Employment Law

UK employment law is a very complex area that deals with the employee and employer relationship. The aim of this guide is to raise awareness of what you are entitled to and provide information on problems that may arise.

You are an employee if you work under a contract for employment. This gives you certain rights and protects you against being mistreated by an employer.

You are an employee if all of the following applies:

• you have to the work yourself
• there is someone else who can tell you what to do, when to carry it out and how to do it
• you can work a fixed number of hours
• you can be asked to do different tasks
• you are paid by the hour, week or month
• you can receive overtime or bonus payments

An employee is one type of worker, which is anyone who provides services personally to an employer. Other types of workers, such as those employed by an agency or casual workers have fewer rights.

Zero-hours contracts

You may have heard about zero- hours contracts or you may be in one. This is a form of employment contract. It differs from the standard employment contract in that the employer does not guarantee you any set amount of work. You have the choice whether to accept any of the work offered.

If you have a zero-hours contract you will be given the status of a ‘worker’. You have the same rights as regular workers, but any breaks in the contract will affect those rights that are gained over time. Your employer should you let you know your employment status based on the nature of the relationship in practice, which may not always match with what the contract says. They should also inform you of basic terms, including pay, holiday and holiday pay entitlements, notice and those relating to how the work will be managed.

Self-Employment

Those who are self-employed or an independent contractor will have the fewest rights because they are their own employer. You are self-employed if all of the following is true:

• you can hire someone else to do the work for or help you at your own expense
• you can risk your own money
• you provide the main equipment you need to do the job
• you agree to do the job for a fixed price regardless of how long it takes
• you can decide what work to do, how and when you do it and for whom
• you regularly work for a number of different people
• you have to correct mistakes in your own time at your own expense

IR35 and MSC Legislation

IR35 rules mainly apply to those who cannot satisfy the Inland Revenue definition of ‘self employed’ and therefore will be required to pay income tax and National Insurance. IR35 will apply to you if:

• you personally perform services for another person (the client)
• the services are not provided directly to the client but under arrangements involving an intermediary
• you would have been regarded for income tax purposes as an employee of the client, had you provided the services directly to the client under a contract between you and the client
• you receive or have rights entitling you to receive a payment or benefit that is not employment income

An alternative to be being self-employed is to be part of a managed service company. This is where a service provider places a group of contractors as shareholders of a company that it manages. As a shareholder, a contractor receives dividends on profit rather than a salary. The contractor has the tax benefits of being part of a company without having the responsibility. 

Statutory rights

Offered to all employees and most workers, statutory rights cover areas such as:

• the National Minimum Wage
• paid holiday 
• sick leave 
• discrimination
• dismissal, redundancy and notice 

Contract of employment

All employees are entitled to receive written confirmation of all of the terms and conditions of their employment, and a contract which can be written or verbal, within two months of beginning employment.

These specifics will also include the employee's salary, as well as details of any company sick pay schemes, amount of paid holiday offered, and the notice period (and, if relevant, a Payment in Lieu of Notice (PILON) clause). 

The contract should also detail the company's redundancy scheme. There is a set method of calculation used to work out the legal minimum for redundancy pay, though often employers will have in place a scheme offering over and above this legal minimum.

Finally, the contract of employment should state the company's disciplinary and grievance procedure.

Disciplinary action and grievances

All companies and businesses should have in place disciplinary and grievance procedures, detailing the appropriate course of action in either case. This also applies to dismissal.

Correct procedure must be followed at all times, and if not the employee has reason to take the employer to an employment tribunal and put forward their case there.

Grievances are complaints or concerns raised by the employee with regard to, for example, unfair pay or an apparent breach of contract by the employer. Grievances must be raised officially, and should be done following the General Code of Practice set out by the Arbitration and Conciliation Advisory Service (ACAS).

Disciplinary action is action taken by an employer, in response to an employee's apparent misconduct of some sort. As with grievances and dismissals, correct procedure must be followed strictly throughout. While the disciplinary procedure is going on, the employee in question may be suspended, but will still receive full pay and retain their rights during this period. 

Employment tribunals

The first port of call for any dispute in the workplace should be an attempt at internal resolution but if this fails then the case may be brought to an employment tribunal. 

The tribunal acts like a small court, presided over by a panel of three who, if ruling in favour of an aggrieved employee, will award compensation of some form relevant to the case in question. This may be monetary compensation or, in cases of unfair dismissal for example, may lead to the ex-employee being reinstated in either their original position, or an alternative position, with the same employer.

In taking a case to a tribunal, the employee has the right to be accompanied by an employment law solicitor, who may advise them on their case. Taking a case to an employment tribunal is no longer free, and there are a range of costs that may be involved.