Employment contractEmployee“An employee is someone who is employed under a contract of services” Independent Contractor“Independent contractor is someone who works under a contract for services.” The distinction between these two terms is necessary because each type of contract has different rules for taxation, health and safety, provisions, protection of contract and different liability in tort and contract.

Factors that distinguish Employee and Independent ContractorA contract of service is distinguished from a contract for services usually because the parties express the agreement to be one of service. This does not always mean that an employee will not be treated as an independent contractor by the court, however; much depends on the three tests.

Control test Integration test Economic reality test

Control Test: The court will consider whether the employer had control over the way in which employee perform his duties or not. Case law “Mersey Docks & Harbour Board v Coggins & Griffiths (Liverpool) 1947  Another example of this test is in W a l k e r v C r y s t a l P a l a c e F C 1910Where it was held that professional footballer was an employee as the club hold control over the form of training, pay and discipline.

Integration Test:The courts consider whether the employee is so skilled that he cannot be controlled in the performance of his duties. Lack of control indicates that an employee is not integrated into the employer's Organization, and therefore not employed. Case law Cassidy v Ministry of Health 1951

Economic Reality Test: Courts also consider whether the employee was working on his own accountand require numerous factors to be taken into account. Case law “Ready Mixed Concrete (South East) v Ministry of Pensions & National Insurance 1968”  Agency WorkersThere are two factors that determined agency worker whether they are employee or independent ContractorThey are not employees of client rather employees of agency (principal)(a) Length of servicesCase law “Franks v Reuters Ltd 2003” 

(b) Control over the workerC o n t r o l o v e r t h e w o r k e rWhere the client of agency has sufficient control over agency worker, it could be held that they are in fact the true employer.

Case law “Motorola v Davidson and Melville Craig 2001”  Relevant Factors:Significant factors that can be used to distinguish between an employee or self employed

Does the employee use his own tools and equipment or does the employer provide them? If worker is using his own tools then it will be considered as an employee.

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 employment.

Employment Contract: An employment contact is as simple straight forward agreement. Just like other contract, employment contract must have four elements of Offer, Acceptance Consideration and Legal Framework. It may express or implied or it can be oral or written.

Implied Term: Implied terms usually arise out of custom and practice in a certain profession and industry.

Requirements of Implied Terms(a) The term must be reasonable, certain and clear(b) It represents the willingness of both parties(c) The relying party must have knowledge of the custom and practice.

Common Law Duties: “The employer has an implied duty under common law to take reasonable care of his employees; he must select proper staff, materials and provide a safe working environment. On the other hand employees must have duty to work honestly with reasonable skill and care. Case law Hivac Ltd v Park Royal Scientific Instruments Ltd 1946.

Employees Duties

There are following implied duties of employees.1. Employees have fundamental duty of faithful service toward his employer.2. They have duty to work with competence.3. Employees have duty to obey all the instructions given by his employer. Case

law Pepper v Webb 19694. Employees have duty to work with care because employers are not liable against the

personal negligence of employees.5. Employees have duty to disclose all their accounts, income and property earned during the

course of employment. Case law Boston Deep Sea Fishing and Ice CO v Ansell 1888

6. Employees have duty to perform all the work on their own so they cannot delegate their duties to anyone else.

7. Employees have duty to comply all the legal and ethical requirements relating with occupation, health and safety.

Employers Duties:There is an overriding duty of mutual trust and confidence between employer and employee.

Employer has following duties under common law, To pay reasonable remuneration or salary to employees To indemnify the losses or expenses incur in course of employment by the employees

and then reimburse those expenses. To provide safe and healthy working environment To provide reasonable work to employees and avoid work load.

Case law William Hill Organization v Tucker 1998.

Statutory Duties:Terms implied by statue and which is not usually overridden. Statutory duties applied to employers in following areas:

Pay and Equality Time off Work Maternity Rights and balance work life Health and safety Work time

Continuous Employment:Many rights of employee under Employment Right Act 1996 can only be available if employee has specific period of continuous employment. Continuous Employment period is usually the period of twelve month.

Transfer of Undertaking: When business transfer from one person to another and same employee work for new employer, this change represent no break in the continuous service.

Termination of Employment Contract:The employment contract may come to an end by notice but the notice period must not be less than the statutory minimum period.There are following rules for the termination of employment contract.

There must be reason behind it otherwise it may not acceptable The notice period must not be less than the statutory minimum period.

Notice Period:The minimum statutory period depends upon the continuous service of employee.

If a person is employed for continuous service of one month or more but below one year then one week notice of termination is sufficient and there will be no breach of contract.

If person is employed for continuous service of one year of more but below twelve years then one week notice of termination for each year of continuous employment is sufficient.

If a person is employed for twelve years of continuous employment or more then less than twelve week notice will never be acceptable.

Dismissal: If employees are dismissed or terminated from their job by the employer without notice is called dismissal. In case of dismissal employee has right to ask reason of dismissal from his employer. And employer also has responsibility to provide written statement of the reason for dismissal within fourteen days.

Types of dismissal

Summary dismissal: When employer terminated his employee without giving him notice, called summary dismissal. Employee may do this at the serious breach of contract by the employee.

Example: In employment contract of two years employee was agreed that during his job here he will never join any other company for part time job but before the completion of employment contract employee accepted the job offer from another company. Here the employer has right to terminate the employee without notice.

Constructive Dismissal: Is opposite to summary dismissal in which employer creates a situation that may affect employee in such a way that he has no other option but to resign. So in this employee terminates the contract at the breach of contract by employer.

Wrongful Dismissal: In which employee is terminated at the behalf of employer when employee has no fault. E.g. if an employer imposed some illegal conditions that are not acceptable by employee and terminated after that ,so in this case employee may have right to claim under common Law due to wrongful dismissal.

Unfair Dismissal: Is closely related with wrongful dismissal but it is handled through statutory concept. In this employee is terminated by employer without any reason or fair reason. Statutory concept introduced employment protection legislation that gave specific procedure to terminate the employee otherwise it will be considered as unfair dismissal.

 Termination of Employment by the Breach of Contract:

Employment contract is terminated by breach in following circumstances Summary dismissal Constructive dismissal

Summary Dismissal: Summary dismissal occurs when employer terminates employee without giving him notice at the serious breach of contract by employee. In this case employee may justify himself that employer is liable for breach of contract, if it is proved then employee may claim a remedy for wrongful dismissal Case law Wilson v Racher  

Constructive Dismissal: Constructive dismissal occurs at the breach of contract by employer. In this case employer wants to carry on employment contract but changed some conditions that are not acceptable by the employee so he resigned from the job.

In order to claim for constructive dismissal employee may have to prove following, There must be serious breach of contract only at the behalf of employer, no other

party or an employee is liable

Employee left the job due to the breach only not due to another reason If breach is not serious then there will be no dismissal Case law Western Excavating (ECC) Ltd v Sharp 1978

If breach is not serious then there will be no dismissal. Case lawWestern Excavating (ECC) Ltd v Sharp 1978

There are some reasons that are not acceptable by the employee which leads to resignation.

If salary of employee is reduced by his employer Case lawIndustrial Rubber products v Gillon 1977

If employer is not providing safe working environment to his employees. If nature of job is changed. If employer is involved in illegal business and employee came to know about it. If employer is imposing some personal duties outside his job obligations.

Wrongful Dismissal: Wrongful dismissal occurs when employer terminates employee without any lawful reason. In this case employee may have right to claim for wrongful dismissal under common Law but employee will have to prove that he has been terminated without any reason. In this case if employer justify himself by arguing that employee has conducted some serious mistakes then it will never be considered as wrongful dismissal.

These are given as follows. Serious disobedience that is beyond his authority also. Disclosure of confidential information without employer’s permission Dishonesty at the behalf of employee If employee is negligent at his work If employee is incompetent and failed to meet professional requirements Drunkenness

Case law William v Royal institute of Chartered Surveyors 1997

Remedies for Wrongful Dismissal:Employee may have right to claim damaged that are equal to the loss of earning.

Unfair Dismissal: When employee is terminated without any fair reason known as unfair dismissal. The employer must have to follow certain procedure to terminate an employee otherwise employee may have right to claim through Employment Rights Act 1996. But employee also must have satisfied certain criteria.

Scope of Unfair Dismissal:Employees under Employment protection legislation can claim for unfair dismissal but its scope is limited to only to Great Britain and the employees working outside it are excluded from this right.

Specific Criteria to Meet Before ClaimThere are following rules that must be followed by the employees in order to claim.

There must be continuous employment of minimum one year although there are some exceptionso Where the employee is pregnanto Where the employee is being denied a statutory right e.g. . Unlawful deduction from wages.

There must be an unfair reason behind this dismissal Employee have been dismissed

Procedure for Claim of Unfair Dismissal:

There are following four steps that must be followed for successful claim

Step 1: Employee must apply for compensation within three months of dismissal

Step 2:  Employee must have to prove that he is qualifying employee and that he has In fact been dismissed by unfair reason.

Step 3: Employer may also have right to prove if there is any other reason of fair reason for dismissal.

Step 4: After employee and employer evidences, employment tribunal must decide whether the employee or employer was in fact right.

Standard Statutory ProcedureThere are three steps.

1. Statement of reason for action and invitation to meeting2. Nature of the meeting3. Appeal stage

For above procedure the timing and location of the meeting should be reasonable and in meeting employee and the employer both should have right to explain their case.

Warnings: In some situations, it is not reasonable for an employer to dismiss an employee without first warning. Case lawNewman v T H White Motors 1972

Fair Reasons for Dismissal: Employer can justify himself through following fair reasons

Capability: If the employee is incompetent with knowledge, aptitude and skills that is required according to the job designation and if employee lacks physical and mental quality Qualification: If employee lacks technical knowledge or education that is necessary for job continuity.

Misconduct: If employee shows some misconduct or illegal activity e.g. fraud or theft that is not allowable under Employment Law Redundancy: If the employer has no work to assign his employees there are two fair situations in redundancy

If the employer has ceased to carry on business The requirement of employee for specific job or project has diminished

If the employee has taken part in some unofficial industrial action e. g Strike

Unfair Reasons for Dismissal:There are some reasons that are considered as unfair and employees may justify themselves s that they are dismissed unfairly by following reasons.

Pregnancy and other materiality related issues If employee taking steps to avoid serious danger or risk If employee refused to accept Sunday working (public holiday) Trade union membership or activities If an employee seeking to defend the rights related with national minimum wage

Remedies available for Unfair Dismissal:If an employee claim for unfair dismissal within three months of dismissal and meet the criteria also then after successful claim employment tribunal may give following remedies.

Reinstatement Re engagement Compensation

Reinstatement: After successful claim employee may be reinstated means returned to his same job without any gap. So there will be no loss suffered by the employee instead of mental disturbance during dismissal period.

Reengagement: In this case employee is employed again at new job but it is equal and comparable to the old one. In this case employee contracts again with new terms and conditions with employer.

CompensationIf employment tribunal does not order for reinstatement or reengagement then tribunal may award following compensation.

Basic award Compensatory award

Redundancy:Dismissal of employees from their job by the employer when he has ceased to carry on business or we can say that business no longer needs employees to carry on that work. This type of dismissal is categorized into redundancy. In case of redundancy employee may have right to claim for redundancy payment but only in case of genuine redundancy. Case law High Table Ltd v Horst and Others 1997

If employees are dismissed not due to redundancy but some other reason, then they cannot claim for redundancy payment Case law North Riding Garages v Butte wick 1967

Reasons of RedundancyThere are following two circumstances in which employees may be redundant,

1. If the employer has ceased business or employer may have no funds to carry on business

2. If the requirement of employee for specific job or project is completed now and employer have no other work to assign that employee.

Calculation of Redundancy Payment: Redundancy payment is equal to basic compensation of unfair dismissal

Exception to the right of redundancy payment In following situations redundancy payment cannot be claimed

If employee is dismissed at any other reason or misconduct Case law Sanders v Neale 1974 If the employee does not fit in the definition of employee If they are not employed for continuous employment of two years Claim is made after six months of dismissals When employee leaves before actual redundancy takes place If employee refused an alternative employment