Category Archives: Terms and Conditions

Contract Essentials

Contract sorter - FG Solicitors

SUMMARY: With unemployment rates at an all-time low we are frequently asked by clients whether they can use the same contracts for each type of employee or worker they engage. The short answer to that question is “no”. As there are a number of contracts and agreements widely available to organisations, we have produced a quick guide to the key contracts.

Type of contract/agreement

Who does it apply to?

Who should it not be used for?

When should your organisation use this contract/agreement and what are the key considerations?

Directors’ Service Agreement

Any Executive Director

Employees generally

Apprentices

Temporary Workers

Zero Hours Casuals

Consultants

Non-executive Directors

  • It is a legal requirement to provide specific terms and conditions within 2 months of an employee commencing employment. Although a standard employment contract can be used, businesses often prefer using Directors’ service agreements due to the additional obligations owed by directors.
  • For owner managed businesses these agreements are favoured to provide protection of the directors’ rights on the sale/transfer/takeover of a business.

Employment Contract

Employees (including directors where a Directors’ Service Agreement is not in place)

Apprentices

Temporary Workers

Zero Hours Casuals

Consultants

  • It is a legal requirement to provide specific terms and conditions within 2 months of an employee commencing employment.
  • Contracts can be standardised for differing categories of employee within the business such as managers, shift workers or home based employees.
  • The contract can include additional protections for the employer such as post-termination restrictions, confidentiality and intellectual property rights – particularly relevant for a number of industries including IT, Professional/Financial Services and Pharmaceuticals. These need to be tailored to the organisation’s needs.
  • Employment contracts for part-time employees need to include specific provisions to ensure entitlements are accrued on a pro-rata basis.
  • Employment contracts for fixed-term employees need to include specific provisions relating to the termination of the employment.

Apprenticeship Agreement

Apprentices (on a work-based training programme).

Employees (including directors)

Temporary Workers

Zero Hours Casuals

Consultants

  • Apprentices are employees and the legal requirement to provide specific terms and conditions within 2 months of the employment commencing applies.
  • Failure to ensure the appropriate apprenticeship agreement is in place, can result in apprentices having rights which can make it difficult and costly to terminate their employment before the end of the apprenticeship.
  • The agreement will include specific provisions relating to the termination of the employment.
  • The agreement can include additional protections for the organisation such as post-termination restrictions, confidentiality and intellectual property rights – particularly relevant for some industries typically associated with apprenticeships such as the IT industry. These need to be tailored to the organisation’s needs.

Zero-hours Casual Worker Agreement

Zero Hours Casuals

Employees (including directors)

Apprentices

Consultants

Directors

  • The agreement will make it clear that it is intended the individual is a worker, rather than an employee, so does not have employment rights.
  • The agreement will set out how work will be offered and accepted.

Consultancy Agreement

Consultants (individuals who are self-employed or whose services are provided through a service company)

Employees (including directors)

Temporary Workers

Zero Hours Casuals

Apprentices

Directors

  • The agreement should specify that the individual is not a worker or employee, but is self-employed or engaged by a service company*.
  • The agreement will detail the basis on which work is offered, payment (including the submission of invoices) and where tax liability sits.
  • It is prudent to set out whether the consultant will have the benefit of various employment rights, or the more limited rights available to workers.
  • The agreement should clarify whether the individual is owed health and safety duties or whether the individual (as an independent contractor) is responsible for their own safety.
  • The agreement can also include additional protections for the organisation such as appropriate restrictions, confidentiality and ownership of intellectual property rights – particularly relevant for a number of industries including IT, Professional/Financial Services and Pharmaceuticals. These need to be tailored to the organisation’s needs.
  • The agreement should also contain appropriate termination provisions and/or substitution rights.

*Organisations are advised to take advice on the practical workplace arrangements and obligations when engaging consultants as these considerations will factor when determining if the “consultant” is, in fact, an employee.

Secondment Agreement

Secondees

Consultants

Zero Hours Casuals

  • Specific agreements should be put into place where the employer intends to temporarily transfer an employee from one organisation to another.
  • The agreement will set out details of the relationship between the two organisations and the employee.
  • The agreement will deal with the employee’s employment status, payment arrangements, day to day management arrangements and the corresponding liabilities.

 

 

Contact Details

For more details about any of the above contracts, or if you just want someone to check that your current contracts are up to date, please contact a member of our Employment Law team:

fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice.

Common Employment Myths

Perception v Reality

SUMMARY: Employers have a number of misconceptions about their rights in relation to employees. Read this if you want to know five common reasons employees may bring a claim against their employer when these misconceptions have been held.

Retirement

“I can retire someone when they reach 65”.

This is not the case. Retirement is no longer a fair reason for dismissal and an employer cannot force someone to retire unless it can be objectively justified (employers should seek legal advice if they think that a retirement may be objectively justified). If it cannot be justified, dismissal will be unfair and discriminatory on the grounds of age.

If an employee’s performance is not satisfactory, an employer should go through a performance management process in the normal way. If there are questions to be asked relating to workforce planning, consider incorporating discussions about an employee’s future plans, which would include retirement, into the appraisal system. However, only ask open questions about short, medium and long term goals and not direct questions about retirement. All employees irrespective of their age should be asked these questions.

All employees, irrespective of their age, should be treated consistently, otherwise there is a risk of age discrimination claims in an employment tribunal.

Probationary period

“I don’t need to give anyone an employment contract now, I’ll give it to them when they’ve done a trial”.

Employees should be issued with contracts when (or preferably before) they start employment. Employers should not wait until the “trial” period or any probationary period has expired. If certain key terms and conditions are not provided to them within two months of commencing employment, the employer could be liable to pay additional compensation to them if they bring a claim in an employment tribunal.

Employers should also be aware of the commercial risk. A retained employee could, at some point in the future, argue that they are not bound by the terms and conditions given to them after they have started. This could be an issue particularly if reliance on confidentiality provisions and post terminations restrictions is an important consideration for the employer.

Interviews and record keeping

“When I interview people, I just have a chat with them to see whether I like them or not. I don’t need to do anything more formal than that.”

An employer does not need to have an elaborate assessment regime set up to employ people. It is legitimate to have a short interview, but it is vital to have considered before-hand the skills, experience and personal attributes necessary for the job (which should have been done when creating the job description/person specification). Interview questions should focus on establishing whether the prospective employee meets the criteria for the job; similar questions should be asked of all candidates.

A record should be retained of the questions and candidates’ answers as well as the reason for selecting the successful candidate. Employers should be aware that unsuccessful candidates could make a data subject access request to obtain copies of these documents, particularly if they are unhappy with the decision. Managers when making their notes should be mindful not to incorporate opinions, which could cause embarrassment at a later date or could be used as evidence in an employment tribunal claim for discrimination.

Individuals do not have to be employed in order to bring a claim in an employment tribunal. A prospective employee who believes they have been discriminated against during the selection/recruitment process may bring a claim; any notes an employer has retained of the interview would be essential in the defence of such a claim.

Pregnancy

“She was pregnant at the interview and didn’t tell me. She’s not getting maternity leave – I’ll dismiss her.”

An employee has no obligation to tell a prospective employer that she is pregnant at the interview and the prospective employer should not ask this question because they would risk a sex/pregnancy/maternity discrimination claim. An employer cannot dismiss on these grounds as this would also be discriminatory. Compensation for discrimination in the employment tribunal is unlimited.

Employers should remember that all female employees, no matter how short a time they have been employed, are entitled to take maternity leave of up to 52 weeks and retain the right to return to a suitable job.

Outsourcing

We are going to outsource the cleaning to a cleaning company. We won’t need the cleaners we employ anymore so we will make them redundant.”

If an organisation has an outsourcing situation, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) may apply. This means that in some cases the organisation’s cleaners will automatically transfer on their current terms and conditions to the newly appointed cleaning company if this work is outsourced. If employees are dismissed because there will be an outsourcing, the employer could be in breach of TUPE and the employees could bring a claim for automatic unfair dismissal in the employment tribunal.

If an outsourcing is being considered, employers should seek early advice on whether TUPE may apply. If it does apply, an employer has information and consultation obligations to fulfil before the outsourcing takes place. Non-compliance could lead to an employer being ordered by a tribunal to pay up to 13 weeks’ gross pay per employee.

Contact details

If you would like advice on any of the issues raised in this article, please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice. 

FGazette July 2012

Welcome to the latest edition of FGazette! The quarterly newsletter of Floyd Graham & Co – Lawyers for today’s employers.

Our Summer edition focuses on social media in the workplace, changing terms and conditions and the future of TUPE. Click the FGazette image to read more.

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