Updated: Jul 2, 2020
UK employment law is constantly changing and increasingly complex. It is vital that all employers and those operating within the HR function of a business, at whatever level, have a proper working knowledge of employment law if the business is not to be exposed to unnecessary risk of tribunal claims.
What is Employment Law?
Employment law is one of the most dynamic and interesting areas of the law.
Complex area that is full of pitfalls.
Getting it right means keeping in touch with developments, thinking out your policies and implementing them with care.
Getting it wrong is easier but could be extremely expensive.
Definition of Employment law:
The law that governs the relationship between the employer and the employee in the workplace.
Also covers the relationship between the employer and the Trade unions and the relationship between the Trade unions and employees.
Employment law covers a huge range of topics e.g. Pay, working hours, sickness and holidays, redundancy, equal pay and discrimination, unfair dismissals and discrimination etc.
'Worker', 'Employee' or 'Self-employed'?
1. There are three main types of employment status:
2. Why employment status is important
Why is an individual’s employment status important?
An individual’s employment status will help define what rights and responsibilities the individual has at work – i.e. how many additional statutory rights he enjoys over and above those in the contract and the tax treatment of his earnings.
A person's employment status will depend on whether their contract is a contract of employment (employee), a contract for the personal performance of work (worker) or a contract for services (self-employed).
An employee enjoys several employment rights. A true independent contractor will enjoy very few statutory rights. A worker who may not be an employee but something in between that and an independent contractor will enjoy some but not all employment rights. Agency workers will also enjoy lesser rights.
The tax treatment of earnings also varies according to status. Traditional employees that are taxable under Schedule E, are subject to PAYE provisions. Workers and individual contractors are more likely to be taxable under Schedule D and it is only in exceptional circumstances that tax will be deducted at source. Finally, whether an employer can be held vicariously liable for the act of its employees will also require a determination of the employee’s status.
An employee is someone who works for you under the terms of an employment contract. A contract of employment could be written, oral or implied.
The category of worker is wider and includes any person who works for you, whether under a contract of employment or other type of contract but is not self-employed. This category can include casual workers, agency workers or some freelance workers but the terms of the contract will determine their employment status.
All employees are entitled to employment protection rights - though some rights require a minimum period of continuous service.
A number of core rights, such as the national minimum wage and regulations on working time, including rest and paid annual leave, are also available to the wider category who qualify as workers.
3. What is an employee?
You are classed as an employee if you are working under a contract of employment (also known as a contract of service). This is normally a written contract but need not be in writing as it exists when you and your employer agree terms and conditions of employment.
It can also be implied from your actions and those of the person you are working for.
Your contract will normally set out what you are expected to do and you will usually be expected to do the work yourself. Put simply, you cannot send someone else to do your work for you.
All employees are workers, but as an employee you have a wider range of employment rights and responsibilities to and from your employer. For example, you will need to give a minimum notice period if you wish to leave your job.
As an employee, your rights include all of the rights workers have, plus the right to:
a minimum statement of employment terms;
Statutory Sick Pay;
minimum notice periods if your employment will be ending (eg if your employer is dismissing you);
not be unfairly dismissed; and
maternity, paternity and adoption leave and pay.
Features of an employee relationship:
you have the right to a minimum statement of employment terms;
you are required to attend work on a regular basis unless you are on authorised leave (e.g. holiday, sickness absence, maternity leave);
you are required to work a minimum number of hours (whether fixed or variable) and you expect to get paid for the hours you work;
your manager or supervisor is responsible for your workload, directing when particular work should be completed and the way it should be undertaken (senior managers can still be employees even if you set your own objectives and organise your own time);
you cannot send a substitute to do your job;
the company deducts tax and National Insurance from your wages;
you have received (or would be entitled to) contractual or Statutory Sick Pay from the company when unable to work through illness or injury;
you have received (or would be entitled to) contractual or Statutory Maternity, adoption or Paternity Pay from the company when on maternity or paternity leave (also known as a contract of service);
you can request flexible working;
you are entitled to minimum notice periods if your employer is dismissing you;
you receive payment from the organisation when taking holiday;
you can join the organisations’ pension scheme;
you are included in the organisations’ organisational chart;
you are subject to the organisations’ disciplinary and grievance procedures;
you have the right not to be unfairly dismissed;
you work at the organisations’ premises or at a location specified by the organisation;
the organisation provides the tools and equipment that you need to do your job;
your contract sets out redundancy provisions and procedures;
you work exclusively for the organisation or you have another job, but it is entirely different from your work for the organisation; and
you have a contract, statement of terms and conditions, or an offer letter which uses terms such as 'employer' and 'employee' and/or is described as an 'employment contract'.
4. What is a worker?
This is a broader category than 'employee' but normally excludes those who are self-employed. The status of worker includes individuals working under a variety of contracts - whether under a contract of employment, or any other contract where an individual undertakes to do or perform personally any work or service.
Employees are workers, but employees have different employment rights and responsibilities than workers.
Workers are entitled to core employment rights and protections.
Providing any other qualifying conditions are met, all workers are entitled to core employment rights and protections:
the National Minimum Wage;
rest breaks, paid holiday and not work more than 48 hours on average per week and limits on night work under the Working Time Regulations;
protection against unauthorised deductions from pay;
maternity, paternity and adoption pay (but not leave);
protection against less favourable treatment because of being part-time;
Statutory Sick Pay;
protection against unlawfu