Contracts of employment
Employment law – Contracts of employment
Does a Contract of Employment have to be in writing?
A contract of employment does not need to be in writing. It can be verbal or written. An employee is, however, entitled at the very least to a “written statement of particulars” of the terms of employment after being employed for 2 months, assuming there is no contract of employment. The written statement of particulars is not a contract as such, but what it needs to set out includes the following;
- your job title;
- commencement of employment;
- hours of work;
- place of work.
A written statement does not need to include the following (although it does need to state where these can be found);
- sick pay and procedures;
- disciplinary process;
- grievance procedure.
If no written statement of particulars has been provided the employee may apply to the Employment Tribunal who will determine what those particulars should be.
Can your employer change the terms of your employment contract?
It is difficult for an employer to change the terms of employment without your consent. Such consent may be verbal or in writing, or may even be implied from the fact that you continued to work on the new terms for a significant period of time whilst being aware of the change that has taken place.
In some contracts, your employer may have expressly reserved the right to unilaterally vary the terms of the contract. The courts have indicated that a strict and narrow approach should be taken in the interpretation of such provision. The contract should therefore provide the power to unilaterally alter the terms of the contract in clear and unambiguous words. As long as this is the case, your employer would then lay themselves open to a breach of contract claim if it sought to vary or introduce new terms which would affect your fundamental rights under your contract.
If your employer, for example, sought to reduce your pay or insisted that you took on an alternative job role or responsibilities that was not within the remit of your contract, this can give rise to a claim for constructive dismissal. Such a claim is only likely to be successful if you can show that the changes to your contract were significant and fundamental to your contract.
If you do not accept the new change of terms, your employer may decide to dismiss you and offer the employment again on completely new terms. There is a big risk here, however, because your employer would be laying itself open to a claim for breach of contract or unfair dismissal (especially where the correct procedure has not been followed).
There is, however, a flip side. You would be under a duty to mitigate your loss of earnings, and so whilst your employer may be initially in breach of contract, your refusal to accept a new contract may not entitle you to much in the way of damages if it is clear you have acted unreasonably.
Can you stay and work under protest where the terms of your contract are changed?
Yes, this is possible. If you work under protest you can either:
- work under the new terms, but make it clear to your employer (for example via the grievance process) that you do not agree to the change whilst making a claim for breach of contract. The court or tribunal will need to consider whether your employer is in breach and may award you damages that you have suffered as a result of the breach of contract. Understandably, this is not a great position to be in (suing your employer whilst still working there!)
- bring a claim for unlawful deduction from wages if the change results in a reduction in your wages. Again you must inform your employer that you do not agree to the changes or that you are agreeing under protest.
Are you entitled to be paid for overtime?
Overtime is usually those hours that are worked above the hours set out in your contract of employment. Overtime can be voluntary or compulsory. Compulsory overtime would form part of the terms and conditions of your employment.
There is no legal right to be paid extra for any overtime worked, unless this is set out in your contact, or by separate agreement. In many senior positions, it is not unusual to find a clause which says you “are expected to work an additional hours that is necessary for the proper performance of your duties”.
Are there examples of any breaches of contract by an employer, other than varying the terms of a contract of employment?
There is what is known as “mutual trust and confidence” between employee and employer implied into every contract of employment. An employer by its conduct may cause a number of breaches of this trust and confidence, which could give rise to a claim for constructive dismissal. These include:
- Non-payment of salary or benefits;
- Harassment/abuse of an employee;
- Non-consultation with an employee over relocation.
An employee’s remedies
If your employer is in breach of contract, your can claim damages against your employer. You can do this whilst remaining in employment. Alternatively, if the breach is fundamental to your contractual rights, you may consider that you have effectively been dismissed and put in a claim for damages for wrongful dismissal. Alternatively, you may be entitled to resign and claim constructive dismissal.
Am I still entitled to be paid when my employer decided to close its business for a short period because of refurbishment, flooding or any other reason?
Unless there is a contractual right to ask you not to come into work or receive pay during this period, or you expressly consent to this, then you will be entitled to receive your normal pay for the period that you would have worked. If your employer fails to pay, then you are entitled to make a claim for unauthorised deductions from wages, or claim constructive dismissal (if you were to resign as a result of the non-payment) on the ground that there has been a fundamental breach of the contract of employment.
Even where your contract of employment contains an express contractual right for to impose a period of lay-off without pay, or if you consent to a this, you may be entitled to a statutory guarantee payment for any complete day of lay-off. Guarantee payments are limited to a maximum of 5 days’ payment in any three-month period. The amount of guarantee payment per day is based on the employee’s normal daily rate of pay, but subject to a statutory maximum. The present maximum is £28 a day, so it will amount to a maximum of £140 (5 days payment for the 3 month period). If you usually earn less than £28 a day, then the statutory payment will be your normal daily rate, and if you work part-time, your entitlement is worked out proportionally.
Can I still be paid if my employer sends me home, because there is not enough work?
Your employer may decide to ask you to stay at home or take unpaid leave if there’s not enough work for you or they are facing financial difficulties. You would still be entitled to receive your full pay and benefits, unless your contract of employment provided otherwise (or a union has negotiated a temporary change to your pay). Your employer would be in breach of contract if they laid you off without pay and the contract does not allow for this.
The guarantees rates of pay mentioned above, would also apply in these circumstances.
You are able to apply for redundancy and claim redundancy pay if you have been laid off for 4 weeks in a row or 6 weeks in a 13-week period, and there are specific processes and timelines for you to do so.
Can I be forced to repay my training fees if I give notice to leave in breach of the training agreement?
The basic position is that employers are unable to recoup training costs from employees unless there is an express right to do so in the employment contract or the employee has consented in writing. This would need to be agreed before the training started. If there is an express written agreement, whether the employer can recoup training costs will depend on the wording of the clause and the specific circumstances of the case.
A training costs recovery clause will not be enforceable if it acts as a ‘penalty clause’. A penalty clause is one which imposes a disproportionate punishment on one party, i.e. it goes further than simply compensating your employer for genuine loss to the business caused by your early departure. For example, this might be the case if you resigned right at the end of the three year period but were still charged 100% of the training costs, despite the fact that your employer has already received substantial benefit from the training you have received.
It is also important to consider whether the clause acts in ‘restraint of trade’. This is the case where the true purpose of the clause is to prevent the employee working for a competitor, rather than to compensate the employer for genuine training costs when it is no longer receiving the benefit of the training through the employee’s work. It can, however, be very difficult to prove that such a clause is in restraint of trade.
A clause is also more likely to be unenforceable if it is disproportionate. This would apply, for example, if the period of time you have to stay to avoid repaying anything is disproportionately long compared to the importance and the cost of the training, or if there is no ‘sliding scale’ for repayment during that period. A sliding scale might involve having to pay back 100% of the training costs if you leave within a year, 60% if you leave within 2 years and 30% if you leave within 3 years. However, the enforceability of such a clause would still depend on the specific wording and the specific circumstances of your case.
Employee or self-employed status
You may have full protection under UK employment law, even though your relationship is expressed to be self employed or a consultancy.
In the first instance, you should always look behind the actual contractual documentation as it does not always reflect the reality of the relationship in practice. Just because a written agreement may state “consultancy” doesn’t meant that person will not have protection under employment law as an employee. Similarly, just because you may be registered as self- employed for tax reasons, the tribunals will look behind this and determine the true position.
The more a person is treated in the same way as an employee, the more likely it is that he will gain employee status. These include:
- Whether you are paid through the payroll or on the production of invoices;
- How uniform the payments are that you receive;
- If your services are provided directly or through a limited company;
- What amount of control you have over when and how you work;
- If you are able to provide a substitute for any periods that you are unable to work;
- Whether you are using your own equipment and tools, rather than being reliant on equipment from those who you are providing services too;
- If you have a company email address, business cards, and are being “held out” as a full time permanent member of staff;
- Whether you are receiving holiday and/or sick pay.
- If there a mutuality of obligation- namely, for you to be provided with work by the other party, and then actually having to perform that work (rather than being able to turn it down).
This is a grey area and every case will be determined on its facts.
Successive renewal of fixed- term contracts.
Under Regulation 8 of the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002, if you have been employed on successive fixed term contracts for over four years, your employment will become permanent, and the continuous renewals will have no effect (unless they can be objectively justified).
Please click here to go to the Fixed- term contracts page for more information about your rights where you have this type of contract with your employer.
Being paid for your travel time to work
If you are working for an employer without a fixed or regular place of work, you could be entitled to more pay or a reduction in hours after a European Court of Justice ruling yesterday. The new ruling means that time spent travelling to and from first and last appointments by workers without a fixed office should be regarded as working time. This is mainly going to affect companies who employ staff whose primary duties are to carry out customer or client visits such as care workers, gas fitters, plumbers and sales representatives.
We can review your contract of employment to service agreement, and advise you on what it all means. We can offer a fixed price for this review. Please click here to access our contract review page.