Commencement of the employment relationship
Do I need to have written employment contract?
There is no legal obligation to have an employment contract agreed in writing (although it is best practice to do so to avoid any dispute about terms). However, employers are obliged to provide employees with a written statement of certain terms of employment. The requirements for this are set out in section 1 of the Employment Rights Act 1996 and include, among other things, details of pay, hours, holidays, notice period and, disciplinary and grievance procedures. Currently, this written statement must be given to employees no later than 2 months after their employment begins and only where employment is to continue for more than 1 month. However, from 6 April 2020 there'll be no minimum service requirement and it will need to be given to employees AND other workers on or before their first day of employment.
Can we use fixed term contracts?
These are permissible in the United Kingdom, but fixed-term contracts of four years or more will automatically become permanent contracts unless the employer has an objective reason for it not to. Therefore such contracts should be kept under review.
An employer must also bear in mind the following:
- UK employment law states that employers must not treat employees on a fixed-term contract less favourably than permanent employees that do the same or a broadly similar job.
- The failure to renew a fixed term contract amounts to a dismissal under UK employment law and therefore the fairness of the non-renewal dismissal must be carefully considered.
Can I ask a potential employee about their health?
You cannot ask about an applicants’ health before you offer them a job unless:
- You need to find out if an applicant can carry out a function that is essential to the role.
- You want to take 'positive action' to assist applicants with disabilities.
- It is for monitoring purposes so that you know the diversity of candidates. This is generally done without revealing an applicant's identity and should not be included as part of a selection process or to assist with decisions.
- To check a candidate has a specific disability where having one is a genuine requirement of the job.
- To establish whether they need any special arrangements for the interview or assessment process due to a disability.
Once you have offered the candidate a job you can ask questions about their health but must make sure that any decisions made subsequently are not discriminatory based on a disability that may be disclosed.
During the employment relationship
Are there any requirements regarding pay?
All workers aged over the compulsory school leaving age (16 years old) must be paid the National Minimum Wage (“NMW”). There are different rates for different aged workers, and there are complicated rules which govern how the NMW is calculated. NMW is reviewed annually and normally increased in April.
Men and women also have the right to be paid the same rate of pay for the same, or equivalent, work. Where they are paid at different rates, an employee can bring an equal pay claim.
There are also provisions (applying from day one of employment) relating to payment of a minimum level of statutory sick pay in the event of sickness absence.
What are an employee's rights in respect of annual leave?
In the United Kingdom all workers are entitled to a minimum of 5.6 weeks pa (28 days for someone working 5 days per week) which can include the usual bank and public holidays. There is no right to carry forward unused holiday to the new holiday year unless the worker has been unable to take leave due to sickness or maternity or shared parental leave. Carry over of annual leave in excess of 5.6 weeks is permitted if the contract expressly permits this. Payment in lieu of accrued but untaken holiday is not permitted except on termination of employment.
Do I have to provide any rest breaks?
Most workers are entitled to minimum daily and weekly rest periods of 11 hours rest a day and the right to one day off per week. Rest breaks at work of at least 20 minutes must be given for six hours’ work.
There is also a limit on the average number of weekly working hours a worker can do (48 hours average per week). Individuals can opt out of this limit, but the agreement has to be made in writing and must allow the worker to withdraw their agreement to opt out.
What do I need to know about discrimination?
Employees and others have the right not to be discriminated against or harassed because of age, disability, gender-reassignment, marriage or civil partner status, pregnancy/maternity, race, religion/belief, sex and sexual orientation. These are known as ‘protected characteristics’ and employees are protected from the job application stage onwards, including post termination.
Any award for discrimination is made up of a compensatory award for past and future financial loss (uncapped) and an injury to feelings award depending on the seriousness of the case.
There are also significant provisions to allow for maternity leave and maternity pay, shared parental leave, paternity leave and other family leave rights which employers need to be aware of.
Are there any rules on a business transfer?
The Transfer of Undertakings (Protection of Employment) Regulations 2006 (known as ‘TUPE’) derive from EU law (so all EU countries have similar TUPE related requirements) and apply to employees when either:
- A business or part of a business is sold as a going concern;
- There is a change of identity in an entity providing a service (e.g. outsourcing, changing service provider or brining a service back in-house).
The effect of TUPE is that all employees assigned to the economic entity or activity will transfer to the new employer together with the rights, powers, duties and liabilities under their employment contracts. There is no right to change terms and conditions because of a transfer unless it is for a specified economic, technical or organisational reason.
Ending the employment relationship
Can I terminate an employee’s employment?
Before an employee has two years’ continuous service with an employer, their employment can be terminated as long as it is not discriminatory and is not connected to an employee whistleblowing or related to health and safety or trade union activities. However, once an employee has two years’ service they qualify for ‘unfair dismissal’ protection and it will be unfair to terminate their employment unless it is for one of the following potentially fair reasons:
- Incapability (performance or illness)
- Some other substantial reason (SOSR).
An employer’s decision to dismiss must also satisfy a general test of fairness, which includes following a fair procedure.
How much notice must I give an employee to terminate their employment contract?
Unless an employee has committed gross misconduct, an employee must be given a reasonable period of notice, but as a minimum 1 week for every completed year of service up to a maximum of 12 weeks. An employer can agree longer periods of notice in the employment contract.
An employee terminating the relationship must give their employee a minimum of 1 week’s notice, but, again, longer notice periods can be agreed in the contract.
In certain circumstances where an employee is considered to have done something so serious that it destroys the very heart of the employment relationship (known as ‘gross misconduct’), an employer can terminate without giving the employee any notice. An example would be serious physical violence in the workplace or fraud. Note that a fair process would still need to be followed.
What is a constructive unfair dismissal?
This is where an employee resigns in circumstances where he or she is entitled to treat the contract as brought to an end by a fundamental breach of contract on the part of the employer. For example if the employer varies a material term of the employment contract without consent or does something which seriously breaches the implied term of trust and confidence.
What is wrongful dismissal?
If an employee is dismissed without the notice they are entitled to they can claim damages equivalent to the loss.
Can I retire an employee at a particular age?
It is no longer possible to ‘retire’ an employee as this will amount to age discrimination unless it can be objectively justified (it is difficult to rely on this). Instead, employers will have to consider capability grounds for dismissal on a case by case basis.
Are post termination restrictions enforceable?
It is possible to apply to the High Court for an injunction to enforce restrictions expressly set out and agreed in a contract of employment where there is a legitimate business interest to protect and the restrictions have been carefully drafted and are relevant, applicable and not wider than is necessary to protect the business interests. Legal advice should always be sought without delay in situations where restrictions and post termination confidentiality is important.
What is the Modern Slavery Act 2015 and must we comply?
The Modern Slavery Act 2015 (the ‘Act’) places an obligation on organisations with a turnover of £36 million or over (which are either incorporated in the UK or carry on a business in the UK) to ensure that their business, and the supply chains used by the business, are free from modern slavery.
Such businesses must produce an annual "modern slavery statement" in each annual report setting out the steps that they have taken to ensure that slavery and human trafficking are not taking place in their own business or supply chain.
The Act has encouraged many businesses to address their commitment to corporate social responsibility and brand protection, both in their workplace and supply chains. Organisations are advised to know their business and to map out their supply chains to understand where labour is sourced. Particular consideration should be given to any risky areas to the business - such as contracting with businesses in geographical areas with a statistical high level of slavery; sectors where there is much low-paid unskilled labour; and where there is a high use of unfamiliar agency providers.
Some examples of international employment work include:
- Advising several Dutch clients re: their UK workforces (e.g. a Dutch employer how to performance manage and ultimately dismiss an under-performing UK sales manager).
- Drafting terms and conditions for UK employees of numerous Dutch employers, ranging from junior employees to director level appointments.
- Advising a Dutch oil and gas company on TUPE relating to two takeovers and the subsequent restructure (some redundancies) and harmonisation of some terms and conditions.
- Advising whether the law of England and Wales would apply to a UK based employee of a Dutch employer whose time was split across the client’s European business, but who lived and predominantly worked in England.
- Advising on a contract for a UK sales agent, who worked on a pan-European basis.
- Advising another oil and gas supply group headquartered in the UK but with bases all over the world on many and various issues relating to their internationally based workforce.