CONTRACTS OF EMPLOYMENTCONTRACTS OF EMPLOYMENT

OBJECTIVESOBJECTIVES

to consider the role of common law in to consider the role of common law in employment lawemployment law

to examine the definition of ‘employee’to examine the definition of ‘employee’

to examine the nature and content of the to examine the nature and content of the employment relationshipemployment relationship

Contract of EmploymentContract of Employment

THEMESTHEMES

which group of workers should labour law which group of workers should labour law aim to protect?aim to protect?

what role should the employment contract what role should the employment contract play, as a source of terms and conditions play, as a source of terms and conditions of employment?of employment?

WHY IS THE CONTRACT OF WHY IS THE CONTRACT OF EMPLOYMENT STILL IMPORTANT?EMPLOYMENT STILL IMPORTANT?

to fill in gaps left unregulated by statuteto fill in gaps left unregulated by statutebecause employment protection legislation because employment protection legislation has been drafted in reliance on contractual has been drafted in reliance on contractual definitionsdefinitionsthe role played by breach of contract in the the role played by breach of contract in the law of industrial actionlaw of industrial actionemployees still look to contractual employees still look to contractual remedies as a more effective form of job remedies as a more effective form of job protectionprotection

Contract Contract

1.Historical Origins of contract of employment1.Historical Origins of contract of employmentThe move from status to contract –and back to The move from status to contract –and back to ‘status’?‘status’?

2. Characteristics of the contract of employment2. Characteristics of the contract of employmentLaw v London ChronicleLaw v London Chronicle [1959] [1959]C - ConsiderationC - ConsiderationI - IntentionI - IntentionA - AcceptanceA - Acceptance0 - Offer0 - Offer

Definition of an employment Definition of an employment contractcontract

Who is an employee?Who is an employee?1. Statute: statutory definition:1. Statute: statutory definition:

S 230 ERAS 230 ERAS 295 TULR(c)AS 295 TULR(c)AAn employee means an individual who has An employee means an individual who has entered into or works under a contract of entered into or works under a contract of employmentemploymentContract of employment means a contract Contract of employment means a contract of service or apprenticeshipof service or apprenticeship

2.Definition in common law:2.Definition in common law:

Tests:Tests:Control Control IntegrationIntegrationEconomic RealityEconomic RealityMutuality of obligationsMutuality of obligationsMultiple testMultiple testContextual ApproachContextual ApproachLabel applied by the partiesLabel applied by the parties

TestsTests

1. Control: 1. Control: BramwellBramwell test: test: ‘ ‘a servant is a person who is a subject to a servant is a person who is a subject to

the command of his master as to the the command of his master as to the manner in which he shall do his job’. manner in which he shall do his job’. Yewens v. NoakesYewens v. Noakes 1880 1880

2. Integration Test2. Integration Test‘‘A person under a contract of service does A person under a contract of service does

his work as an integral part of the his work as an integral part of the business’. business’. Stevenson & JordanStevenson & Jordan 1952 1952

3. Economic Reality3. Economic Reality

Market Investigations LtdMarket Investigations Ltd v. v. Minister of Social SecurityMinister of Social Security

control will be important, but it is not the sole control will be important, but it is not the sole determining factordetermining factorother factors are whether the worker provides other factors are whether the worker provides his own equipmenthis own equipmentwhether he hires his own helperswhether he hires his own helperswhat degree of financial risk he takeswhat degree of financial risk he takeswhat degree of responsibility for investment and what degree of responsibility for investment and management he has, andmanagement he has, andwhether he could profit from what the judge whether he could profit from what the judge called ‘sound management’called ‘sound management’

4. Mutuality of Obligations4. Mutuality of Obligations

Cases: Cases: Nethermere Ltd v GardinerNethermere Ltd v Gardiner

O’ Kelly v Trusthouse ForteO’ Kelly v Trusthouse Forte

Necessity to show mutuality of obligationsNecessity to show mutuality of obligations

Important in relation to atypical workers: Important in relation to atypical workers: seasonal workers, casual workers, home seasonal workers, casual workers, home workers, catering workersworkers, catering workers

5. The Multiple Test5. The Multiple Test

Case Case Ready Mixed ConcreteReady Mixed Concrete Factors

To wear the company’s uniformTo wear the company’s uniformUse the lorries only on a company businessUse the lorries only on a company businessPlace them at the company’s disposal for a set number Place them at the company’s disposal for a set number of hoursof hoursObey the foreman’s ordersObey the foreman’s orders

Other factorsThey had to maintain their lorries and pay the running They had to maintain their lorries and pay the running costcostThey could own more than one lorry and hire substitute They could own more than one lorry and hire substitute drivers.drivers.They had no set hours of meal breaks They had no set hours of meal breaks They decided on routes and paid their own national They decided on routes and paid their own national insurance insurance

6. Contextual approach6. Contextual approach

Case Case Lane v. Shire Roofing Co (Oxford)Lane v. Shire Roofing Co (Oxford)

He fell off a ladder and suffered serious He fell off a ladder and suffered serious injuriesinjuries

A real public interest in recognising the A real public interest in recognising the employer/ employee relationshipemployer/ employee relationship

5.The label applied by the parties5.The label applied by the parties

Case Case Ferguson v Dawson & Partners Ferguson v Dawson & Partners (Contractors) Ltd(Contractors) Ltd

Case Case Massey v Crown Life Assurance CoMassey v Crown Life Assurance Co

IllegalityIllegality

Principle: Principle: ex turpi causa non oritur actioex turpi causa non oritur actio

action is not available on an illegal contractaction is not available on an illegal contract

Case Case Tomlinson v Dick Evans ‘U’ Drive LtdTomlinson v Dick Evans ‘U’ Drive Ltd

Case Case Salveson v SimonsSalveson v Simons

Case Case Leighton v MichaelLeighton v Michael

SOURCES OF CONTRACTUAL SOURCES OF CONTRACTUAL TERMSTERMS

How far does the law recognise the How far does the law recognise the normative effect of the different sources?normative effect of the different sources?

How does the law deal with conflicts How does the law deal with conflicts between different sources?between different sources?

SOURCES OF CONTRACTUAL SOURCES OF CONTRACTUAL TERMSTERMS

Express terms (letter of appointment, Express terms (letter of appointment, items in a staff book)items in a staff book)

Imposed terms (minimum notice, tax, Imposed terms (minimum notice, tax, insurance, pension contribution)insurance, pension contribution)

Implied terms (duty of cooperation)Implied terms (duty of cooperation)

Terms incorporated from collective Terms incorporated from collective agreementsagreements

SOURCES OF CONTRACTUAL SOURCES OF CONTRACTUAL TERMS: IMPLIED TERMSTERMS: IMPLIED TERMS

at common law, employees owe their employer a at common law, employees owe their employer a duty to:duty to:obey lawful orders and instructionsobey lawful orders and instructionsco-operate with their employer and be adaptableco-operate with their employer and be adaptableexercise reasonable care and skillexercise reasonable care and skillserve the employer faithfully and honestly, andserve the employer faithfully and honestly, andmaintain the relationship of mutual trust and maintain the relationship of mutual trust and confidenceconfidence

in turn, employers have an obligation to:in turn, employers have an obligation to:pay wages for work performed, or for which the pay wages for work performed, or for which the employee is ready to performemployee is ready to performprovide work provide work take reasonable care for the safety of the employee, take reasonable care for the safety of the employee, andandmaintain the relationship of mutual trust and maintain the relationship of mutual trust and confidenceconfidence

Duty of the employerDuty of the employer

Duty to provide a safe workplace is onerous.Duty to provide a safe workplace is onerous. Wilsons & Clyde Coal Co. Ltd.Wilsons & Clyde Coal Co. Ltd. v. v. English English [1938] AC 57.[1938] AC 57. Waltons & MorseWaltons & Morse v. v. DorringtonDorrington [1997] IRLR 488. [1997] IRLR 488.

Workplace stress has become an enormous issue for employers:Workplace stress has become an enormous issue for employers: Intel CorporationIntel Corporation v. v. DawDaw [2007] IRLR 355. [2007] IRLR 355. MajrowskiMajrowski v. v. Guy’s and St. Thomas’s NHS TrustsGuy’s and St. Thomas’s NHS Trusts [2006] IRLR 695. [2006] IRLR 695. DickinsDickins v. v. O2 plcO2 plc [2008] EWCA Civ 1144; [2009] I.R.L.R. 58. [2008] EWCA Civ 1144; [2009] I.R.L.R. 58. ConnorConnor v. v. Surrey County CouncilSurrey County Council [2010] EWCA Civ 286; [2010] 3 All E.R. [2010] EWCA Civ 286; [2010] 3 All E.R.

905.905. VeakinsVeakins v. v. Kier Islington Ltd.Kier Islington Ltd. [2009] EWCA Civ 1288; [2010] I.R.L.R. 132. [2009] EWCA Civ 1288; [2010] I.R.L.R. 132.

Provision of references is not free of risk:Provision of references is not free of risk: SpringSpring v. v. Guardian Assurance Plc.Guardian Assurance Plc. [1994] IRLR 460. [1994] IRLR 460. BartholomewBartholomew v. v. London Borough of HackneyLondon Borough of Hackney [1999] IRLR 246. [1999] IRLR 246. McKieMcKie v. v. Swindon CollegeSwindon College [2011] EWHC (QB) 469; [2011] IRLR 575. [2011] EWHC (QB) 469; [2011] IRLR 575.

Duty of the employeeDuty of the employee

Duty of co-operation and adaptation:Duty of co-operation and adaptation: Secretary of State for EmploymentSecretary of State for Employment v. v. ASLEF (No. 2)ASLEF (No. 2)

[1972] 2 QB 455.[1972] 2 QB 455. SimSim v. v. Rotherham MBCRotherham MBC [1987] Ch. 216. [1987] Ch. 216. TicehurstTicehurst v. v. British Telecommunications Plc.British Telecommunications Plc. [1992] IRLR [1992] IRLR

219.219. CresswellCresswell v. v. Board of the Inland RevenueBoard of the Inland Revenue [1984] IRLR [1984] IRLR

190.190.

Employee’s corollary of mutual trust and Employee’s corollary of mutual trust and confidence?confidence?Complicated by potential for rule books etc. to Complicated by potential for rule books etc. to become part of the contract of employment?become part of the contract of employment?

Duty of the employeeDuty of the employee

Duty of care:Duty of care: ListerLister v. v. Romford Ice & Cold Storage Ltd.Romford Ice & Cold Storage Ltd. [1957] AC [1957] AC

555.555. JonesJones v. v. Manchester CorporationManchester Corporation [1952] 2 QB 852. [1952] 2 QB 852.

Duty of fidelity:Duty of fidelity: Employees generally NOT fiduciaries.Employees generally NOT fiduciaries. Obligations on employees are not generally strict – Obligations on employees are not generally strict –

seldom will the law condone heavy restrictions on seldom will the law condone heavy restrictions on employees’ activities.employees’ activities.

Many complex IP and trusts law issues can arise.Many complex IP and trusts law issues can arise.

Incorporation of Terms from Incorporation of Terms from Collective AgreementsCollective Agreements

Section 179 of TULRCA 1992: the collective Section 179 of TULRCA 1992: the collective agreement is presumed ‘agreement is presumed ‘not to have been not to have been intended by the parties to be a legally intended by the parties to be a legally enforceable contractenforceable contract’.’.

Two functions of Collective AgreementsTwo functions of Collective Agreements

A) A) procedural:procedural: regulating relations between regulating relations between employer and Trade Unionsemployer and Trade Unions

B) normative (B) normative (substantivesubstantive) regulating the terms ) regulating the terms of employment contract (hours of work, pay)of employment contract (hours of work, pay)

Collective AgreementsCollective Agreements

How terms of collective agreements can How terms of collective agreements can have legal effect in employment contract?have legal effect in employment contract?

Express and Implied IncorporationExpress and Implied Incorporation

sufficient contractual intention (express)sufficient contractual intention (express)

Sufficient evidence (implied)Sufficient evidence (implied)

Collective AgreementsCollective Agreements

What is the position of employees who are What is the position of employees who are not members of the Trade Union?not members of the Trade Union?

In practice, the terms and conditions In practice, the terms and conditions contained in collective agreements are contained in collective agreements are normally applied uniformly across the normally applied uniformly across the entire workforce, to members and not entire workforce, to members and not members alike.members alike.

Collective agreements.Collective agreements.

Less prevalence than in earlier decades.Less prevalence than in earlier decades. Still important in some industries and the public sector.Still important in some industries and the public sector. Can have huge significance in some redundancy cases.Can have huge significance in some redundancy cases. Have created some uncertainty.Have created some uncertainty.

Trade Union and Labour Relations (Consolidation) Act Trade Union and Labour Relations (Consolidation) Act 1992, s. 179(1):1992, s. 179(1):

A collective agreement shall be conclusively presumed not to A collective agreement shall be conclusively presumed not to have been intended have been intended by the partiesby the parties to be a legally enforceable to be a legally enforceable contract unless the agreement—contract unless the agreement—

(a) is in writing, and(a) is in writing, and(b) contains a provision which (however expressed) (b) contains a provision which (however expressed)

states states that the parties intend that the agreement shall be a that the parties intend that the agreement shall be a legally enforceable contract.legally enforceable contract.