LPC EMPLOYMENT LAW SUMMARY
EXAM TIPS
• Must cite statutory/regulatory authority precisely and hand in all rough work
• Always check if there has been any breach, when and how things happened
• Course focuses on employee’s right not rights of the employer
EMPLOYMENT STATUS
3 types of employment status:
1. Employee – is a person under a contract OF service
• s230(1) ERA 1996 – defines an employee as a person with a ‘contract of employment’
• s230(2) ERA 1996 – define a contract of employment as a ‘contract for service’
• Is entitled to: redundancy pay, protection on business transfer, protection from unfair dismissal,
statutory minimum notice, written statement of contract, statutory paternity and maternity leave
and pay, etc.
2. Independent Contractor – is a person under a contract FOR service
3. Worker – this is NOT really relevant for this course (include employees) – s230(3) ERA 1996
• Is entitled: equal pay, holidays, national minimum wage, working hours & breaks, protections
against discrimination
TESTS FOR DETERMINING STATUS OF EMPLOYEE
To determine whether a worker has a contract FOR service OR contract OF SERVICE, you apply the
following tests:
1. Control Test
• Test: can the employer control not only WHAT is done but HOW it is done?
• The more control there is, the more likely there is a contract OF service (i.e. person is an employee)
• This test is not really useful for skilled workers
2. Integration Test
• ‘Part and parcel’ test – was the worker involved in the administrative duties/take part in
management decisions?
• If worker is part and parcel of the business, it is indicative they are an employee
3. Multiple Choice Test/Economic Reality Test – most commonly used
• Requires you to weigh different factors and no one factor is decisive in determining status
• Key Case: Ready Mixed Concrete (south East) Ltd v Minister of Pensions and National Insurance
[1968]
o held the lorry drivers were independent contractors not employees because they could
provide substitute drivers
• Factors for consideration:
1. Mutuality of obligation – employee agrees to provide work/skill in exchange for remuneration
2. Substitution/personal service – if a worker can substitute their labour it is a strong indicator
that they are not an employee and it is a contract FOR service
o Macfarlane v Glasgow City Council [2001] – held just because a person can substitute
doesn’t mean they won’t be an employee
o Pimlico Plumbers Ltd and another v Smith [2018] – UKSC held the righto delegate internally
or seek held from other engineers for work did not prevent ‘personal service’
3. Terms in the contract
1
, o Autoclenz Ltd v Belcher & Ors [2011] – court disregarded the terms of the contract
between the parties because it did not reflect the true intentions/relationship of the parties
4. Economic risk – if worker bears a strong risk of loss, this is an indication they are NOT an
employee and it is a contract FOR service
o Stringfellow Restaurants Ltd v Quashie [2012] – the Court of Appeal held that Quashie (lap
dancer) wasn’t employee because she negotiated her own fees with clients and took the
economic
5. Control – the degree of control may vary but the employer must retain at least an element of
control in the performance of work
Additional factors to consider (these don’t carry as much weight)
• Who provides the tools?
• Holiday pay
• SSP
• Tax/National Insurance
STATUS OF AGENCY & PART-TIME WORKERS
• Part-time workers are entitled to the same rights & privileges as full-time worker/employees – Auth:
Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000
• Agency workers can sometimes be held as an employee of the agency or employee of the company
they are working at through an agency
o Motorola v Davidson [2001] – agency worker was held to be employee of Motorola
ADVANTAGES OF BEING AN EMPLOYEE VS INDEPENDENT CONTRACTOR
Advantages to A COMPANY of hiring independent Advantages to WORKERS of being independent
contractor contractors
• Cheaper than hiring full-time employees • Have more flexible schedule
• Avoids administrative burden of tax and national • Greater freedom to work for others
insurance accounting • No requirement to provide personal service
• Don’t have to pay seek pay • Greater freedom to determine working pattern
• Don’t have to pay benefits • Worker may be able to achieve more beneficial
• Don’t have to pay insurance contractual payments than employee-bonus
• Don’t have to provide some statutory minimum payments etc
notice periods
• Unlikely to be vicariously liable for actions of a
contractor
• No duty to consult trade unions
• Not liable for unfair dismissal or redundancy
Advantages to COMPANY of hiring employees Advantages to WORKER of being employee
• Personal service may • Minimal financial input and risk
• Can exercise higher degree of control over • Membership of Company sick pay scheme and
employees possibly pension scheme
• Control may be reinforced on employee during • Entitled to redundancy pay
and post-employment by sanctions, dismissal or • Employee has right of indemnity in respect of
use of disciplinary procedures expenses incurred in carrying out duties
• Implied terms of loyalty and good faith • Will receive holiday pay – statutory minimum
• Breach of commercial contract may prove more under WT regs
expensive than termination of employment • Greater job security in terms on income and
contract dismissal protection
2
, TERMS OF EMPLOYMENT CONTRACT
• An employment contract does not have to be written. It can be verbal
• Terms of employment contract can come from:
o Express terms – oral or written
Employer must give written statement to employee containing certain information
within 2 months of start of employment – s1 ERA 1996
o Statute
o Custom/Practice
o Business efficacy
o Implied by common law
IMPLIED DUITIES
Implied duties owed by the EMPLOYER Implied duties owed by the EMPLOYEE
• Duty to pay • Duty to provide personal service – i.e. show up to
• Duty to provide work work
• Duty to indemnify employees – compensate • Competence – not really relied on
employees for expenses incurred during course • Reasonable care in performance of duties
of employment • Obedience
• Duty to take reasonable care for employee’s • Duty of mutual trust and confidence
safety • Duty of good faith/fidelity
• Duty of mutual trust and confidence – this goes
both ways
TERMINATING EMPLOYMENT CONTRACTS
METHODS OF TERMINATION
An employment contract can be terminated in the following ways:
1. By agreement
2. Passage of time – e.g. if a fixed term contract comes to an end without being renewed
3. Frustration
4. By giving notice
POSSIBLE CLAIMS AN EMPLOYEE CAN MAKE FOR BREACH OF THE EMPLOYEE CONTRACT
1. Contractual Claims
• Wrongful Dismissal - occurs when person is dismissed without proper notice
• Wrongful Repudiation – occurs when an employee resigns in response to a repudiatory breach of
the employment relationship by their employer
o Key case: Weston Excavating v Sharpe – sets out principles needed to show there was a
wrongful repudiation
Has there a repudiatory breach?
Did employee resign in response to breach?
Did employee resign promptly?
*Beware, that an employee can waive/lose their right to bring a wrongful repudiation claim if the AFFIRM
the breach
2. Statutory Claims
• Unfair Dismissal
• Redundancy
3
EXAM TIPS
• Must cite statutory/regulatory authority precisely and hand in all rough work
• Always check if there has been any breach, when and how things happened
• Course focuses on employee’s right not rights of the employer
EMPLOYMENT STATUS
3 types of employment status:
1. Employee – is a person under a contract OF service
• s230(1) ERA 1996 – defines an employee as a person with a ‘contract of employment’
• s230(2) ERA 1996 – define a contract of employment as a ‘contract for service’
• Is entitled to: redundancy pay, protection on business transfer, protection from unfair dismissal,
statutory minimum notice, written statement of contract, statutory paternity and maternity leave
and pay, etc.
2. Independent Contractor – is a person under a contract FOR service
3. Worker – this is NOT really relevant for this course (include employees) – s230(3) ERA 1996
• Is entitled: equal pay, holidays, national minimum wage, working hours & breaks, protections
against discrimination
TESTS FOR DETERMINING STATUS OF EMPLOYEE
To determine whether a worker has a contract FOR service OR contract OF SERVICE, you apply the
following tests:
1. Control Test
• Test: can the employer control not only WHAT is done but HOW it is done?
• The more control there is, the more likely there is a contract OF service (i.e. person is an employee)
• This test is not really useful for skilled workers
2. Integration Test
• ‘Part and parcel’ test – was the worker involved in the administrative duties/take part in
management decisions?
• If worker is part and parcel of the business, it is indicative they are an employee
3. Multiple Choice Test/Economic Reality Test – most commonly used
• Requires you to weigh different factors and no one factor is decisive in determining status
• Key Case: Ready Mixed Concrete (south East) Ltd v Minister of Pensions and National Insurance
[1968]
o held the lorry drivers were independent contractors not employees because they could
provide substitute drivers
• Factors for consideration:
1. Mutuality of obligation – employee agrees to provide work/skill in exchange for remuneration
2. Substitution/personal service – if a worker can substitute their labour it is a strong indicator
that they are not an employee and it is a contract FOR service
o Macfarlane v Glasgow City Council [2001] – held just because a person can substitute
doesn’t mean they won’t be an employee
o Pimlico Plumbers Ltd and another v Smith [2018] – UKSC held the righto delegate internally
or seek held from other engineers for work did not prevent ‘personal service’
3. Terms in the contract
1
, o Autoclenz Ltd v Belcher & Ors [2011] – court disregarded the terms of the contract
between the parties because it did not reflect the true intentions/relationship of the parties
4. Economic risk – if worker bears a strong risk of loss, this is an indication they are NOT an
employee and it is a contract FOR service
o Stringfellow Restaurants Ltd v Quashie [2012] – the Court of Appeal held that Quashie (lap
dancer) wasn’t employee because she negotiated her own fees with clients and took the
economic
5. Control – the degree of control may vary but the employer must retain at least an element of
control in the performance of work
Additional factors to consider (these don’t carry as much weight)
• Who provides the tools?
• Holiday pay
• SSP
• Tax/National Insurance
STATUS OF AGENCY & PART-TIME WORKERS
• Part-time workers are entitled to the same rights & privileges as full-time worker/employees – Auth:
Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000
• Agency workers can sometimes be held as an employee of the agency or employee of the company
they are working at through an agency
o Motorola v Davidson [2001] – agency worker was held to be employee of Motorola
ADVANTAGES OF BEING AN EMPLOYEE VS INDEPENDENT CONTRACTOR
Advantages to A COMPANY of hiring independent Advantages to WORKERS of being independent
contractor contractors
• Cheaper than hiring full-time employees • Have more flexible schedule
• Avoids administrative burden of tax and national • Greater freedom to work for others
insurance accounting • No requirement to provide personal service
• Don’t have to pay seek pay • Greater freedom to determine working pattern
• Don’t have to pay benefits • Worker may be able to achieve more beneficial
• Don’t have to pay insurance contractual payments than employee-bonus
• Don’t have to provide some statutory minimum payments etc
notice periods
• Unlikely to be vicariously liable for actions of a
contractor
• No duty to consult trade unions
• Not liable for unfair dismissal or redundancy
Advantages to COMPANY of hiring employees Advantages to WORKER of being employee
• Personal service may • Minimal financial input and risk
• Can exercise higher degree of control over • Membership of Company sick pay scheme and
employees possibly pension scheme
• Control may be reinforced on employee during • Entitled to redundancy pay
and post-employment by sanctions, dismissal or • Employee has right of indemnity in respect of
use of disciplinary procedures expenses incurred in carrying out duties
• Implied terms of loyalty and good faith • Will receive holiday pay – statutory minimum
• Breach of commercial contract may prove more under WT regs
expensive than termination of employment • Greater job security in terms on income and
contract dismissal protection
2
, TERMS OF EMPLOYMENT CONTRACT
• An employment contract does not have to be written. It can be verbal
• Terms of employment contract can come from:
o Express terms – oral or written
Employer must give written statement to employee containing certain information
within 2 months of start of employment – s1 ERA 1996
o Statute
o Custom/Practice
o Business efficacy
o Implied by common law
IMPLIED DUITIES
Implied duties owed by the EMPLOYER Implied duties owed by the EMPLOYEE
• Duty to pay • Duty to provide personal service – i.e. show up to
• Duty to provide work work
• Duty to indemnify employees – compensate • Competence – not really relied on
employees for expenses incurred during course • Reasonable care in performance of duties
of employment • Obedience
• Duty to take reasonable care for employee’s • Duty of mutual trust and confidence
safety • Duty of good faith/fidelity
• Duty of mutual trust and confidence – this goes
both ways
TERMINATING EMPLOYMENT CONTRACTS
METHODS OF TERMINATION
An employment contract can be terminated in the following ways:
1. By agreement
2. Passage of time – e.g. if a fixed term contract comes to an end without being renewed
3. Frustration
4. By giving notice
POSSIBLE CLAIMS AN EMPLOYEE CAN MAKE FOR BREACH OF THE EMPLOYEE CONTRACT
1. Contractual Claims
• Wrongful Dismissal - occurs when person is dismissed without proper notice
• Wrongful Repudiation – occurs when an employee resigns in response to a repudiatory breach of
the employment relationship by their employer
o Key case: Weston Excavating v Sharpe – sets out principles needed to show there was a
wrongful repudiation
Has there a repudiatory breach?
Did employee resign in response to breach?
Did employee resign promptly?
*Beware, that an employee can waive/lose their right to bring a wrongful repudiation claim if the AFFIRM
the breach
2. Statutory Claims
• Unfair Dismissal
• Redundancy
3
