According to Daniel Barnett “If it looks like an employee and quacks like an employee, it’s probably not a self-employed subcontractor.”

Today saw the Supreme Court’s Judgment in Autoclenz Limited v Belcher & Others handed down and I’ve recorded my thoughts on it in this brief podcast.

“He had to duck as a cheesecake was propelled towards him.” Kitchen staff dismissed over hijinks http://ow.ly/5MxMs #HR #tribunals #ukemplaw

25/07/2011 3:06 pm via HootSuiteReplyRetweetFavorite

@TribunalWatch

Tribunal Watch

As well as quacking employees I’ve also talked about chefs, Facebook and flying cheesecake.

Related posts:

1. The Beecroft Report: The Twitter Response
2. Podcast#3 – What’s coming in 2012?
3. Podcast#1

Podcast#2 originally appeared on Jobsworth by Michael Scutt on 27/07/2011.

Following the Supreme Court’s decision in R (on the application of G) v The Governors of School X probably  not if you’re a teacher in a state school. Doctors in the NHS may be able to.

One of the issues that arises in advising clients on the process is whether the employee should be allowed to bring a lawyer with them into the meeting.  There is no statutory legal right to be allowed to do so.  The Employment Relations Act 1999 s.10 only provides for a worker to have the right to be accompanied by a trade union official or a fellow worker.  It does not cover family members or friends (unless they are within the two allowed categories).

This can be a real problem for employees who are either very senior or in small companies where often there is no one appropriate from within the business to take with them and there is no union.  An employee can ask to take a lawyer with them but most employers will refuse. It is also a major issue where the employee is facing career-threatening allegations, such as teachers, doctors or even people regulated by the FSA.

Thanks to the much-maligned Human Rights Act 2000 (“HRA”), the situation is slightly more complicated when the employer is in the public sector.  This is because the HRA can be employed against public sector employers but not those in the private sector.  In particular Article 6 of the ECHR provides the right to “a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law”, often shortened to the right to a fair trial. In Kulkarni v Milton Keynes Hospital NHS Trust [2009] EWCA Civ 789  it was held that a doctor should be entitled to legal representation at a disciplinary hearing if the effect of being dismissed would be to bar the individual from their career.

That view was upheld by the Court of Appeal in R (on the application of G) v The Governors of School X but subsequently rejected by the Supreme Court on a majority decision of 4 -1,who decided that there is no right under Article 6 ECHR to legal representation at a disciplinary meeting where a decision to dismiss could lead to the individual being barred from their profession if the barring decision is sufficiently independent of the dismissal.

In this case G., the employee, was a teaching assistant accused of an inappropriate relationship with a pupil. He was summoned to a disciplinary meeting and refused permission for his lawyer to accompany him.  On advice he refused to co-operate with the disciplinary meeting. The school dismissed him and he commenced proceedings for judicial review of the school’s decision to deny him legal representation at the disciplinary hearing. He argued that the decision to terminate his employment prevented him from teaching.  Because the Protection of Children Act was involved, the fact of his dismissal had to be passed on to the ISA – Independent Safeguarding Authority – for consideration as to whether he should be banned from working with children.  The ISA is a statutory, independent body.

This is where this case and Kulkarni differ. In Kulkarni the employer was the NHS, which is effectively the employer of the overwhelming majority of doctors in the country.  A decision to ban him from working in the NHS effectively meant that he could not work again. One decision automatically followed the other.  However, in this most recent case the ISA was independent of the school, the decision to bar him was taken entirely independently of the school. The Supreme Court held that that meant he did not need legal advice at the disciplinary because the two processes were independent of each other. The ISA were not bound to bar the teacher just because of his dismissal in those circumstances. Their caseworkers had guidelines to follow when deciding whether to bar or not.

This is a harsh decision.  G was faced with serious allegations, which could have led to criminal proceedings as well as the loss of his career.The majority view of the Supreme Court was that the school was only concerned with the issue of his employment and not his civil right to teach or work with children.  How can the two be divorced in a case based on facts such as these?    I suspect the underlying rationale is that the Supreme Court did not want to see disciplinary proceedings in schools turned into mini-employment tribunals and also sought to preserve ISA’s reputation, but that is a poor rationale for denying individuals proper legal representation in serious cases.  Lord Dyson’s lead judgment spent much time discussing the ISA’s procedures, which did not include the right for him to give oral evidence to it.  G, on legal advice, did not give his account to the disciplinary meeting, and was dismissed.  Despite this the school were satisfied that the allegations were made out and dismissed him.  It appears from the judgment that the ISA have not yet made the barring decision but, as Lord Kerr, dissenting from the majority, pointed out it was inconceivable that the ISA would not be heavily influenced by the school’s decision to dismiss;

“Although the actual determination takes place at the point when ISA decides whether to include the respondent on the list, the anterior stage of disciplinary proceedings cannot be left out of account in deciding whether the overall process is fair.“

Exactly so. The number of teachers facing career threatening allegations is, presumably (and hopefully) fairly small, so the floodgates would hardly have opened, if at all, had the Supreme Court upheld the Court of Appeal’s decision.  However, it looks like we’re stuck with this decision for some time.

Related posts:

1. The new statutory disciplinary and dismissal procedures
2. Can a Partner be an Employee?
3. Can My Employees Secretly Tape a Meeting With Me?

Can an Employee take a Lawyer into a Disciplinary or Grievance Meeting? originally appeared on Jobsworth by Michael Scutt on 09/07/2011.

The government last week announced that it intends to shake up employment law practice and procedure with a consultation trying to rebalance the rights of employer and employee. It’s the latest episode in the long-running saga “does the law favour employees too much?”

I suspect that there is much political posturing in the consultation and I would be surprised if some aspects survive the consultation process. The headlines have been well trailed already: here is my take on the main points that caught my eye.

Issue Fees – how much is too much?

There are some interesting proposals, which deserve a welcome, such as the introduction of fees for issuing proceedings in the ET.  The difficulty will be in setting a fee that discourages serial litigants and chancers whilst not denying access to justice to genuine claims from hard-up Claimants.  I have read in various places that the fee might be £30 or £500!  £30 would have no appreciable effect on deterring unmeritorious claims and £500 would prevent those people on lower incomes, but with decent claims, from bringing them. There will be further consultation on the level of the fee.

Increasing the qualifying period for unfair dismissal would be a retrograde step

Much less welcome, for employees anyway, will also be the consultation on whether the qualifying period of 12 months continuous employment should be increased to 24 months before an employee would be eligible to bring a claim for unfair dismissal.  The effect of that would be to reduce the number of unfair dismissal claims by 3,700 – 4,700 claims annually. Employers might be keeping their fingers crossed that this measure does get adopted, I think it would be short-sighted to adopt that proposal.

Apart from denying access to justice to individuals (which is a corner-stone of the Legal Services Act which is keeping many lawyers awake at the moment) and turning the clock back to the situation that pertained prior to 1998, it will lead employees (and not just of the more vexatious or speculative persuasions) to seek to find discriminatory behaviour on the part of the employer where none exists.  Employers could therefore find themselves facing an upsurge of more unmeritorious and badly founded claims than before. The government needs to decide whether it wants to reduce unmeritorious claims or just prevent claims full stop.

ETs need to use the powers they already have

The proposals suggest that ETs should be given more flexible powers for striking out unmeritorious claims, but Employment Judges need to be readier and more willing to use these powers.  Costs orders can be made at the moment, but ETs are notoriously reluctant to use them.

Jaw, jaw not war, war

More sensibly, it is suggested that more use be made of mediation in disputes and even that all claims be submitted to ACAS for conciliation in the first instance before they be allowed to proceed to Tribunal.  On the face of it, this seems a sensible proposal but in reality it may be unworkable.  ACAS will need to be properly funded in order to cope with the vast amount of work that would be generated from this.   ACAS runs a mediation/conciliation service at the moment and it seems to me to be overstretched.

Will employers really be put on the naughty step?

In a nod towards employees, to show that not everything is weighted in favour of the employer, there is a proposal that employers who fail to abide by “their obligations” could be fined, with the revenue generated going to the state and not to the wronged employee.  I can’t see this making it on to the statute book for a moment – it would be seen as a tax by the back door on hard-pressed employers and would draw unwelcome flack on the government. Unlike most employment claims, which are designed to compensate, this would punish.  For an analysis of some other pitfalls see Laurie Anstis’s blog post on the subject.

Pointless window dressing

There’s also a rather pointless “Employer’s Charter” that, to quote Basil Fawlty does no more than state “the bleedin’ obvious”.  It is subtitled “As an Employer – as long as you act fairly and reasonably – you are entitled to …” and there then follows a list of actions and requests that employers can make, such as make people redundant, ask pregnant employees when they intend to return to work and ask employees to take a pay cut.  Follow this link for the full list of nonsense.  The subtitle contains the clue – the employer needs to act fairly and reasonable. Herein lies the heart of the debate – most employers think this obligation is too onerous and the law sets the bar on what is fair and reasonable too high.  Employees think the opposite.  The Charter in my view is no more than pointless window dressing which will not assist either employer or employee. If you think I’m putting it too strongly, read Darren Newman’s blog on the issue.

Something must be done …

The debate is more about perception than reality – a bit like the compensation culture that rears its head every now and then. ET procedure needs to be reformed.  Why no consultation on introducing “cost shifting” into ETR procedure – i.e costs follows the event or, to be more blunt, the loser pays, as with civil litigation.  That would cause many individuals with weak claims to think twice about bringing a claim.  If the government does introduce the Jackson proposals on reform of civil litigation costs in without too much dilution, it would probably prevent the worst excesses of the claims management companies piling into employment litigation as they did with personal injury.

I can’t help but feel that something wider is afoot here.  The consultation suggests employment judges sit alone, which would have to mean a qualified lawyer would be the one hearing the case: the input from industry and management, in the persona of the two wingmen who sit with the lawyer, will be lost.  That is said to be one of the strengths of the current system.  If that is lost, taken with the amalgamation of the administration of the ETs with Her Majesty’s Court Service, can’t the entire merging (or absorption) of ETs into the Courts be but a matter of time?

Related posts:

1. Employer was Justified in Sacking Employee for Comments on Facebook
2. What happens if my employer goes bust? Part 2
3. What happens if my employer goes bust?

Employer vs Employee: The Saga Continues originally appeared on Jobsworth by Michael Scutt on 31/01/2011.

How much tax should employers deduct from termination payments? HMRC have announced a change to  the way that lump sum termination payments have to be taxed by employers from this coming April.

As is well known, the first £30,000 of a compensation payment can be paid free of income tax and national insurance contributions, provided that it is paid as compensation for “loss of office” or employment. This commonly applies on redundancy, but can apply in other situations too.

Any balance above the £30,000 is taxable at the employee’s marginal rate of tax.  This is because of a long established concession contained within ss.403 – 404 of the Income Tax (Earnings and Pensions) Act 2003. Useful links from the HMRC website are here and here.

Such payments are usually made once a compromise agreement or COT3 has been entered into  and the employee’s employment has terminated.  The compensation payment won’t have been included on the P45.  It is important that the payment must not be contractually binding, otherwise the tax concession is lost.  Most commonly this will affect those employees being made redundant.

Usually, the employer will deduct basic rate tax only from the balance and then to leave the employee to account to HMRC in due course for any higher or additional rate tax that might be due.   This can, depending on when the payment to the employee is made give them several months before that tax has to be paid – usually by 31st January following the end of the relevant tax year.

In these straitened economic times, HMRC has decided to clamp down on this practice and will, from April 2011, require employers to deduct basic, higher and additional tax from such payments.  The effect of this will be that higher and additional rate  employee tax payers will receive the net sum, rather than having to hold some of the payment back to pay their tax.

It will prevent them investing the higher or additional tax element themselves until they have to account to HMRC for it and pocketing the interest gained on it during that time.  The detailed guidance for employers will be published next month.

The taxation of payments on termination can be a complicated issue and I recommend that you take expert advice from a solicitor or accountant if you have any concerns.

Please note that nothing in this blog constitutes legal advice to you and is just my understanding of the law.  I only give advice via Dale Langley & Co and please do get in contact via michaelscutt@dalelangley.co.uk if you need some.

Related posts:

1. When is an Ex-Gratia Payment a Notice Payment?
2. What lies ahead in 2010?

Termination Payments: Taxing Times Ahead for Employers originally appeared on Jobsworth by Michael Scutt on 20/01/2011.

Time for Tiffin

A few weeks ago I wrote about whether a lapdancer could be held to be an employee (she couldn’t).  A similar question arose recently in the case of Tiffin v Lester Aldridge LLP at the EAT: can a Partner in a law firm be an Employee?  Nadine Quashie’s case was a Preliminary Hearing at first instance, i.e before the Employment Tribunal; Tiffin’s was an appeal against the refusal of the ET to hold that he was an employee.

Martin Tiffin had worked for the firm since 2001, working his way up from “Associate” to “Salaried Partner” to “Fixed Share Partner”.  What is a Fixed Share Partner? Mr Tiffin had put in a fairly small amount of money into the business (£6,000 odd),  paid tax on a self-employed basis and received monthly “drawings” and only had a limited say at management meetings.  He had also received a P45 when promoted from salaried partner to Fixed Share.

Lester Aldridge terminated his membership of the LLP and Mr Tiffin brought various claims, including for unfair dismissal.  If he was an employee then the ET had jurisdiction to hear his claim; if a partner it did not. Like Nadine Quashie, he lost.

The EAT applied the definition of “partner” contained in the Partnership Act 1890 which states that for a partnership to exit there must be a business, carried on by two or more persons with a view of profit.  Furthermore, the EAT held that it did not matter that Mr Tiffin received a smaller share of the profits than the other partners nor that he had limited voting rights.  Those considerations were irrelevant.

On all the facts, as reported, what seems most surprising is that Mr Tiffin was granted permission to appeal in the first place.  There are only two bases upon which it is possible to appeal a decision of an ET: (1) that it misdirected itself as to the applicable law or (2) there was perversity in its decision. Leave to appeal is not granted readily in either case.

Sadly (for him) Mr Tiffin could not pursue his claims before the ET or, to put it another way, he could not have his cake and eat it.

Related posts:

1. Employee, worker or neither?
2. Can an Employee be Sacked for Refusing a Paycut?
3. Can an Employee take a Lawyer into a Disciplinary or Grievance Meeting?

Can a Partner be an Employee? originally appeared on Jobsworth by Michael Scutt on 14/12/2010.

Send the boys round?

So, the Employment Tribunal (ET) agreed you had been unfairly dismissed.  They award compensation for unfair dismissal in your favour.  Then your former employer doesn’t pay up.    In a recent post I wrote about how the ET won’t consider whether the employer can pay the award.  So what happens if the employer can’t or won’t pay? What can you do? How do you get your money?

The first thing to realise is that ETs can’t enforce their own awards: you need to go to a County Court to do that, although there’s no longer any need to get the ET award registered at the County Court.  You can ask the County Court to use the enforcement procedures available to it and you can also use the new(ish) High Court recovery procedure via the Sheriff.  See here for an explanatory booklet you can download from HMCS.  To use the court procedures you pay a fee and, depending on the process you opt for, there may be  a hearing or two at Court to attend.

Similarly settlements reached with ACAS (such as a COT3) are also enforceable in the same way as an ET award. Click here.

There are several options available;

1. Send the bailiffs round (“warrant of execution”) – or the Sheriff in the High Court (“writ of fi fa”).  They will go to the debtor’s property and try and seize goods to the value of the debt.  Bailiffs aren’t very pro-active in recovering  goods, whereas Sheriffs tend to be a little better.  I’ve never had a great deal of success with this one.
2. Charging Orders – made against property.  The Court can subsequently order a sale of the property to release payment.
3. Third Party Debt Orders – allows you to get access to the Defendant’s assets, such as getting the award deducted from their bank account.  Difficult and you need to know when the other side gets money into their account.
4. Attachment of Earnings Orders – if there is an employer involved then this can be very effective.
5. Bankruptcy/Insolvency – to enforce against an employer that is not a limited company use bankruptcy procedure, with a statutory demand.  Against a limited company, insolvency proceedings can be started by issuing a “winding up petition”. These can be very effective but the Bankruptcy Courts don’t like people using insolvency proceedings to collect debts and it could backfire: you might end up making your target bankrupt and getting nothing back.   Take specialist advice and use with care.

Not that sort of Sheriff

Employers also ought to be aware that awards made by ETs can also be placed in the official Register of Judgments, which is open to the public and used by Credit Reference Agencies: having an unsatisfied Judgment recorded in it might make it hard for someone to obtain credit.

Hard though it may be to hear it, especially if you feel you’ve been wronged by the other party, but it sometimes pays to accept an offer of payment from a Respondent/Defendant made voluntarily even if it is less than you would like, rather than trying to squeeze the money out of them subsequently.  In my experience enforcement proceedings are never very satisfactory and usually take a long time.

I’d be interested to know how other people have fared.  According to Ministry of Justice research in 2009  39% of people hadn’t been paid any of the awards made to them.  If you’re one of those unfortunate enough not to have been paid, what steps have you taken to get paid?

Have you had much (any?)  success in enforcing an ET award?  What would be your top tips for success if yes?

If you need advice on any of the above please contact me at michaelscutt@dalelangley.co.uk

Related posts:

1. Unfair Dismissal: What if the Employer Can’t Pay?
2. Unfair Dismissal Rights to be Restricted?
3. Unfair Dismissal to be Abolished?

Enforcing Unfair Dismissal Awards Part II originally appeared on Jobsworth by Michael Scutt on 25/09/2010.

For an employee who has decided to move on to pastures new and has handed in his/her notice, or has been told they are to be made redundant, there are certain pitfalls to be avoided. They may seem obvious (like serving notice), but people still fall foul of them. Walking out there and then is a big step for an employee – we’re in constructive dismissal territory here and legal advice should be taken  before you do it. In other cases some employees only have regard to the restrictive covenants in their contracts of employment (which are the clauses that say the departing employee won’t try to solicit work or custom from the clients he’s been dealing with, or prevent him from joining a competing business once he’s left).  Whether those restrictions are always legally enforceable is another matter and constitute another material for another blog post or three, but in this post I want to highlight for employees that trying to get ahead by taking confidential information, or by acting inappropriately whilst stil an employee (even if on garden leave) could end in tears.

The basic common law position is that all employees owe a “duty of fidelity” to their employers whilst they remain employed and to breach it may be a serious matter, even justifying dismissal for gross misconduct. This comprises several specific duties but the three main ones are ;

1. Duty of Confidentiality – It sometimes happens that when an employee is thinking of leaving their job they take some liberties with the employer’s confidential information, such as downloading the client database or copying confidential information.  Don’t do it: every employee owes his/her employer a duty of confidentiality, which may be expressly stated in the contract of employment/staff handbook or implied under common law
2. Duty not to Compete -  Don’t start working for another business, whilst still employed by current employer.   This situation should not be confused with restrictive covenants preventing the employee from dealing with or working for a competitor for a period of time after the employment has terminated.  Restrictive covenants can be difficult to enforce and will only be enforceable so long as they seek to protect an employer’s legitimate economic interests because the courts view them as being a restraint of trade.  However, before the employee actually takes his leave he should not be competing with his employer.  That is a breach of the duty of fidelity and, if the person concerned is a senior employee or a statutory director of the business concerned it may be a breach of fiduciary duty (“utmost good faith”).  That will be a disciplinary matter and, almost certainly, gross misconduct, leading to dismissal without notice pay and, quite possibly, a reference. The above all applies even when the employee is on garden leave. They’re still an employee even if they’re not attending the workplace or doing any work.
3. Duty not to Act against the employer’s best interests – ie not to act in Conflict of interest -  not whilst still employed.  The duty of fidelity requires the employee not to act in a way that damages the employer and, furthermore, requires the employee to notify the employer of his (and other employees’) wrongdoing. There is also a duty to report approaches from competitors.

How can an employer protect themselves?  The answer, as ever, is to have a properly (and professionally) drafted contract of employment that expands upon the various duties above and makes it quite clear what employees can and can’t do during employment.

So, this is all fairly straightforward, but can an employee prepare to compete? In other words can an employee take steps whilst in employment to prepare his own business when he leaves? Is buying an off the shelf company a breach of the duty of fidelity, or having stationery printed? It has always been the case that an employee can prepare to compete, but the recent case of Shepherds Investments Ltd v Walters [2006] EWHC 836 suggests that might not be quite so straightforward now.

I’ll deal with that in my next post.

Related posts:

1. Things employers shouldn't ask …

Leaving your job? Three things not to do before you get your P45 originally appeared on Jobsworth by Michael Scutt on 22/06/2010.

It's the one in Iceland, I can't spell it either

Now that the drama of the election is over and the novelty of the Coalition government is fading and before the whole country shuts down for the World Cup, it’s time for a brief reminder of the event that brought Europe to a standstill, Kenyan flower growers to the brink of bankruptcy and led to people having extended holidays all over the world.  Yes: the eruption of the Eyjafjallajökull  volcano (it’s only marginally easier to spell than to pronounce), which won’t quite go away (although The  Guardian reported on 23rd May that it may now be dormant) and which caused almost as much pain to news broadcasters as to those stranded in airport departure lounges.

Although there was a marked “spirit of Dunkirk” at the time, with Royal Navy ships being dispatched to the coast of Portugal, it seems many employers didn’t quite see it the same way according to a survey commissioned by recruitment consultants Badenoch & Clark. It reported that 43% of employees caught up in the chaos had their pay docked or their annual leave entitlement reduced.  Approximately one-quarter of employers were prepared to allow staff to work remotely, whilst 32% allowed staff to take the days off as additional leave.

The press release quotes Andy Powell, a Director at Badenoch & Clark, saying

“Employers cannot be expected to give out additional paid leave because of acts of God; however, it is important for employers to set a standard policy on this, so that everyone understands the consequences of any delays returning to work.  While remote working is a good solution in some cases, for many people it will not be a viable option. As such, although ensuring you are contactable by mobile or smart phone where possible is a sensible precaution, both employers and employees need to understand that the risk of disruption should be shared.”

One day you'll look back on all this and laugh ...

I think Powell has it right.  If there’s one thing everyone knows about “Eyja” it is that the last time it erupted it did so for two years.  Now is the time for employers to develop their policies on this in case it happens again.  If an employee fails to attend work without a good excuse that will usually be treated as unauthorised absence and thus a disciplinary matter.  It would be a harsh (and probably imprudent) employer that disciplined an employee who had been stranded abroad.  Employers need to make it clear what steps they will take in this situation, whether to make employees take it as unpaid leave or to reduce annual holiday entitlement and very few employers will want (or be able to afford) to grant it as additional paid leave now that the risk is known.  What is most important is that employers have a policy and adhere to it consistently, to avoid the risk of claims arising.  An employee may try and claim for breach of contract or unlawful deduction of wages if they have their pay or holiday entitlement docked, but provided an employer can show it had a policy and adhered to it, the risk of being held liable for such a claim should be much reduced.

Badenoch & Clark have created a Facebook page called CareerTalkUK   where you can get career tips and useful information, or you can follow them @CareerTalkUK.  It’s got a nice orange logo as well.

If you require any assistance on this or any other employment law issue please do get in contact with me, either on 0207 464 8433 or at michaelscutt@dalelangley.co.uk

No related posts.

Has the Dust Settled on the Ash Cloud? originally appeared on Jobsworth by Michael Scutt on 27/05/2010.

Well, would you believe it?  In the week that I gave a talk at the City Business Library about contracts of employment (see here for my slideshare presentation) and the differences between employees, workers and the self-employed, I came across a case in the Employment Appeal Tribunal (EAT) which discussed all these issues.  It is an important issue because the answer to the question will determine what legal remedies are available to the individual.

In the case of Clarkson v Pensher Security Doors Ltd [2009] UKEAT 0107_09_1606  the Applicant undertook the bulk of the electrical work for the Respondent company.  He provided most of the tools he did and although he was given jobs to do he was not told how to carry out those jobs.  He was paid hourly and kept to hours stipulated by the Respondent and, importantly, there was “mutuality of obligation” between the parties – i.e. the Respondent would supply work and Mr Clarkson would undertake it.  However, he took no part in the running of the company or attended company meetings or appraisals and was not paid when he didn’t work. He did do some, limited, work for On the facts it seems like he was, at least, a worker (which is a broader category with fewer legal rights).  However, it was finally held that Mr Clarkson was neither a worker nor an employee and, instead, he was an independent contractor or “business undertaking”.  This meant that his legal rights against the company were confined purely to the terms of the contract between them (and it isn’t clear whether that contract was in writing or purely oral).  In other words he had no right to apply to an Employment Tribunal for any remedies that might otherwise have been available to him. 

This case demonstrates the need for businesses and workers/employees to enter into clear written agreements that set out their status and thus, hopefully, avoid the need for expensive and time consuming litigation that these parties found themselves embroiled in. 

If you need assistance or advice on these issues please do not hesitate to contact me on 0207 464 8433 or at michaelscutt@dalelangley.co.uk

Related posts:

1. Can an Employee take a Lawyer into a Disciplinary or Grievance Meeting?

Employee, worker or neither? originally appeared on Jobsworth by Michael Scutt on 23/10/2009.

I  spent a good part of yesterday evening preparing a seminar that I have been asked to give at the City Business Library on 20th October next.  The topic handed to me is the title to this post: “Contracts of Employment: what you need to know”, to cover one hour.  The seminar is aimed at new businesses looking to take on staff for the first time.  At first glance I thought it would be an easy topic, one I am very familiar with, nothing too controversial and plenty of time for discussion afterwards.  Then, on my way in to work this morning, tapping out a skeleton presentation in Powerpoint on the trusty laptop, I realised just what I have let myself in for. 

The topic is huge.  You could spend an hour discussing what actually constitutes an employee before you even get on to discussing the information that has to be given to a new employee under s.1 of the Employment Rights Act 1996 (click here to view the BAILLI database for the full test of s.1). If you follow that link  you will see that s.1 requires the employer to write to the employee setting out the main terms of the employment, the name of the employer (not as silly as it might seem at first glance), the date the employment began and any periods of continuous employment to be taken into account, job title, place of work, the amount and rate of pay and many other important “housekeeping” issues.  The s.1 statement must be given within two months of the employee starting work, failing which the employee could complain to an Employment Tribunal for a declaration of the applicable terms of employment.  In other words, the ET would decide what the terms and conditions of employment will be (or were if the employee has since left); a potential double-edged sword which is why not many complaints under s.1 ERA get made to ETs.

In many cases a business will describe someone as “self-employed” when, in reality, they are an employee, in an attempt to avoid the individual acquiring the right to sue for unfair dismissal. The taxation treatment of the individual isn’t enough.  In other words, if someone is not on PAYE that doesn’t mean they are self-employed.  There are many different tests used by ETs to determine whether a person is an employee or not – none of them overridingly conclusive.  Each situation is looked at on its own facts and an ET won’t be blinded by whatever label the person has been given. 

The factors that are particularly important though concern whether there is a need for the individual to provide the services themself, or are they required to find a substitute to perform when they are sick/on holiday.  If yes, then that tends to be suggestive of an independent contractor relationship rather than an employee.  Also is there mutuality of obligation?  Is the business obliged to provide work to the individual?  If no then it is not suggestive of an employee relationship.

A massive topic and I haven’t even got onto disciplinary procedures, notice periods, PILON clauses, restrictive covenants and how to avoid being sued plus a hundred and one other considerations. At least there is scope for further seminars.  More updates to follow in due course.

Of course, if you want any advice on any of these issues please do not hesitate to contact me on 0207 464 8433 or at michaelscutt@dalelangley.co.uk

Related posts:

1. Contracts of Employment – what you need to know
2. Harmonising contracts under TUPE

Contracts of Employment: what you need to know originally appeared on Jobsworth by Michael Scutt on 12/08/2009.