Employment Contracts: Written Statements, Implied Terms, and Changes, Lecture notes of Business

Download Employment Contracts: Written Statements, Implied Terms, and Changes and more Lecture notes Business in PDF only on Docsity! Employment contracts – the formalities 1. Written statement Under Section 1 of the Employment Rights Act 1996, all employees should be given a written statement of certain terms and conditions governing their employment within two months of commencing employment.1 The written statement of terms and conditions does not necessarily constitute the whole contract of employment, as there can be additional written or implied terms in an employee’s contract which are not covered in the written statement. Often, a contract and an employee handbook are used to provide the complete express terms. Sections 1(3) and 1(5) of the Employment Rights Act detail the matters to be set out in the written statement. These include: • the identity of the parties; • the date on which the employment began; • the date on which the employee’s period of continuous employment began; • the scale and rate of remuneration; • the intervals at which remuneration is paid; • terms relating to hours of work; • terms relating to holidays; and • job title or description of work and place of work. The following particulars should also be provided or reference should be made to where they can be obtained: • terms relating to sickness absence and payment during such absences; • pension entitlement; • the length of notice that the employee is entitled to give and receive to terminate the contract of employment; • in the case of non-permanent or fixed-term contract, when the contract will cease; • details of any collective agreement affecting the terms and conditions of employment; • details of the disciplinary and grievance procedures applicable to the employee; and United Kingdom Paul Callaghan David Kent Taylor Wessing 67 1 Section 1 of the Employment Rights Act 1996. • if the employee is required to work outside of the United Kingdom for more than a month, details of this employment and any terms and conditions regarding the employee’s return to the United Kingdom. An employee is also entitled to receive an itemised statement of pay and deductions with each payment of his wages or salary.2 2. Implied terms Some terms are not expressly agreed, but are implied into the contract by common law or statute. Terms implied by common law on the employer include the following duties: • to pay wages (and potentially also to provide work); • to give reasonable notice; • to indemnify an employee for expenses and liabilities incurred by the employee in the course of his employment;3 • to take reasonable care of the employee’s safety and working conditions;4 • mutual trust and confidence;5 and • to take reasonable care when providing a reference.6 Terms implied by common law on the employee include the following duties: • to give personal service; • to give reasonable notice; • to obey lawful and reasonable orders;7 • to exercise reasonable care and skill (and an indemnity for deviation from this); • fidelity and good faith; • not to disrupt the employer’s business; • not to compete; • not to solicit the employer‘s customers; • not to entice employees; • to disclose wrongdoing; • confidentiality; • not to misuse the employer’s property; and • to account for a bribe, secret profits or secret commission. Terms can also be implied into contracts where the court considers that they are necessary for the business efficacy of the contract or where they are so obvious that the parties must have intended them. This is known as the ‘officious bystander‘ test.8 A term may also be implied where the parties’ conduct demonstrates that the term United Kingdom 68 2 Section 8 of the Employment Rights Act 1996. 3 Re Famatina Development Corporation Ltd [1914] 2 Ch 271. 4 Wilsons & Clyde Coal Ltd v English [1938] AC 57. 5 Woods v WM Car Services (Peterborough)Ltd [1983] IRLR 413, CA. 6 Bartholomew v London Borough of Hackney [1999] IRLR 246. 7 Laws v London Chronicle Ltd [1959] 2 All ER 285. 8 Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206. the employee’s duties, working methods or place of work; and even in the absence of this clause, an employee cannot insist on doing his job in a certain way or at a set location. An employee is under a duty at common law to obey the lawful and reasonable orders of his employer. This implied duty will not normally form part of the contract of employment and consequently can be altered unilaterally by the employer.20 An employee is not bound by an illegal order from his employer – for example, to drive a lorry without third-party insurance21 or to falsify the account books.22 Reasonableness will be a question of degree. In Ottoman Bank v Chakarian23 the Privy Council held that it was unreasonable for an employee to comply with an order to stay in Turkey, where he had been sentenced to death. In comparison, in Walmesey v Udec Refrigeration Ltd24 the tribunal did not uphold the employee’s refusal to go to Wexford, Ireland, as they found the employee’s argument that Wexford was an IRA stronghold to be unproven. An instruction may not be regarded as reasonable if it is inconsistent with the nature of the contract. In Price v Mouat25 a highly paid buyer did not have to comply with an instruction to carry out a manual task in a warehouse. An employee is not relieved from the duty to obey lawful and reasonable orders when he is on sick leave, unless the illness prohibits compliance.26 An employee may need to adapt to new working methods after appropriate training.27 The employer’s right to require the employee to obey instructions may be limited by the implied term of mutual trust and confidence. In accordance with Section 1(4)(h) of the Employment Rights Act, the place or places of work should be detailed in the employment contract. A mobility clause may detail the area within which the employee can work. The existence or otherwise of a mobility clause will depend on the facts of the case. A mobility clause is not a term implied by law and is likely to be implied only on the grounds of business efficacy.28 In Jones v Associated Tunnelling Co Ltd29 the EAT implied a term allowing the plaintiff’s employer to instruct him to work at any place within reasonable daily travelling distance from his home, on grounds of business efficacy.30 Mobility clauses might also not be as restrictive for a senior member of staff.31 In United Bank Ltd v Akhtar32 it was held that a mobility clause (whether express or implied) cannot be exercised in such a way as to breach the implied duty of trust and confidence. In that case it was also held that there was an implied duty, which Paul Callaghan, David Kent 71 20 [1997] IRLR 105. 21 Gregory v Ford [1951] 1 All ER 121. 22 Morrish v Henlys (Folkestone) Ltd [1973] ICR 482. 23 [1930] AC 277. 24 [1972] IRLR 80. 25 (1862) 11 CBNS 508. 26 Marshall v Alexander Sloan & Co Ltd [1980] ICR 394. 27 Cresswell v Board of Inland Revenue [1984] ICR 508. 28 Parau v Iceland Frozen Foods plc 1996 IRLR 119. 29 [1981] IRLR 477. 30 See also Courtaulds Northern Spinning Ltd v Sibson [1988] ICR 451. 31 Little v Charterhouse Magna Assurance Co Ltd [1980] IRLR 19. 32 [2000] WL 456. was not to be breached, to provide reasonable notice of relocation and not, by exercising a mobility clause, to make performance of the employment contract impossible. In Millbrook Furnishing Industries Ltd v McIntosh33 the EAT made a non-binding comment that, subject to it being on a temporary basis and with no reduction in wages, an employer could oblige an employee to transfer to other suitable work where the “stresses or the requirements of [the] business” necessitated it.34 United Kingdom 72 33 [1981] IRLR 309. 34 This case was followed in Luke v Stoke on Trent City Council UKEAT/0344/06.