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Recruitment Issues And Employment Contracts Notes

LPC Law Notes > Employment Law Notes

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A more recent version of these Recruitment Issues And Employment Contracts notes – written by University Of Law students – is available here.

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RECRUITMENT ISSUES AND EMPLOYMENT RELATIONS 'WORKER' OR 'EMPLOYEE' DEFINITION Worker is employed under a 'contract for services' Worker may be regarded as 'carrying on a business' (Byrne Brothers (Formwork) Ltd 2002) Employees entitled to:?

Redundancy payments Present claim for unfair dismissal

(see eg Hall v Lorimer [1994] IRLR 171).

Matters that may be relevant to consider as to whether the person is an employee are: (a) How is the individual paid?
(b) Who pays tax and National Insurance?
(c) Who provides the tools and equipment?
(d) How integral to the business is the individual's role?
(e) Is the individual paid for sickness and holiday?
(f ) Is the individual subject to the disciplinary and grievance policy?
(g) Is the individual a member of a company pension scheme?
(h) Where does the economic risk lie?
(i) How did the parties view the relationship at the outset ( j) How was the arrangement terminable?

A worker is defined under s 230(3) of the ERA 1996 to mean an individual who has entered into or works under (or where employment has ceased worked under) (a) a contract of employment; or (b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual. The reference to a contract of employment in para (a) above means that an employee is also a worker. The same definition appears in the National Minimum Wage Regulations 1999 and the Working Time Regulations 1998. There are thus four requirements that need to be satisfied in limb (b): (a) the worker has to be an individual who has entered into or works under a contract; (b) with another party for work or services; (c) the individual undertakes to do or perform personally the work or services for the other party; (d) that other party must not, by virtue of the contract, have the status of a client or customer of any profession or business undertaking carried on by the individual who is to perform the work or services. Worker has benefit of:

?

Working Time Regs 1988; andDiscrimination legislation

INFORMATION NEEDED TO DRAFT AN EMPLOYMENT CONTRACT Practical Law Employment General The points follow the order of the clauses in the Standard document, Section 1 statement of terms and the Standard document, Employment contract for a junior employee. Parties
? Names and addresses of the employer and the employee. Commencement of employment
? Date when the employment began, or is to begin.
? Date on which the employee's period of continuous employment began or will begin (if different from above). Does anyemployment with a previous employer (or the same employer after a break) count towards the employee's continuous service for statutory purposes?
? If the employment is for a fixed term or is temporary, when does the fixed term or the temporary period expire? Is there any procedure for a renewal of the employment?
? Should the employee be subject to a probationary period and, if so, for how long? Does the employer wish to have the right to extend the probationary period?
Job title
? The employee's job title and a brief job description (if appropriate for the particular case).
? Who should the employee report to?
? Can the job be performed jointly with other individuals?
Place of work
? Where is the employee to be employed? Will the employee spend any time working from home?
See Practice note, Homeworking for more information.
? Will the employee be required to work at different locations?
? Will the employee be required to live at a particular place in order to carry out the job?
? Will the employer need to be able to change the location of the employee's workplace and, if so, what is the relevant geographical area for such relocation?
? Is the employee required to work abroad for a period of more than one month? If so, in which currency will the employee be paid? Will the employee receive additional pay (for example, a living allowance or bonus)? What terms and conditions apply to the employee's return to the UK?
Salary
? How much is the employee paid? Is this payable weekly, monthly or over some other period? Is it payable in advance or arrears? At what point in each period will it be paid?
? Will the salary be reviewable and, if so, how often and by whom? Does the employer want to identify any factors which might be taken into account in deciding whether to award a pay rise (for example, based on individual performance)?
? Does the employer operate a grade system which will entitle the employee to an automatic salary increase on attaining a higher grade?
? What deductions, if any, might the employer wish to be able to make from the salary (for example, overpayments, loan repayments)?
Hours of work and office rules
? What are the employee's normal hours of work (if any)?
? Will the employee have to work any overtime? What rates of pay, if any, are paid for overtime?
Or will the employee be entitled to take time off in lieu of any overtime worked?
? Will the employee be working full-time or part-time?
? Does the employer operate a shift system and will the employee be required to work shifts?
? Is the employee likely to work more than an average of 48 hours each week over a 17 week reference period? If so, consider a separate opt-out agreement.
? Is there an office manual or staff handbook or other rules and procedures?
Holidays
? What is the employer's holiday year?

????

Will employees be allowed to carry non-statutory holiday into the next holiday year or will holiday which has not been taken in a particular holiday year be forfeited?
What rules apply with regard to taking holiday (for example, notice requirements and number of days that can be taken at one time)?
Will holiday entitlement increase with years of service?
Will the employee be entitled to take holiday during a probationary period? (Holiday will continue to accrue in any event). Does the employer wish to reserve the right to require the employee to take any outstanding holiday during any period of notice given to terminate the employment (including any garden leave period)?
Will the employee be required to work on public holidays? If not, will public holidays be included within the employee's annual entitlement or be additional days' holiday?
Does the employer have any annual shut-down periods? Will the employee be required to take holiday during these periods?

Incapacity
? If the employer operates a sick pay scheme consider:
? If there should be a waiting period before the employee is eligible (for example, after completion of the probationary period);
? If there will be a contractual amount of sick pay (for example, full pay or half pay) or whether sick pay will be solely at the employer's discretion?
? If the employee is to be a member of any pension scheme, what do the scheme rules say about paying contributions during periods of absence due to incapacity?
? Does the employer wish to reserve the right to require the employee to undergo a medical examination by a doctor of the employer's choice?
Termination and notice period
? Are notice periods to be longer than the employer is obliged to give under section 86 of ERA 1996 (the statutory minimum)?
? If there are restrictive covenants, does the employer wish to have the right to terminate the employment by payment in lieu of notice (see Standard document, Payment in lieu of notice clause).
? Identify grounds upon which the employment can be terminated summarily.Any retirement age should be set out in the contract, and will need to be objectively justified: see Practice note, Default retirement age: implications of its abolition.

Disciplinary and grievance procedures
? Does the employer have any disciplinary and grievance procedures. If so, where can they be found?
Pensions
? What is the name of the pension scheme (if any) that the employee may join, and where can the employee obtain details of it?
? Will the employer make contributions to the employee's pension?
? Is there a contracting-out certificate in force in respect of pensions?
Collective agreement
? Are there any collective agreements in force? If so, who are the parties to such agreements and where are copies kept?
Confidential information
? Does the employer have specific types of confidential information which it would wish to protect after the employee's employment has been terminated?
Company property
? Will the employee have any company property (for example, car, phone, computer, pass, credit card) which should be returned on termination of employment?
? Other issuesThese issues relate to additional standard clauses that can be inserted into an employment contract (see Additional Standard Clauses: Contracts of employment).

Director
? Will the employee be a director of the company? If so, include details of the additional duties to which the employee will be subject (see Standard document, Director clauses (for directors of private and listed companies)). Benefits
? Will the employee be entitled to receive a bonus? If so, how will the bonus entitlement be calculated (for example, by reference to individual performance or company performance or a mix of both)?
? Will the employee have a company car? If so, the following issues should be considered:
? does the employer have its own fleet of cars or does it lease cars for employees from a leasing company?
? who should be permitted to drive the car?
? what level of insurance cover is to be provided (comprehensive or third party only or a combination of both dependent on who is driving)?
? is the ability to drive an essential part of the employee's job?
? which costs are to be covered by the employer (for example, insurance, maintenance and repair) and which by the employee (for example, petrol for personal journeys and traffic offences)?
? is there to be a cash alternative on offer?
? Will the employee be entitled to receive any insurance (for example, private medical insurance, permanent health insurance or life assurance) and, if so, what are the relevant schemes?
Intellectual property
? Is the employee in a creative role and will the employer require an assignment of copyright and intellectual property in relation to work created during the course of the employment?
Data protection and monitoring
? Does the employer need to have the right to process the employee's personal data?
? Does the employer need to have the right to monitor the employee's use of the telephone or email?
Garden leave
? Does the employer wish to reserve the right not to provide the employee with any work and/or exclude the employee from the premises (that is, garden leave) during any notice period?
? Should the employee be entitled to participate in any bonus or commission arrangements while on garden leave?
Restrictive covenants
? Is the employee sufficiently important to the employer's business to mean that the employer wishes to restrict his activities after termination of the employment?
? If so, consider what types of post-termination restrictions would be appropriate:
? non-competition clause
? what is the nature of the employer's business in which the employee has been involved?
? which geographical area has the employee operated in?
? what period of restraint would be necessary in order to protect the employer's legitimate business interests?
? non-solicitation and non-dealing clauses
? will the employee be materially involved with employees of the business whose departure would materially affect the employer? If so, what period of restraint would be necessary in order to protect the employer's legitimate business interests?
? will the employee be materially involved with customers or clients of the business? If so, consider the nature of the goods and/or services supplied and the relevant period of restraint.
? will the employee be materially involved in negotiations with prospective customers or clients of the business? If so, consider a restriction on solicitation and dealing with prospective customers or clients of the business.

REVIEWING A DRAFT CONTRACT (See amended pre-task contract) Employment relationship is contractual Are they free to contract to any terms that they like? NO. There are implied terms by common law and statute. Contract could be oral. Oral terms as binding as written terms but difficult to prove.?

Consider: What the client should change in the contract to reflect its wishes?
Any statutory restrictions on its wishes??

GENERAL

JOB TITLE/DU TIES

PLACE of WORK TRAVEL/
MOBILITY and EXPENSE S

REST BREAKS

Hours of Work MAXIMU M WEEKLY

An employer and employee are not free to contract on any terms they agree Legislative restrictions are imposed in relation to:
? maximum periods of work (Working Time Regulations 1998)
? minimum wages (National Minimum Wage Act 1998),
? minimum health and safety standards and
? discrimination legislation.
? Whilst an employer and employee can agree to opt out of certain legislative protections, this is not always the case. S 1 only requires job title, however ECJ has held that the employee must be told the nature of his job or given a brief description (Helmut Kampelmann).
? Must include the commencement date because of unfair dismissal and redundancy (because of two year employment rule).
? Can be anything
? To broaden it include following clause:
? 'In addition to the duties which this job normally entails, the Employee may from time to time be required to undertake additional or other duties as necessary to meet the needs of the Employer's business'
? s 1 requires the place or places of work to be stated. Employer must exercise the mobility clause in such a manner as to avoid breaching the duty of trust and confidence.
? Mobility is generally not implied by the court. Two circumstances 1) where it is necessary to give business efficacy to the contract; and 2) where the term implied represents the obvious, but unexpressed intention of the parties. (ie working at different sites)
? Affects redundancy and claims for breach of contract.
? Clause must be reasonably operated by employer o Otherwise ER may be in breach of duty of mutual trust and confidence (United Bank v Ahktar 1989)
? If employee refuses to comply with reasonable clause, may result in dismissal for misconduct (NB redundancy)
? There may be sex discrimination issues for female staff (due to family issues)
? State if the employee may be required to work at another branch
? Include a clause on travel expenses - reasonable expenses may have to be agreed prior - receipts will be required
? Where there is no mobility clause the court Is unlikely to imply one
? The Working Time Regulations (WTR) don't specifically say anything about lunch breaks, but do allow for one uninterrupted 20-minute rest break during the working day, provided the working period is longer than 6 hours.
? Workers above school leaving age and under 18 have a more generous entitlement of one 30-minute rest break if working for longer than 4.5 hours.
? E.g. 8.30-5.30 less 30 min lunch break
? 8.5 hours x 5=42.5 hours?

WORKING TIME REGULATIONS 1998 The general rule is that a workers working time (including overtime) in any reference period (17 weeks) shall not exceed an average of 48 hours for each seven days excludes breaks if hourly worker. An employer is under a duty to take all reasonable steps, in keeping with the need to

WORKING TIME TB p 52

protect the health and safety of workers, to ensure that this time is not exceededAverage working time is calculated by identifying the number of weeks in the reference period (C) and the aggregate number of hours of working time worked by the worker in that period (A) and dividing A by C to produce an average figure (A + B)/CHOLIDAY

PENSION

SICK PAY

Most workers who work a 5-day week must receive 28 days' paid annual leave per year. This is calculated by multiplying a normal week (5 days) FULL by the annual entitlement of 5.6 weeks (WTR 1998) TIME
? They must either put they are entitled to 28 days inclusive of bank holidays (better for employer as there have been extra bank holidays recently) or 28 days exclusive of bank holidays
? Part-time workers are also entitled to a minimum of 5.6 weeks of paid holiday each year, although this may amount to fewer actual days of paid PARTholiday than a full-time worker would get. TIME
? A worker works 3 days a week. Their leave is calculated by multiplying 3 by 5.6, which comes to 16.8 days of annual paid leave.
? Need express agreement in WRITING for deductions for overpayment Recove if employee leaves so put in the contract (Reg 14(4) WT Reg 1998 p ry of 61) excess(ERA illegal to do deduct unless provided by statute or in the contract holida or agreed in writing) y pay:
? Minimum notice for taking leave - twice as much notice as amount of time employee wants to take
? The contract should specify whether or not the employer has an occupational pension scheme which the employee is entitled to join
? An employee cannot be compelled to join an occupational pension scheme and is entitled to enter into a personal pension scheme instead
? Often there will be a document referred to in the contract for the pension scheme - this is so the company can update it without have to change every employees contract every time they adapt the pension schemeIf an employee if absent more than three days, statutory requirement for payment?

Employer is not required to pay more than statutory pay Contract should state whether the employer pays sick pay (other than statutory sick pay) Employer does not have to pay contract sick pay - only statutory which it will be paid back
? You can get PS87.55 per week Statutory Sick Pay (SSP) if you're too ill to work.
? It's paid by your employer for up to 28 weeks.?

NOTICE

You need to qualify for SSP and have been off work sick for 4 or more days in a row (including non-working days).
? You can't get less than the statutory amount. You can get more if your company has a sick pay scheme (or 'occupational scheme') - check your employment contract.
? Even if there is no express contractual term governing sick pay, a term that an employee is entitled to sick pay could be implied if the employer usually pays workers who are off sick for a set period of time
? If there is no sick pay scheme, the there is NO pay for first three days of illness
? Increases to PS88.45 from 6 April 2015
? Best for employers to contract that employee must give the same notice as them for terminating the contract otherwise it is the statutory minimum of notice ERA s 86(1)which is very little:
? During the first 2 years of continuous employment not less than [one week's]
notice
? During the third to twelfth years of continuous employment not less than [one week's] notice for each year of continuous employment
? After 12 years of continuous employment not less than [12 weeks'] notice Employees must give one week notice after one month. If want employees to give more notice than that, must expressly agree to it.

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