Contracts of Employment
At times of recession, small businesses often review their workforces and their agreements to explore whether they can reduce them or be inventive in construing their employment relationships in ways which might save them money.
Whilst people will fall into categories of employee, worker or self employed, exactly what their status is, will be ultimately decided by the contract under which they work. A contract of employment requires that an employee will give personal service and a self employed contractor would work under a “Contract for Services”. A worker, however, may work under a contract of employment but also may be a casual worker who works under agreed conditions but not providing their services as a self employed person, i.e. carrying on a business.
EMPLOYEES
Employees will have:
- the right to a contract of employment/written particulars;
- paid sick pay or statutory sick pay;
- the right to be paid in accordance with the National Minimum Wage;
- working hours in compliance with the Working Time Regulations and attract protection under the ACAS Code of Conduct for resolving workplace disputes;
- the right to a safe system of work as a result of the employer’s duty of care for the employee’s well-being and to believe that the employer will carry vicarious liability for the employee’s actions;
- a right not to be unfairly dismissed after working for a year. protected employment rights if the business is bought or sold and they have more than a year’s service. (Transfer of Undertaking (Protection of Employees) Regulations 2006).
The case of Ready Mixed Concrete v Minister of Pensions & National Insurance (1968) provided a number of conditions which demonstrate whether a person is an employee or not. These are as follows:-
- that the relationship between the employee and the employer is consistent with a contract of employment;
- that there is an element of personal service, in other words, the employee provides his labour and skill for pay;
- there is a “master and servant” relationship in that the employee does the work he is given by his employer. There is also a concept of mutuality of obligation in that there is a relationship in which the employer provides work and the employee does it to the best of his ability. The employee is unable to substitute somebody else to provide the service and must provide the work personally. He is also not in a position to refuse to do the work or to work elsewhere rather than for his employer at the times and venues agreed between them.
Merely stating that an employee can substitute another worker for himself will not relieve the employer and employee of their obligations under a contract of employment.
An Employment Tribunal is likely to see through any attempt at a sham contract and will construe the relationship as one of employer/employee if that was the intention behind the relationship.
As to workers, casual workers and agency workers; these are invariably not employees of the organisation at which they supply their labour. Agency workers may qualify as employees of the agency that supplies them to the end user and their contract of employment will be with that company. There are, however, protections for agency workers in the workplace and even though they are supplied as an agency worker to a company, they can suffer discrimination and harassment in that workplace and can bring a claim against either organisation.
Casual workers can also bring various claims but they cannot bring a claim of unfair dismissal as invariably they will not have a full year’s continuous service.
If in doubt, seek legal advice and remember that where a worker has to do as they are told, is supplied tools, vehicles and are directed as to the work to be done and how it is to be done, then it is a strong indication of an employment relationship and the individual is likely to be construed as an employee.
Terry Falcão, Partner, Head of Employment 01392 666861
terryfalcao@stones-solicitors.co.uk
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