Source: https://www.oxbridgenotes.co.uk/revision_notes/law-labour-law/samples/contract_of_employment
Timestamp: 2019-04-23 08:39:10+00:00

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This is an extract of our Contract Of Employment document, which we sell as part of our Labour Law Notes collection written by the top tier of Oxford students.
? 1.2 AgreementThere are few if any formalities for formation of employment contracts. The contract may be formed without writing, and may be implied from conduct.ERA 1996 s. 230(2): Defines a contract of employment as one which may be formed expressly or impliedly, and may be oral or in writing.
? 1.3 PartiesEmployee/workerSee notes on personal scope.CapacityIn principle, children and young persons are covered by labour law regulations in the same way as adults.
? Young Workers' Directive, Directive 94/33: Contains restrictions on the employment of young workersEmployerSee notes on personal scope.2. WRITTEN NOTIFICATION OF TERMSDeakin and Morris, paras. 4.13-4.25.
? 7A and 7B ERA 1996, inserted by the ERA 2002: the employer can satisfy its obligations under ss. 1-3 by issuing a document in writing in the form of a contract of employment or letter of engagement.1. The information must be contained in a single document.This document must provide two different types of information: basic information (names of the parties, date on which employment began) and information about certain terms and conditions of employment eg, the scale or rate of remuneration, intervals at which remuneration will be paid (weekly, monthly etc..), any terms relating to holidays or holiday pay, the job title, the employee's place of work or, failing that, the employer's name and address.
? Kampelmann v. Landschaftsverand Westfalen-Lippe  IRLR 332: On the 'job title'. ECJ Held: when interpreting the equivalent provisions of Directive 91/533, that: "... the notification referred to in Article 2(1) of the Directive, in so far as it informs an employee of the essential aspects of the contract or employment relationship and, in particular, of the points listed in Article 2(2)(c), enjoys the same presumption as to its correctness as would attach, in domestic law, to any similar document drawn up by the employer and communicated to the employee. The employer must none the less be allowed to bring any evidence to the contrary, by showing that the information in the notification is either inherently incorrect or has been shown to be so in fact."2. Some information can be contained in a separate document issued to the employee.This includes the length of the contract, where it is not indefinite and any collective agreements which directly affect the terms and conditions of the employment.3. Some information can be contained either in a written statement or in another document.
? The employee must have a reasonable chance to read in the course of her employment, or which is made reasonably accessible in some other way. This concerns information relating to incapacity for work, including sick pay and details about pension arrangements.4. Disciplinary and grievance rules and procedures.These must be specified in the written statement or in another, readily accessible document (s. 3).
? 2.1 Timing of notificationRelevant info must be notified to all employees whose employment continues for one month or more (s198, ERA);Statement must be issued within two months of employment (s1(2)), even if the employment ends at some point in the second month (s2(6)).If statement is issued in the form of 1+ document - Then they must all be issued within this two-month period.Particulars must be those which were in effect on a specified date not more than seven days before the date on which the statement was issued.Generally, if there are no particulars in effect in respect of the categories listed above, that fact itself must be stated (s2(1)) - This does not apply to grievance procedures however.
? 2.2 Changes to the particularsERA 1996 s. 4: employer must notify changes 'at the earliest opportunity' and at most within one month of them taking effect. The statement need only outline the changes as such, and may make reference to another document.
? 2.3 RemediesLack of compliance with s1 can lead to reference to an ET under s11, which may 'amend those particulars, or substitute other particulars for them, as [it] may determine to be appropriate.' (s12(2)).
?ERA 1996, ss. 11, 12: Contains a statutory rectification procedure by way of application to an employment tribunal, which can make a declaration and determine the particulars. The tribunal cannot substitute its view of what the terms should be, but should be able to construe the contract in order to establish whether or not the statement is in alignment with it.Tribunals have no general power to award compensation to the employee; nor is the employer's failure to comply a criminal offence. However, since 1 Oct 2004, where employee has been successful in relation to other specified statutory proceedings, 2-4 week's pay may be awarded for failure to provide an initial statement of particulars or to notify the employee of changes. Recent dicta to the contrary notwithstanding:Southern Cross Healthcare v. Perkins  IRLR 247: Confusing dicta. Precise scope of the ET's jurisdiction to hear complaints arising from a breach of the written statement provisions of ERA was considered. Argument in the case turned on whether C had been able to establish a contractual entitlement to long service leave in addition to statutory leave entitlements provided for by WTR 1998. EAT Held: It was the tribunal's task to construe the contract of employment as a necessary step to determine whether the written statement was correct. CA Maurice Kay LJ: This view was right 'to the extent that an [ET] will have to identify the terms of the contract in order to see that the statutory statement correctly reflects.' However, went on to say that the tribunal has no power to interpret the written statement itself, and that 'the only forum with jurisdiction in relation to the construction issue... is the ordinary civil court'.Further oblique sanction on employer for failure to provide a written statement:EA 2002, s.38: If an employee wins one of a number of claims before a Tribunal listed in EA 2002 (including all discrimination claims, union membership/activities claims, unfair dismissal claims, claims under WT Regs) and it is found during the proceedings that the employer had failed to issued a written statement as required, the Tribunal can award between 2 weeks and 4 weeks pay ('a week's pay' subject to max in s.227 ERA 1996).
2.4 Limited normative effect of s.1-4The statement is declaratory; it has no 'normative' effect. Thus T&Cs must be derived from contractual agreement or from incorporation, or from an external source such as legislation or common law implied terms.It follows that if there are no terms on e.g. pension entitlements, there is nothing to report in the statement.Act has been interpreted as requiring the employer to notify the employee only of particulars which have independent contractual force (incl. statutory rights to notice and continuity of employment which are also specifically mentioned).This is despite the fact that it is not stated clearly that the 'terms and conditions' which must be notified are those which are contractual in nature.Edwards v Chesterfield Royal Hospital NHS Foundation Trust  IRLR 129: Lord Dyson expressed the view that, in enacting s1 and 3 of the ERA, Parliament had decided that 'contractual force should be given to [the] rules and procedures' referred to in those provisions of the Act.
? This view is heterodoxy because the more conventional understanding is that the parties themselves make the contract subject, in effect, to the relevant common law principles of the construction of contract terms, and that all the legislature did in enacting the written statement law was to impose the obligation of notification on the employer.
? Practical effect of the enactment of the written statement law may well have been to encourage employers to formalise employment procedures which, as a matter of construction, then came to be regarded as contract terms, but this is very different from saying that the legislature requires the courts to interpret disciplinary and other procedures as having contractual effect.
? Notwithstanding this dictum, in the unlikely event that it could be shown that disciplinary procedures did not have contractual force, no obligation of notification would arise under the Act; nor would it arise if there were neither contract terms nor particulars of any kind.
2.5 Distinguishing contract from statementEmployers frequently issue written documents which purport to be contracts of employment; fail to distinguish between 'contracts' and 'statements'.Because it is declaratory only, the statement is not a normative source of terms for the contract of employment. If it conflicts with terms drawn from e.g. a collective agreement, there is a presumption in the employee's favour that the terms of the collective agreement would normally apply, but if the statement is more favourable to the employee, the employer may have difficulty rebutting a presumption that the statement was accurate.Gascol Conversions v. Mercer  ICR 420: Suggested the statement might readily be accorded normative effect as an offer of contract terms. Employer sent each of its existing employees a document which purported to discharge its obligations to issue a written statement under IRA 1971, but which was headed 'contract of employment'. Applicant signed and returned to the employer a form which stated: 'I confirm receipt of a new contract of employment... which sets out as required under the Industrial relations Act 1971 the terms and conditions of my employment.' CA Held: The document constituted an offer of a new contract, which the employee accepted by returning the signed form. Since the contract was in writing, there was a presumption against according contractual force to any other terms which might have express orally or implied by conduct. Employee's acceptance of the statement amount to a variation of the original contract terms.System Floors v. Daniel  IRLR 475: Browne Wilkinson J: Explained that this means that 'in the absence of an acknowledgement by the parties that the statements is itself a contract and that the terms are correct, such as contained in the Mercer case, the statutory statement does not itself constitute a contract in writing.'Short of such acknowledgement, the employee cannot be taken to have agreed a variation; merely carrying on work is insufficient. Moreover, in attempting to introduce new or differing terms by means of a written statement the employer will be in breach of his statutory obligations under s1; this makes it difficult to argue that the employee is estopped from denying a variation of the contractJones v. Associated Tunnelling  IRLR 477;Robertson v. British Gas  IRLR 302: CA Held: The employer will not be allowed to set up its own legal wrong as the basis for such an estoppel. Mercer was distinguished. (1) A written statement cannot be an offer for a new contract. It is simply a defective statement of the old contract. (2) By issuing a defective statement the employer has committed a civil wrong under the ERA, under which the employee can claim damages.Case E-10/12 Hardarson v. Askar Capital hf  IRLR 475, EFTA Court: Agreed wage cut was effective even though not formally notified to the employee. Directive says there is an obligation to provide this information, subject to the decision of national law governing the definition of the contract of employment.
2.6 Express Terms and Managerial PrerogativeExpress terms only play a limited role in defining the agreement made between the parties; 'contract of employment hardly ever specifies exactly what the employee undertakes to do during each hour or day of employment.'May lay down hours/wages, disciplinary procedures etc - Usually these are incorporated by collective agreement.Certain element of incompleteness in regards to contract; the employer buys 'not an agreed amount of labour, but the power to access labour over an agreed amount of time.': Employee merely agrees to serve in return for remuneration.Employer has an element of prerogative power over the work of the employee; with the latter having a 'diffuse obligation of obedience': Employer may then unilaterally alter the norms for performance of work.Lack of clarity surrounding where the express contract terms end and managerial prerogative begins: Certain things that the employer cannot unilaterally change, such as wages, hours etc. Whereas the precise form in which those hours are subject to the employers right to specify the mode of performance, subject to only the need for orders given to be lawful and reasonable in the circumstances.However, this can only be taken so far:(1) Obligations that are specific in nature will often be construed as express terms which limit the employee's more open-ended duties of obedience and cooperation.(2) The employer's prerogative power is clothed in forms of various implied terms which may be limited in their scope not just by formal agreement between the parties but also by incorporated from other sources.
3. INCORPORATION OF TERMS FROM COLLECTIVE AGREEMENTS AND OTHER EXTERNAL SOURCES; VARIATION OF TERMSDeakin and Morris, paras. 4.265-4.42.
? (1) In this Act "collective agreement" means any agreement or arrangement made by or on behalf of one or more trade unions and one or more employers or employers' associations and relating to one or more of the matters specified below; and "collective bargaining" means negotiations relating to or connected with one or more of those matters.
? (g) machinery for negotiation or consultation, and other procedures, relating to any of the above matters, including the recognition by employers or employers' associations of the right of a trade union to represent workers in such negotiation or consultation or in the carrying out of such procedures.
However, the legal status of the collective agreement between the parties is irrelevant to the question of whether it is incorporated into individual contracts of employment:Marley v. Forward Trust Group Ltd.  IRLR 369:There are also special rules relating to incorporation of no-strike agreements:TULRCA s.180: Effect of provisions restricting right to take industrial action.
? (1) Any terms of a collective agreement which prohibit or restrict the right of workers to engage in a strike or other industrial action, or have the effect of prohibiting or restricting that right, shall not form part of any contract between a worker and the person for whom he works unless the following conditions are met.
? (d) is one where each trade union which is a party to the agreement is an independent trade union; and that the contract with the worker expressly or impliedly incorporates those terms in the contract.
? Burton Group v. Smith  IRLR 351.Express bridging termEvidence for the existence of express bridging terms may be found in the contents of written statements which under ERA s. 2(2)-(4) must make reference to any relevant collective agreement.Implied bridging termCourt may also imply into the contract a 'bridging term' necessary to give effect to a collective agreement which is applicable to the contract; aligns the legal contents of the contract with the circumstances governing its operation in practice.
? Braganza v. BP Shipping  IRLR 487: Mr B was the chief engineer on a BP oil tanker. His COE provided for compensation for death so long as, in the opinion of BP, the death did not result from Mr B's wilful act or default". One night, after he was asked to inspect the engine, he disappeared. There was some suggestion that he had committed suicide rather than simply fallen overboard. BP's inquiry concluded that suicide was most likely and thus there had been "wilful default" and thus death in service benefits were not payable to Mrs B, who bought a claim for the benefits. After hearings in the HC and CA, the general issue was what it meant to say that the decision of a contractual fact-finder had to be a reasonable one: whether unreasonableness was analogous to Wednesbury unreasonableness. SC Held: BP's decision that Mr B had committed suicide, although not "arbitrary, capricious or perverse", had been unreasonable in the Wednesbury sense, having been formed without taking relevant matters into account. Mrs B's claim for death benefits would succeed. A party who is charged with making decisions which affect the rights of both contractual parties has a clear conflict of interest which is heightened due to the significant imbalance of power in an employment contract. To ensure this power is not abused, the courts have implied a term to as to the manner in which such powers may be executed. The decided cases reveal an understandable reluctance to adopt the fully developed rigour of judicial review but there are signs that the contractual implied term is drawing closer and closer to such principles; encompassing both (i) the decision making process (proper account of matters) and (ii) the outcome (no reasonable decision maker). It is clear that the employer is required to take a 'reasonable' view for the purposes of determining a contractual entitlement and is bound to take the decision 'rationally (as well as in good faith) and consistently with [the relevant] contractual purpose'. Both limbs of the Wednesbury formulation are included in the rationality test in relation to employment contracts but whatever term may be implied depends upon the terms and the context of the particular contract involved. Further, any decision making function has to be exercised in accordance with the implied obligation of trust and confidence. The more unlikely an outcome, the more cogent the evidence must be to show that it happened. Lord Hodge: Because employment is a relational contract, an employer may require cogent evidence before it makes a finding that has serious consequences for an employee or his family, including the loss of death in service benefit. It is consistent with the duty of trust and confidence that where the evidence is exiguous, the employer should ask itself whether there was evidence of sufficient quality to justify the finding, and when there is no cogent evidence, it should refrain from making a positive finding as to the cause of death.
3.4 The 'translation' problem: appropriateness of terms for incorporationCollective or procedural terms may not be appropriate for incorporation.This is a major limitation on the normative effects of collective agreements.Terms intended to regulate the employment of one group of employees won't be incorporated into the contracts of others. May be that certain terms are intended to be part of the 'contractual' function of the agreement which governs the collective relationship between employer and trade union, as opposed to regulating the terms and conditions of employees.Difficulty arises where the term is collective in nature but is also capable of conferring rights or imposing obligations upon an individual employee; often the bridging term is silent on this matter.?Provisions of collective agreements relating to organisational matters, such as the allocation of employees to certain tasks and operations, may not be appropriate for incorporation at an individual level.Malone v. British Airways plc  IRLR 32: Employer breached CA governing manning levels on flights. CA Held: No breach of COE. CAs are not legally enforceable without a specific provision stating a joint intent that they be legally enforceable. Their terms could only be enforced if incorporated into the individual contracts of employment. Question whether as a matter of construction the term was apt for incorporation. The touchstone for incorporation is whether the provision in question impacts upon the working conditions of the cabin crews. The test for the court is what the parties must objectively be considered to have intended the provision to mean. That has to be decided on the basis of the words used, set in context and against the factual matrix (including the employer's corporate objectives). The meaning given to the provision must make business sense. The agreement was a negotiation fleet collective agreement apt to cover planning for and employment of 11,500 employees; it was not the stuff of 11,500 individual contracts due to the disastrous consequences for the employer if the term were to be individually enforceable.Possible basis for addressing the issue of appropriateness of terms may to distinguish between terms which are procedural in nature and those which are substantive. Substantive terms, laying down entitlements in relation to pay, working time and other benefits, are normally incorporated into contracts of employment without difficulty. Problems have arisen in classifying redundancy selection procedures: not clear whether substantive or procedural:Camden Exhibition and Display ltd v Lynott  1 QB 555: Court held by a majority that the term of a national level collective agreement was incorporated into individual contracts of employment: 'overtime required to ensure the due and proper performance of contracts shall not be subject to restriction, but may be worked by mutual agreement and direct arrangement between the employer and operatives concerned.' Majority construed this as imposing a substantive obligation on the individual employees not to take any action to restrict overtime, such as an overtime ban.
? This appears to be a misreading of a term whose intention was to regulate the relationship between the national collective agreement and agreements at company or plant level.
? The amount of overtime was to be agreed at plant level, without restriction by the national agreement.
3.5 Incorporation from work rules, company handbooks, personnel documentation, and noticesWork rules may not constitute terms of the contract if they are simply a codified form of instructions from the employer, which can be altered unilaterally by the managerial prerogative.Certain rules are too precise in their effect to be classified in this way. Such as rules concerning discipline, hours of work or the method of calculating pay would normally be contract terms.Express incorporation normally requires reasonable notice to the employee or steps to bring it to his or her notice.Petrie v. Macfisheries  1 KB 93:Issue whether a communication from an employer is intended to be contractually binding has been considered in a number of recent bonus cases:Attrill v. Dresdner Kleinwort Ltd  IRLR 548: Bank minimum bonus pool of EU400m announced at "town hall" meeting and on the company intranet. Discretionary allocation. Section 1.4 Employee Handbook was incorporated into contracts of employment and conferred power to unilaterally vary the contracts: "The company reserves the right to vary the terms and conditions described in this handbook and the terms and conditions of your employment generally. Such changes can only be made by a member of the HR department and must be communicated to you in writing. When the change affects a group of employees, notification may be by display on notice boards or company intranet". Financial crisis. Head of HR sent an email to all employees stating that the bonus pool had already been communicated. Provisional bonus letters sent out "subject to review in the event that additional material deviations in revenue and earnings are identified". Bank takeover. Bonuses reduced by 90%. CA Held: Communications were effective for unilateral contractual amendment and the bank was obliged to pay the discretionary bonuses from the minimum pool (1) Clause 1.4 had to be interpreted objectively so as to give it a sensible and workmanlike construction. The second and third sentences were intended to be read disjunctively so either written communication by HR or group communication was needed. (2) The variation term was apt for incorporation and not too uncertain. The right to be considered for a bonus was a valid right perfectly capable of constituting a contractual term. (3) There was an intention to enter into legal relations when the offer was made. (4) There had been no need for acceptance of the offer. (5) Introduction of the MAC clause constituted a breach of the duty of trust and confidence. The sensitivity of the takeover bank to paying bonuses whilst in receipt of state support was not a reasonable and proper cause for introducing the clause. The original promise had been repeatedly reiterated.
3.6 Terms implied from custom and practiceA term which is 'reasonable, certain and notorious' may be implied on the basis of custom and practice:But only if is shown that the parties implicitly contracted on the assumption these informal norms would applyCustom and practice defined as: 'those transactional rules of job regulation which arise, not from any explicit or formal negotiation, but from a process whereby managerial error or omission establishes a practice which the workers see as legitimate to defend.'Whether such informal practices (such as engineers right to boycott jobs that would not pay a satisfactory wage, or the implied right to lay off) deserve informal recognition is doubtful.Importance of custom and practice has declined due to the formalisation of contract terms and conditions which employment protection legislation, and in particular the introduction of the written statement, has encouraged.?

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