Employment Law – A to Z Guide
Employment Law A-Z
ACAS (Advisory, council and Arbitration Service)
A non-departmental public body of the government of the United Kingdom, the purpose of which is to improve businesses and other organisations and working life through the promotion and facilitation of strong industrial relations practice (i.e. the relationship between employers and workers).
ACAS codes of practice
ACAS’ codes of practice are intended to offer authoritative advice in respect of crucial aspects of employment practice. The codes are approved by Parliament and, although not legally binding, are referred to by employment tribunals.
ACAS early conciliation
A process through which to resolve workplace disputes using independent ACAS conciliators. Early conciliation should take place after internal procedures (such as the employer’s grievance procedures) have been exhausted but before making a claim to the employment tribunal. It is now mandatory in (almost) all cases to notify ACAS of an intention to lodge a claim before doing so – otherwise the tribunal will not accept the claim. ACAS must be notified before the deadline for making a claim. The process is intended to be quicker, cheaper and less stressful than court action.
Advocacy is the means by which an advocate (such as a barrister or a solicitor) puts her or his client’s case to the court. Advocacy may be undertaken through written submissions or orally at a tribunal or court hearing.
Almost all workers are entitled to 5.6 weeks’ paid annual leave per year, which equates to 28 days for those working full-time 5 days per week. Part time workers have the same entitlement, though the number of days of their entitlement depends upon how many days they work. Those working irregular hours (such as shift workers) are also entitled to annual leave, calculated on an hourly basis (7 minutes of annual leave per hour worked).
If an employer’s conduct is such that it commits a serious or ‘repudiatory’ breach of the employment contract an employee is entitled to resign without a notice period as a result of this breach. The employee is entitled to treat herself or himself in these circumstances as having been ‘dismissed’.
Continuous employment is the time which an employee has worked for a single employer without a break. The length of continuous employment is important since a minimum period is a necessary requirement for particular rights available to employees, including maternity pay, flexible working requests and redundancy pay.
Contract of employment
A contract of employment is an agreement between an employer and an employee which forms the basis of the employment relationship. (Almost) all employment contracts can be made orally and do not therefore strictly need to be in writing, but written contracts are preferable since they offer clarity and security. A contract of employment starts as soon as an offer of employment is accepted either expressly orally or in writing, or impliedly by conduct, for example if the employee starts work.
Contract for services
A contract for services is an agreement made between a self-employed person and a client to which she or he provides services. It differs from and is not a ‘contract of service’, which relates to an employee.
A company handbook is a book provided to employees by an employer. It typically contains information regarding company policies and procedures, such as holiday arrangements, company rules, disciplinary and grievance procedures.
A director runs a limited company with or without other directors on behalf of the shareholder(s). The rights and obligations of directors differs from that of employees or other workers, although some directors may also do work unrelated to that of a director under an employment contract and enjoy employment rights under that contract.
It is against the law for employers to discriminate on the grounds of a disability. Employers must not discriminate on the grounds of disability when considering application forms, interview arrangements, aptitude or proficiency tests, job offers, pay and other terms of employment, promotions, transfers and training opportunities, dismissal or redundancy, discipline and grievances. An employer must also make ‘reasonable adjustments’ to avoid putting a disabled person at a disadvantage compared with non-disabled people in the workplace, such as adjusting working hours or providing special equipment.
Disciplinary and grievance procedures
Disciplinary and grievance procedures are policies which provide clear and consistent structures for handling issues arising as an aspect of a working relationship. These policies ensure that everybody is treated equally, fairly and reasonably. ACAS publishes a Code of Practice on these issues. Failure to follow this Code does not give rise to liability, but an employment tribunal will take such failure into consideration when deciding relevant cases and may adjust an award by up to 25 per cent for unreasonable failure to comply with any provisions of the code. Employers and employees are encouraged to attempt to resolve these issues within the workplace using internal disciplinary and grievance procedures, rather than resorting to tribunal or court action.
It is against the law to discriminate against anybody because of the ‘protected characteristics’ of age, being or becoming a transsexual person, being married or in a civil partnership, being pregnant or having a child, disability, race including colour, nationality, ethnic or national origin, religion, belief or lack of religion or belief, sex or sexual orientation, whilst at work. Discrimination can be direct, if somebody with a protected characteristic is treated less favourably than others, or indirect, if rules or arrangements are put in place which apply to everyone but put somebody with a protected characteristic at an unfair disadvantage.
A worker who works under a contract of employment is an employee. Employees have additional rights and obligations (some of which require a minimum length of continuous employment) compared with other workers, including statutory sick pay, statutory maternity, paternity adoption and shared parental leave, minimum notice periods, protection against unfair dismissal, the right to request flexible working, time off for emergencies and statutory redundancy pay.
An employee shareholder is a worker who works under a contract of employment whilst owning shares worth £2,000 or more in the employer company or a parent company. Employee shareholders have most of the same employment rights as employees and other workers, though they do not enjoy protection against unfair dismissal (except on the grounds of discrimination or in relation to health and safety), statutory redundancy pay, the right to request flexible working (except in the 2 weeks after returning from parental leave) or certain statutory rights to request time off for training.
Employment tribunals are public bodies in England and Wales which have statutory jurisdiction to hear many kinds of disputes between employers and employees, including unfair dismissal, redundancy payments and employment discrimination.
Equality Act 2010
The Equality Act 2010 legally protects people from discrimination in the workplace. It replaced previous anti-discrimination laws with a single act, making the law easier to understand and strengthening protection in some situations. It sets out the different ways in which it is unlawful to treat somebody.
Fixed term contract
Fixed term contracts are contracts of employment which terminate on a particular date or on completion of a specific task or project. Employees working under fixed term contracts may include seasonal or casual employees taken on for up to 6 months during a peak period, specialists employed for a particular project, or employees covering for maternity leave.
Flexible working is a pattern of working that suits an employee’s requirements, such as flexible start and finish times or working from home. All employees who have worked for the same employer for at least 26 weeks have the legal right to ‘make a statutory application’ to request flexible working. Employers must deal with requests in a reasonable manner, such as assessing the advantages and disadvantages of the application, holding a meeting to discuss the request with the employee and offering an appeal process, but may refuse the application if they have a good business reason for doing so.
Workers are entitled to a week’s pay for each week of annual leave they take. A week’s pay is calculated in accordance with the hours an individual works and how they are paid for those hours. Full-time, part-time and casual workers are all entitled to holiday pay.
Maternity leave and pay
Pregnant workers and new mothers may be eligible for statutory maternity leave, statutory maternity pay and paid time off for antenatal care. Whilst on leave a pregnant worker or new mother’s employment rights are protected, including her right to pay rises, accrued holiday and return to work.
Notice period and pay
Statutory notice is the minimum legal notice that can be given, which is one week’s notice for employees employed by an employer continuously for one month or more but for less than two years, two weeks’ notice if the employee has been employed by the employer continuously for two years, and one additional week’s notice for each further complete year of continuous employment, up to a maximum of 12 months.
A partnership agreement is a contract which establishes the rights and obligations of each partner in a for-profit partnership, in addition to the profit and loss distribution for each partner. It is useful to have a written partnership agreement because it sets out all the rules, responsibilities and financial details of a partnership and its partners and lessens the possibility of disputes between partners at a later date.
Paternity leave and pay
Employees may be eligible for statutory paternity leave and pay if they and their partner are having a baby, adopting a child or having a baby through a surrogacy arrangement. Employees can choose to take either 1 week or 2 consecutive weeks’ leave, which must start on the actual day of birth or an agreed number of days after the birth or after the expected week of childbirth, provided the leave finishes within 56 days of the birth or due date. Statutory paternity pay for eligible employees is the lower of £139.58 per week or 90% of their average weekly earnings.
Pay-as-you-earn (PAYE) is Her Majesty’s Revenue and Customs’ (HMRC’s) system to collect National Insurance and Income Tax from employment. All employers with one or more employee paid £112 or more per week, or with expenses, benefits, another job or a pension must operate PAYE as part of its payroll.
Pay in lieu of notice (PILON)
A payment in lieu of notice (PILON) is a payment made to an employee by the employer for a notice period that the employee has been informed by the employer that the employee does not have to work. If a notice period is required for an employer to terminate a contract, PILON is immediate compensation at an amount equal to that which an employee would have earned as salary or wages had they worked through the entire notice period.
Probationary periods give new workers of a business probation status, which allows a supervisor or manager to evaluate closely the progress and skill of the newly-hired worker, determine appropriate assignments and monitor other aspects of the employee such as honesty, reliability and interactions with co-workers, supervisors or clients.
Redundancy is a form of dismissal which arises when an employer requires a reduction in their workforce. Redundant employees may be eligible for certain rights, including redundancy pay, notice period, consultation with the employer, the option to move to another job within the employer, and time off to find a new job with another employer.
Employers do not typically need to give a reference, but if they do it must be fair and accurate. Workers may be able to challenge a reference if they think it is unfair or misleading. Employers must, however, give a reference if there was an agreement to do so, or if they are in a regulated industry, such as financial services.
A restrictive covenant is ordinarily a clause in a contract of employment which prohibits an employee from competing with her or his former employer for a given period after the employment has terminated, or prevents the former employer from soliciting or dealing with clients of the business by using knowledge of those clients gained during her or his prior employment.
The default retirement age has been phased out so most people can now work for as long as they wish. Retirement age is when an employee chooses to retire – most businesses do not set a compulsory retirement age for their employee.
A person is self-employed if they run their business for themselves and have responsibility for its success or failure. Self-employed workers are not paid through the pay-as-you-earn (PAYE) system and they do not have the employment rights and responsibilities of employees or other workers.
Settlement agreements are legally binding contracts that waive an individual’s rights to make a claim covered by the agreement to an employment tribunal or court. Settlement agreements must be in writing and usually include some form of payment to the employee and often contain a reference.
Shared parental leave
Parents who have a child or adopt may be eligible for shared parental leave and shared parental pay. Eligible parents may take the leave in blocks separated by periods of work, rather than taking it all at once.
Shareholder agreements are contracts between the shareholders of a company in which they agree as to how the company is to be run, including the appointment and removal of directors, and are important in cases where the shareholders wish to vary usual company law rules.
Sickness absence and pay
Employees need a ‘fit note’ from a doctor after 7 consecutive days off work sick (including non-working days). If employees are sick immediately prior or during annual leave they can take off work that time as sick leave instead.
Termination of employment
An employment contract can be terminated at any time by either the employer or the employee. This termination could take the form of a resignation, a dismissal, redundancy or retirement.
Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE)
The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) is the UK’s implementation of the EU Business Transfers Directive. It is a significant part of UK labour law since it offers protection to employees whose business is being transferred to another business.
A dismissal can be fair or unfair depending on the specific circumstances of the dismissal. An employee might be in a position to take legal action in an employment tribunal if a dismissal is unfair. A dismissal could be unfair if the employer does not have a good reason for the dismissal or does not follow the company’s formal disciplinary or dismissal policy.
Unlawful deduction from wages
If an employer fails to pay a worker her or his wages or salary, or pays less than the worker is entitled to receive, the worker could have a claim for an unlawful deduction from wages, which is a right under section 13 of the Employment Rights Act 1996 (ERA).
A worker is a person with an oral or written contract or other arrangement to do work or services personally for remuneration. The compensation is usually monetary but can also be for a benefit in kind such as the promise of a contract or future work. Workers have only a limited right to subcontract and they are required to do the work as agreed, whereas an employer is obliged to provide work for them to perform for the duration of the contract or arrangement.
Working Time Regulations 1998
The Working Time Regulations 1998 is a UK statutory instrument which implements the EU Working Time Directive. These Regulations govern the time that people in the UK may work. The Regulations apply to all workers (not just employees) and prescribe minimum rest breaks, daily rest, weekly rest and the maximum average working week.
Wrongful dismissal arises when an employee’s contract of employment has been terminated by the employer in circumstances where the termination breaches one or more terms of the contract of employment, or a statutory provision in employment law.
A zero-hour contract is a type of contract where the employer has the discretion to vary the employee’s working hours, usually anywhere from full-time to zero hours. The employer typically asserts that it has no obligation to provide work for the employee.