Intro To Employment Law

Introduction to
Employment Law
This primer introduces you to Employment Law. It will

consider some of the basic areas of employment law
including employment status, contract terms and
termination.
Introduction
Employment law governs the relationships, rights and responsibilities of
businesses in their role as employers and those of the individuals who work for
them.
The individuals can be employees, workers or self-employed. Each of these are

defined differently in law and entitle the individual to different rights as well as
imposing on the employer different responsibilities.
The Employment Tribunal hears disputes arising out of employment relationships. Most
frequently these are brought by an individual (the Claimant) against the business they work
for (the Respondent). Some employment claims can also be brought in the County Court.
Employment Law comes both from legislation and common law with key statues including
the Employment Rights Act 1996 and the Equality Act 2010. Much of UK Employment law
derives from the European Courts and EC Legislation, so may be subject to change in
coming years.
Employment Status
In most circumstances, to determine the rights of an individual it is necessary to identify

whether they are an employee, worker or self-employed.
Employees work under a contract of service. Employee is defined in s.230 ERA 1996.
This statutory definition states ‘an employee is an individual who has entered into or
works under a contract of employment’. A contract of employment is then defined as a
contract of service or apprenticeship.
Self-employed persons work under a contract for services.
Workers include employees but the definition is wider. It also includes other individuals
who personally perform work or provide services but not in a client or customer
relationship so not in business on their own account. Some domestic legislation (and the
Directives they implement) for example Part-Time Workers Regulations 2000 and
Working Time Regulations 1998 apply to ‘workers’ rather than employees.
Employee or Not?
Most statutory protection is only afforded to employees. In determining whether a specific

individual is an employee the whole relationship needs to be examined. The starting
point for resolving difficult cases remains the case law on the following tests:
Control test: Historically the primary method of analysing the employment relationship
and still important. Can the employer control what the ‘employee’ does, and where, how
and when it is done?
Mutuality of Obligations: Is there a mutual obligation to provide and perform work?

Employee or Not?
Integration test: To what extent is the ‘employee’ integrated into the employer’s
organisation?
Multiple or Economic Reality test: This test recognises that there needs to be a
balancing exercise looking at a number of factors, including:
• does the worker take a degree of financial risk?
• does the worker profit from sound management of tasks?
• payment of wages; sick leave; paid holidays
• does the worker hire their own helpers?
• who provides the materials and the equipment?
• participate in company pension scheme?
• prohibition on working for others?
• tax arrangements (schedule D/ PAYE)?
• how have parties described their relationship?
Employment Contracts
An employment relationship is fundamentally governed by the contract which

the parties entered into when commencing that relationship. This may be
written or verbal. Express terms should cover essentials such as pay, hours,
holiday entitlement and notice requirements on termination.
Where employment law provides a statutory minimum such as for wages,

holiday entitlement or notice periods, the contract cannot reduce this right by
providing for less. The employee remains entitled to the statutory minimum;
employers can, of course, exceed the minimum in their provision.
Employment Contracts
Terms may also be implied into the contract. For example, these may come from statute
or custom and practice. They are often fundamental to the employment relationship and
their inclusion reflects how unique and important that relationship is. Common law
examples include:
A duty on the employer to take reasonable care for the employee’s health and safety:
this arises under common law, but is supplemented by statute (e.g. Health and Safety at
Work Act 1974)
A duty on employees to obey lawful and reasonable orders
A mutual duty of trust and confidence: based on the concept of reasonableness, this is a
wide and significant duty on both parties to the contract and is recognised as an essential
ingredient to maintain the employment relationship. Conduct amounting to a breach of
this fundamental implied term will inevitably be a repudiatory breach of the employment
contract.
Termination
The contract may be brought to an end in a number of ways including by either party
individually or by mutual consent. Commonly, if the contract is terminated unilaterally, this
would be by the employee resigning from his position or the employer dismissing him.
An employee can also be dismissed by operation of Constructive Dismissal. Here the
employee asserts that the employer has committed such serious breach of contract that
it goes to the heart of the employment relationship. This allows the employee to resign
and claim constructive dismissal i.e. that the employer left him with no alternative but to
resign. The employee is deemed to be dismissed by the employer.
Termination of the employment relationship can give rise to dispute. If an individual is
dismissed, there is potential for a complaint of either wrongful or unfair dismissal by that
individual.
Constructive Dismissal
To establish constructive dismissal, the following factors will be considered:
• Was the employer’s action a significant or serious breach of

contract, often called a ‘fundamental’ or ‘repudiatory’ breach?
The breach must strike at the root of the contract, destroying the
relationship between the parties.
• Was the resignation a direct consequence of the employer’s

breach?
It must be the principal if not sole reason for the resignation.
• Did the employee act promptly and resign or has the employee
‘affirmed the contract’ by continuing to work, waiving their right to
claim constructive dismissal?
Summary
• Employment law governs the relationships, rights and responsibilities of businesses in

their role as employers and those of the individuals who work for them.
• The individuals can be employees, workers or self-employed.
• Most statutory protection is afforded to employees.
• In determining whether a specific individual is an employee the whole relationship
needs to be examined with reference to a number of tests set out in case law.
• Employment contracts can be written or verbal.
• As well as express terms, employment contracts will include implied terms such as the
mutual obligation of trust and confidence.
• Employment contracts can be terminated by either party. Most commonly this is by
resignation of the employee or by the employer dismissing the employee.
• Where the employer has committed a repudiatory breach of the contract, an employee
may resign and this be deemed a dismissal. This is called constructive dismissal.

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Intro To Employment Law

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Introduction to

This primer introduces you to Employment Law. It will

The individuals can be employees, workers or self-employed. Each of these are

In most circumstances, to determine the rights of an individual it is necessary to identify

Most statutory protection is only afforded to employees. In determining whether a specific

Mutuality of Obligations: Is there a mutual obligation to provide and perform work?

An employment relationship is fundamentally governed by the contract which

Where employment law provides a statutory minimum such as for wages,

To establish constructive dismissal, the following factors will be considered:

• Was the employer’s action a significant or serious breach of

• Was the resignation a direct consequence of the employer’s

• Employment law governs the relationships, rights and responsibilities of businesses in

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