 52 weeks' pay
(again subject to a statutory weekly maximum).
17
Redundancy
• Dismissal is caused by redundancy when the employer

has ceased to carry on the business in which the
employee has been employed or the business no longer
needs employees to carry on that work. In these
circumstances, dismissal is presumed by the courts to
be by redundancy unless otherwise demonstrated.
What is redundancy?
• A dismissal is treated as caused by redundancy if the

only or main reason is that:
The employer has ceased, or intends to cease, to
carry on the business (or the local establishment of
the business) in which the employee has been
employed
The requirements of that business for employees to
carry on the work done by the employee have ceased
or diminished (or are expected to)
18
British Broadcasting Corporation v
Farnworth 1998
• In British Broadcasting Corporation v Farnworth 1998 a
radio producer's fixed-term contract was not renewed and
the employer advertised for a radio producer with more
experience. It was held by the Employment Appeal
Tribunal (EAT) that the less-experienced radio producer
was indeed redundant as the requirement for her level
of services had diminished.
Calculation of redundancy pay
• Redundancy pay is calculated on the same basis as the

basic compensation for unfair dismissal.
19

Employment Law

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Employment Law

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Employment law

• A general rule is that an employee is someone who is

The control test

• The court will consider whether the employer has control

The multiple (economic reality) test

• Courts also consider whether the employee was working

• Significant factors that you should consider when deciding

• The distinction between employed and self-employed is

Employment contract: basic issues

• There are no particular legal rules relating to the

• The case of Methodist Conference v Preston 2013

• Implied terms usually arise out of custom and practice

• Within two months of the beginning of the employment, the

Requirement for written particulars

Any holiday and holiday pay entitlement (for a person

• The employee has a fundamental duty of faithful

Hivac Ltd v Park Royal Scientific

There is an overriding duty of mutual trust and confidence

(d) To provide work, where:

• An employer has statutory duties in the following

A contract of employment may be terminated by notice. The

If an employer terminates the contract of employment by

Termination of employment by breach of

• Summary dismissal occurs where the employer

• Constructive dismissal occurs where the employer,

• Where the employer has summarily dismissed an

• Unfair dismissal is an extremely important element of

Automatically unfair reasons for

• Remedies for unfair dismissal include:

(a) A basic award calculated as follows. Those aged 41

(b) A compensatory award for any additional loss of

(c) If the employer does not comply with an order for

• Dismissal is caused by redundancy when the employer

• A dismissal is treated as caused by redundancy if the

Calculation of redundancy pay

• Redundancy pay is calculated on the same basis as the

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