Charles Avens Employment Solicitor Druces LLP www.druces.com

Introduction Practising solicitor / Non-practising barrister in the Druces’ Employment Group Specialise in all aspects of employment law and HR related matters Area of particular interest- advising companies on their internal policies and procedures and acting in an advisory capacity to both HR departments and professionals. Aim of speech is to provide you with an overview of some of the key employment facts Employee = Company’s most important resource? Growth of complex rules and regulations + employee’s knowing their rights www.druces.com

There are three types of employment status: Employee Worker Self-Employed www.druces.com

Employee What is an employee? Basic definition- “An individual who has entered into or works under a contract of employment”. An Employee works under a ‘contract of service’ which is different from an individual who is self-employed (e.g. contractor) who works under a “contract for services”. How do you prove your an employee? (Mutuality of Obligation / Control) The tests of employment status: The Control Test The Integration or Organisational Test The Multiple Factor / Economic Reality Test www.druces.com

The Employment Contract The Employment Contract is the key document between the Employer and the Employee and sets out the core terms between the two parties. A binding contract can be made either orally or in writing (though as an employer you have a duty under s.1 of the Employment Rights Act 1996 to provide an employee with written terms within 2 months of the employee starting work- there is a penalty of between 2 - 4 weeks salary for failing to provide an employee with written terms). The written particulars should at the very least contain 9 key terms. Outside of these 9 key terms, not all the terms of the contract need to be expressed in writing, some can be implied. Express terms take precedence over implied terms owing to the fact that an express term reflects what the parties have actually agreed, whereas an implied term reflects what the parties are taken to have agreed or would have agreed if they had put their minds to the matter. www.druces.com

The Key ‘Express’ Terms The Employment Contract does not have to be a long and complex document, its length and complexity is dependent on each individual situation but all employment contracts no matter how simple or complex must contain the following information: names of the employer and employee date when employment began date on which the employee’s continuous employment began scale or rate of remuneration or the method of calculating the remuneration intervals at which remuneration is paid, that is, weekly, monthly or other specified intervals terms and conditions relating to hours of work (max 48 hours per week unless the employee has agreed to opt out), including any terms and conditions relating to normal working hours terms and conditions relating to entitlement to holidays, including public holidays and holiday pay, in such a manner as to allow them to be precisely calculated job title or a brief description of the type of work the employee is employed to do place of work or an indication that an employee is required or permitted to work at various locations. www.druces.com

The term is so obvious that the parties must have intended it. Implied Terms It is unusual (and perhaps impossible) for the employer to specify in the employment contract, all the terms of the contract when it is made. Employment contracts will, therefore, normally be made up of both express and implied terms. A Court will not imply a term simply because it is reasonable. A Court will only imply a term if it can presume it would have been the intention of the parties to include it in the agreement. In order to make such a presumption a Court must be satisfied of the following: The term is necessary in order to give the contract business efficacy (i.e. workable). It is normal custom and practice to include such a term in a contract of that particular kind. An intention to include the term is demonstrated by the way in which the contract has been performed. The term is so obvious that the parties must have intended it. www.druces.com

Employer’s / Employee’s Implied Obligations Employer’s implied obligations: Duty to pay agreed wages Duty to provide work Duty to provide reasonable support Duty to provide a safe system of work and a safe workplace Duty to provide a suitable working environment Employee’s implied obligations: Duty to render faithful service Duty to obey lawful and reasonable orders Duty to exercise reasonable care and skill The employment relationship produces an implied obligation of mutual trust and confidence between both the employer and the employee. www.druces.com

Additional Employment documentation In addition to the employment contract, it is advisable to have a staff handbook that contains all of your business’s policies and procedures. A staff handbook normally contains the following: Equal Opportunities, Equality and Diversity Anti-harassment and bullying Disciplinary and Grievance Maternity, Paternity & Adoption Leave Parental Rights Dependants and Special Leave Flexible Working Whistleblowing / Protected Disclosures Health & Safety Attire & Code of Conduct Electronic Information and Communications Systems Data Protection Bribery / Anti-Corruption www.druces.com

Employee’s Statutory Rights Unlike a worker and the self-employed, an employee is afforded a number of key statutory rights that are exclusive to the employer / employee relationship. Some of those key statutory rights are as follows: The Right to written particulars The Right not to be unfairly dismissed The Right to written reasons for dismissal The Right to a statutory minimum notice period Protection on the transfer of undertakings The Right to statutory sick pay The Right to Statutory maternity, paternity and adoption leave and pay The Right to statutory redundancy pay The Right to parental leave The Right to request flexible working Vicarious liability of the Employer for the Employee’s tortious acts www.druces.com

Right not to be Unfairly Dismissed Unfair dismissal Right not to be Unfairly Dismissed One of the key statutory rights that an individual gains by becoming an employee is the right not to be unfairly dismissed. Since April 2012 Employees accrue this right after 2 year’s continuous employment. Until an employee has worked for your business for a minimum of 2 full years, an employee cannot bring a claim for unfair dismissal. This is NOT the case with discrimination. An employee can bring a discrimination claim on the grounds of race, sex, sexual orientation, gender reassignment, disability, religion and belief, age, marital status, pregnancy and maternity from day 1 of the employment relationship. Note- unfair dismissal and wrongful dismissal are NOT the same- unfair dismissal = breach of a statutory right / wrongful dismissal = breach of a contractual right www.druces.com

Unfair dismissal continued After 2 years service the employer has only 5 gateways by which an employee can be fairly dismissed, which are as follows: Conduct Capability Redundancy The continued employment of an Employee in their position contravenes an act of law or parliament Some other substantial reason (SOSR) (this normally involves the re-organisation / re-structuring of a business) Retirement used to be the 6th gateway but since April 2011, the default retirement age of 65 has now been abolished, making it illegal to try and force an employee to retire at 65 unless retirement of that employee would be a ‘proportionate means of achieving a legitimate aim.’ www.druces.com

are an apprentice. The current rates (from 1 October 2012) are: National Minimum Wage There are different levels of NMW, depending on the employee’s age and whether they are an apprentice. The current rates (from 1 October 2012) are: £6.19 - the main rate for workers aged 21 and over.  £4.98 - the 18-20 rate. £3.68 - the 16-17 rate for workers above school leaving age but under 18. £2.65 - the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship. Redundancy Pay An employee only accrues the right to redundancy pay when they have worked for their employer for a minimum of two years continuous service. Age Factor X Length of Service X Statutory Weekly Gross Pay (Capped at £430) www.druces.com

Right to a Statutory Minimum Notice Period Notice Period / Pay Right to a Statutory Minimum Notice Period In regard to dismissal, before 2 years continuous service an employee can be dismissed by the employer by giving the employee notice. Under s.86 of the Employment Rights Act 1996, an employee who has worked for an employer for less than 1 month is not entitled to any notice. But after 1 months’ service an employee is entitled to a minimum of 1 week’s notice, which accrues by an extra week for each completed year of service up to a maximum of 12 weeks notice. (2 years completed service = 2 weeks notice). Pay in Lieu of Notice (PILON) This is a clause that can be specifically drafted into the employment contract and means that the employer can pay the employee for their notice rather than the employee work their notice period out. www.druces.com

Right to Statutory Sick Pay Statutory sick pay is where the employer pays the basic minimum wage of £85.85 per week (as set by the government) when an employee if off work on sick leave. An employer can decide if it is going to pay staff contractual sick pay or solely statutory sick pay.   Contractual sick pay is where you agree under the terms of the employee’s employment contract to pay the employee an enhanced level of sick pay if they are off sick for a designated number of days or weeks in a year. Holiday and Sick Leave Entitlement to statutory holiday during sick leave- workers on long-term sick leave can take holiday and be paid for it whether or not they have exhausted their right to statutory and/or contractual sick pay. www.druces.com

Statutory Maternity Leave Annual Leave An employee is entitled to a statutory minimum of 28 days annual leave, inclusive of 8 statutory bank holidays. (20 days paid leave + 8 paid bank holidays). An employer can request an employee works on a bank holiday, as long as the employer provides an alternative day off in lieu. Statutory Maternity Leave A pregnant female employee has the right to 52 weeks maternity leave, which is split into 26 weeks Ordinary Maternity Leave (OML) and 26 weeks Additional Maternity Leave. (A female employee is not legally allowed to work for 2 weeks after childbirth). The earliest date a pregnant female employee can start OML is the 11th week before the Expected Week of Childbirth (EWC) unless the child is born early. The employee must notify the employer at least 15 weeks before the EWC that she is (1.)pregnant (MATB1 Certificate) and (2.) the date when she wishes to start OML. www.druces.com

Statutory Maternity Pay A female employee needs 26 weeks service with her employer before she is entitled to qualify for SMP. (If the employee does not qualify she may be able to make a claim for Maternity Allowance (MA).) SMP is paid for the first 6 weeks at 90% of the employee’s average gross weekly earnings with no upper limit. SMP is then paid for the following 33 weeks at the lower of either the standard rate of £135.45 per week or 90% of the employee’s average gross weekly earnings. The final 13 weeks of maternity leave are unpaid. SMP stops being paid if the employee returns to work beyond her designated 10 (KIT) days. www.druces.com

Statutory Paternity Leave A male employee, whose partner gives birth is entitled to two weeks paternity leave, which must be taken and must finish within 56 days of the baby’s birth. A male employee needs 26 weeks service with his employer before he is entitled to qualify for Ordinary Paternity Leave (OPL). The Employee must also be intending to take time-off to support the mother/ carer for the baby and intend to be fully involved in the child’s upbringing. (OPL is extra to the normal holiday allowance). The Employee must be the child’s biological father, the mother’s husband or partner, the child’s adopter or the husband or partner of the child’s adopter and have notified the employer, when the baby is due and when he would like his OPL to start, at least 15 weeks before the EWC. The employee may also qualify for Additional Paternity Leave (APL), which is for a maximum of 26 weeks, which can be taken between 20 weeks and 1 year after the child is born. www.druces.com

Statutory Paternity Pay To qualify for SPP: The Employee must be the biological father or adopter of the child or be the mother's (or adopter's) husband, partner or civil partner or have or expect to have responsibility for the child's upbringing. The Employee must have continued to work for the same employer without a break for at least 26 weeks by the 15th week before the baby is due. The Employee must continue to work for that employer without a break up to the date the child is born. The Employee must be earning an average of at least £107 a week (before tax). If the employee qualifies, ordinary SSP is paid for one or two consecutive weeks at £135.45 or 90 per cent of the employee’s average weekly earnings if this is less. www.druces.com

Examples of specific categories of worker: A worker is not afforded the same level of rights as an employee but they are entitled to certain rights such as the national minimum wage, protection from unlawful deduction from wages, limits on working time (max 48 hours per week), health & safety rights, paid holiday and the right not to be discriminated against. A worker can become an employee but this is dependent on the level of control that exists between the employer and the worker. Temporary workers are not employees if they are free, without penalty, to accept or reject any offer of employment made to them. Examples of specific categories of worker: Casual worker, agency worker, homeworker, secondees, volunteers, trainees, apprentices www.druces.com

Working pattern This is different from the employment status (employee, worker or self-employed). The working pattern of the ‘employee’ or ‘worker’ can be one of the following: full-time part-time fixed-term contractor consultant casual zero hours seasonal agency or 'temp' volunteer www.druces.com

Agency Worker or ‘Temps’ An individual is likely to be a agency worker if: they undertake work for a business (or multiple businesses) through a recruitment agency their contract with the recruitment agency states that they are not their employee their contract with the recruitment agency does not guarantee that they will find them work they can decide whether or not to accept or refuse work the employment agency pays their wages and deducts tax and National Insurance the employment agency pays them when they are on holiday or pays them in lieu of accrued holiday at the end of their contract they can leave the employment agency or a particular assignment giving little or no notice the hirer (eg the end user business you work for) can terminate an assignment giving little or no notice they have signed on the books of several employment agencies they work on a variety of assignments through the year for different companies The lack of day-to-day control by the agency whilst the individual is on assignment usually prevents the individual from being the agency’s employee. Equally, the individual is not an employee of the business they work for, because there is no obligation to offer or accept work. www.druces.com

Casual Worker or Irregular Worker An individual is likely to be a casual worker if: they occasionally undertake work for a particular company or business the company has no obligation to offer them work and they do not have to accept it - they only accept work when they are able to or willing to if they do accept work, their contract describes the relationship as 'casual', 'freelance', 'zero hours', 'as required' or similar they had to sign the company's standard terms and conditions in order to get the work whilst at work, they are under the supervision or control of a company manager or director they are expected to perform the work themselves the company deducts tax and National Insurance contributions from their wages the company provides any tools, equipment or materials that they need to undertake their work The lack of any obligation to offer or accept work may prevent the individual from being an employee. The issue is fact sensitive and up to a Court/Tribunal to decide based upon the facts. The less control the more likely the individual is a worker. www.druces.com

As a part-time worker they have the right to: Part-time Employee Part-time employees have the same statutory employment rights as any other employee. They do not have to work a minimum number of hours to qualify for employment rights. As a part-time worker they have the right to: receive the same rights of pay as full-time employees not be excluded from training simply because they work part-time receive holiday entitlement pro rata to comparable full-time workers have any career break schemes, contractual and parental leave made available to them in the same way as for full-time workers not be treated less favourably when workers are selected for redundancy www.druces.com

Fixed-Term Contracts Fixed term contracts are automatically converted to contracts of indefinite length after four years. The completion of a limited-term or task contract counts as dismissal for unfair dismissal purposes. The expiry of a fixed term employment contract without renewal is deemed to be dismissal rather than simply the coming to the end of the contract "by performance". The effect is that employers cannot escape from liability to pay unfair dismissal compensation or statutory redundancy pay by employing staff on fixed term contracts which are simply not renewed when the employee is no longer wanted. It is unlawful for an employer to treat a fixed-term employee less favourably than he treats a comparable permanent employee unless the treatment is objectively justified. A fixed term employee who considers he is being treated unfairly can require his employer to provide a written statement setting out the reasons for the treatment complained of ( The request must be in writing and the Employer must reply in writing within 21 days). www.druces.com

Charles Avens Employment Solicitor c.avens@druces.com DDI: 020 7216 5568