13 Employment
1 The contract of employment
Overview:
Determining status
Definition
1.1 An employment relationship exists where one person (the employee) supplies skill and labour to another (the employer) in return for payment.
1.2 Distinguish Employee from Independent Contractor. (Contract of Service vs Contract for Services.)
Determining status
1.3 An Employment Tribunal (ET) may apply one or more of the four tests listed below, note that no one test is likely to be conclusive Ready Mixed Concrete v Minister of Pensions:
(a) Control test.
(b) Integration Test:
Is this party fully integrated into the organisation?
(c) Multiple Test:
ET looks at all the relevant factors. Now the most widely used test it considers:
(i) Method of payment: periodic and prolonged, or lump sum?
(ii) Method of selection and termination of relationship;
(iii) Organisation of the work: can the individual choose hours and methods of working, or delegate?
(iv) Provision of tools and equipment and;
(v) Deduction of tax and N.I.
(d) Mutuality of obligations test.
2 Terms
Overview
2.1 Express terms
(a) No requirement for formal written contract.
(b) Under Employment Rights Act 1996 (ERA 1996) employer must provide written particulars to employee within 8 weeks of starting employment. Note this is not a contract but will constitute strong prima facie evidence of the contractual terms.
Particulars must include inter alia:
· Details of remuneration and procedure for calculation.
· Hours and place of work
· Holidays and holiday pay
· Situation if unable to work (sick pay/leave)
· Length of notice
· Disciplinary and grievance procedures.
Any change to the particulars must be notified within one month.
2.2 Implied terms
Employee is also protected by common law and statutory implied terms. Note that as with any contract terms can be implied by custom and practice.
2.3 Employer’s duties to:
(i) Provide remuneration:
· Amount decided by contract or collective agreement. Common law provides that it must be reasonable now subject to National Minimum Wage Act 1998.
(ii) Provide holidays and holiday pay and comply with Working Time Regulations:
· Limit average weekly working time to 48 hours. The average is taken over a reference period of 17 weeks. (There is an opt out provision but this does not detract from the overriding duty to provide a safe system of work.)
· Limit on night workers average working time to 8 hours.
· Minimum rest periods of at least 20 minutes for every 6 hours of work and a break away from work for 11 hours each day.
· Right to paid annual leave allowing the worker to be away from work for 4 weeks. The right to leave starts to accrue from the first day of employment.
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