Statutory terms affecting the contract
As mentioned above, the contract is regulated by common law and statutes, some of the Act's etc are:
- The Equal Pay Act 1970. Enacted primarily for the protection of women it refers equally to men.
- Discrimination. Unlawful on the grounds of: Sex, Disability, Colour, Race, Marital status, Nationality and Ethnic or National origin.
- Health and safety at work. To protect the employee by providing safe conditions for work.
- Patents Act 1977. Generally protects employers against employees claiming ownership of inventions made during the course of their work.
- Copyright, Designs and Patents Act 1988. Deals with the copyright issues of an employees work.
- Employer's Liability (Compulsory Insurance) Act 1969. Covers employees against personal injury as a result of an employers negligence.
- Employment Rights Act 1996. Lawful wage deductions.
- Working Time Regulations. Hours, holidays, rest breaks etc
- Unfair Contract Terms Act 1977. Protects against unreasonable or law avoiding terms.
Who has to have a contract
A contract of employment comes into existence as soon as an employee starts work and, by doing so, demonstrates that he or she accepts the job on the terms offered by the employer.
All employees taken on for one month or more are entitled by law to be given, within two months of the date the employment starts, a written statement setting out the main particulars of the employment. This statement will not necessarily cover every aspect of the contract, but will cover the main terms and conditions.
Whether or not somebody is employed or self-employed needs to be determined before they become entitled to a written statement. If the employer has a duty to provide work, controls when and how it is done, supplies the tools or other equipment and pays tax and NI on the worker's behalf, then the worker is probably an employee. If, on the other hand, the worker can decide whether or not to accept work and how to carry it out, makes their own arrangements for holidays or sickness absences, payment of tax and NI and is free to do the same type of work for more than one employer at the same time, the person is probably self-employed.
If proved to be genuinely self-employed the contact would not be of employment but of a provision of services. In this case there is no entitlement, however, the details settled upon when negotiating the services to be provided and the price charged would constitute a contract.
Variation of the contract details
The contract of employment is binding on both parties and it is unlawful for one party to vary the terms and conditions without joint agreement. The contract however may include provisions allowing the employer to make important changes - e.g. changing the employees place or type of work - as it does not change any of the terms or conditions it is acceptable.
The terms and conditions are not set in concrete and can be changed with the agreement of both parties or, if a provision (or implication) within the contract allows, collectively by a trade union on behalf of the employees and the employer or employers association. Any changes made that affect the written statement must be passed onto the employees in writing no later than one month after the change.
If an employee finds a variation of contract unsatisfactory but continues to work without making their objections known to the employer, they will, after a time, be deemed to have implicitly accepted it.
If an employer attempts simply to impose a variation of contract on an employee without the employee's agreement, this will be a breach of contract. The employee may have a number of avenues open to them to lodge a complaint.
Employee refuses to authorise a variation :
If an employee, after being consulted, refuses to accept a variation, the employer is entitled to terminate the contract by dismissing the employee and offer the job on the new terms to the dismissed employee or another applicant.
The employee is entitled to make an unfair dismissal complaint to an employment tribunal if they have been in the employer's continuous employment for at least one year if they feel the dismissal was unfair. The tribunal would consider all the circumstances of the case in deciding whether or not the dismissal was in fact unfair. These would include the employer's reasons for wishing to vary the terms and conditions - overriding business considerations, for example, might make the dismissal fair - and the employee's reasons for opposing the variation.
Breach of the contract
An employer as well as the employee may claim damages.
If an employee suffers financial loss because their employer has breached the contract of employment then the employee may be entitled to seek damages by making a breach of contract claim. The normal normal way to pursue it would be by a civil court action.
It is also possible to make a claim through an employment tribunal. The time period in which the claim can be made is much shorter (usually 3 months) and the upper limit to the damages claimed is currently £25,000. There are also certain things that can't be claimed for e.g. personal injury, restrictive trade covenants etc. A tribunal is generally quicker, more informal and cheaper.
There are similar options open to employers when it comes to claiming damages from an employee. The law doesn't really differentiate between employer or employee, it is simply a case of breach of contract.
Payments of wages
There is no requirement in law for payment of wages to be made at any particular time or by any specific method or form. It is a matter that is open for negotiation and agreement and forms part of the contract for which damage claims can be pursued if broken and a measurable financial loss is suffered.
The employee is protected against unlawful deductions being made from their wages. The protection also covers individuals who work under a contract of service or apprenticeship and UK registered ship workers and others.
For the purpose of this legislation, wages are sums payable to the worker by the employer in connection with their job and include:
any fees, bonuses, commission, holiday pay or other job specific payments;
statutory payments such as Statutory Sick Pay and Statutory Maternity Pay;
luncheon vouchers, gift tokens and other vouchers of a fixed monetary value that can be exchanged for money, goods or services.
Some of the types of payment that are not classed as wages, and therefore are not protected against unlawful deductions are:
loans or advances of wages;
payments of expenses incurred in employment;
pension and redundancy payments;
lump sums on retirement or in compensation for loss of office;
payments in kind, excepting vouchers above;
tips and other gratuities paid directly to the worker by a third party.
A deduction is lawful if it falls within any of the following three conditions. It is:
required or authorised by legislation (for example income tax or national insurance contributions); or
authorised by the worker's contract - provided that the worker has been given a written copy of the relevant terms or a written explanation of them before it is made; or
agreed to in writing by the worker before it is made.
The deduction is also lawful if it is made:
to recover an earlier overpayment of wages or expenses by the employer to the worker; or
as a result of disciplinary proceedings provided for in legislation (for example, police disciplinary proceedings); or
as a consequence of the worker taking part in a strike or other industrial action; or
to satisfy a court order or a tribunal decision - provided in the case of a deduction that the worker has given his or her prior written agreement to it; or
after written agreement from the worker to make a deduction that would otherwise be unlawful to a third party on amounts notified by the third party
There are a number of additional protections against deductions from retail workers to cover cash shortages and stock deficiencies. The rulings are quite extensive but simply put, an employer can deduct no more than 10% of an employees gross wages at any one time, amounts greater than this have to be spread over a period, unless it is the final payment for the employee on leaving in which case the full balance owing can be deducted. Amounts can't start to be deducted any more than twelve months after the reason for the deduction took place but an arrangement can continue for longer than twelve months.
An employee has a right to complain to an employment tribunal if they feel they have suffered unlawful deductions. There is no minimum length of service required.
Complaints to an Employment Tribunal
Before making a complaint it is expected that the employee has already tried to settle the dispute with the employer and has failed, this is what the three months time limit is for. To apply for a tribunal an application form must be filled in, available from Job Centres and CAB's, and sent to the tribunal office.
Once the complaint is made, ACAS (Advisory, Conciliation and Arbitration Service) is automatically informed and an opportunity for resolving the dispute via a conciliator is available. If an agreement between the parties is made with the help of the ACAS conciliator the decision not to proceed with the case is binding. It is also possible to have a binding 'compromise agreement' after taking 'official advise' and having a written agreement.
If ACAS fails, the next step is a tribunal hearing, this may be preceded by a pre-hearing review where a deposit of up to £500 may be requested if a particular parties' case is weak and has little prospect of success.
The full hearing would usually be held in the employment tribunals own offices and normally consists of a legally qualified chairman sitting alone. The hearing is conducted in a simple and straightforward manner, in such a way that the parties may put their own cases without the need to incur the cost of legal representation. Either party may however get a lawyer, a friend, a trade union official or some other representative to act on their behalf if they wish.
If a breach of contract is proved, it will order a payment of damages calculated in the same way as a civil court would but subject to the current upper limit.
Where it is proved that an unlawful deduction from wages has been made or an unlawful payment received by the employer, it will order a repayment taking into account any amount already repaid as a result of a genuine mistake being rectified.
Appeals against a decision
Any party who is dissatisfied with an employment tribunal's decision may apply for a review of that decision or, if the dissatisfaction concerns a point of law rather than one of fact, may appeal to the Employment Appeal Tribunal.
