Unless a detailed written contract of employment was made, an employer is required to provide a new employee a written statement setting out certain terms of the contract of service with their employee.
This needs to be provided on or before their first day of employment and must include the following –
- Names of the employer and employee
- Date when employment began
- Job title or description of work the employee is employed to undertake and any probationary period
- Details of payment
- Terms and conditions relating to hours of work and holidays
- Information on where rules on health and safety may be found
- Period of employment if not indefinite
- Place of work
- Details of currency payment will be made, any terms and conditions relating to return to the UK if employee is required to work overseas for more than one month
Additionally, on the first day of employment, employers must provide the employee with information about sick pay, maternity leave and notice periods.
Within the first two months, the employer must update the employee with the following information –
- Pensions and pension schemes
- Collective arrangements
- Any other right to non-compulsory training provided by the employer
Termination of employment
A contract of employment often ends without any breach of its terms by either party, either by –
- Notice – employment contract may be terminated by notice being given. Statutory notice is one week for each year of continuous employment, up to a maximum of 12 weeks. Under common law, a contract can be terminated on the giving of “reasonable notice”, this can exceed but cannot be less than the statutory notice and depends on several factors, such as the seniority of the employee. An employee is entitled to be given notice unless the employer is entitled to dismiss the employee instantly with a cause of action. For example, the employer will make a payment in lieu of the notice period.
- Passage of time – a fixed term contract expires at the of an agreed period.
- Mutual agreement – employee and employer make a “compromise agreement” and agree to end their relationship at any time and upon any terms.
- Frustration – employee can no longer perform the services hired for due to ill health, imprisonment or prolonged absence
- Summary dismissal with a cause – an employer may dismiss an employee immediately due to gross misconduct, such as theft or wilful damage to the employer property.
An employment contract can end by breach (wrongfully terminated) in the following ways –
- Summary dismissal without a cause – if an employer dismisses the employee without giving the required notice or observing the other formalities agreed in the contract
- Constructive dismissal – this occurs where an employee is forced to resign and leave their position against their will because their employers conduct results in unreasonable changes to their contract of employment as originally agreed. For example, the employer instructs an employee to work night shifts when it was agreed that the employer would work only during the day.
An employee who was wrong wrongfully dismissed is entitled to compensation for the loss they have experienced because of the breach. An employee must take reasonable steps to mitigate their loss, trying to find a new job at the comparable level.
Unfair dismissal and wrongful dismissal
The right not to be unfairly dismissed is given to the employees under the Employment Rights Act 1996.
Unfair dismissal occurs where either –
- procedure of dismissal was not fair
- reason of dismissal was not fair
Automatically unfair reasons include the following (but are not limited to) –
- discrimination on the grounds of protected characteristics
- trade union membership or refusing to join a trade union
- compulsory retirement on the grounds of age (unless this can be objectively justified)
- jury service
- pregnancy or the exercise all family employment rights
- whistle blowing
Unfair dismissal rights granted by the Employment Rights Act will usually start after two years of continuous employment. However, for any of the automatically unfair reason stated above there is no qualifying period.
Potentially fair reasons for dismissing employee include –
- the ability or qualifications of the employee
- the conduct of the employee
- redundancy
However, even when the reason is potentially fair, a tribunal may still find there has been unfair dismissal if reasonable procedures in relation to the dismissal were not followed.
Wrongful dismissal is when an employee’s contract of employment comes to an end because of breach of contract by their employer.
What does an employee do if unfair dismissal?
Initially an employee notifies ACAS (the advisory conciliation an arbitration service) if they wish to make a claim for unfair dismissal. A claim might then proceed to the employment tribunal. If the employee is found to have dismissed employee unfairly awards can take the following 3 forms
- Reinstatement in the same job
- re engagement in another suitable job with the same employer
- compensation
A compensation award may comprise 3 elements –
- basic award – this is calculated in a similar way as statutory redundancy pay
- compensation award – this is based on the employees’ losses, which can include future losses. The employee is under duty to mitigate their loss.
- Punitive additional award – this is given where the employer has not complied with an order for re-instatement or re-engagements.
Compensation for unfair dismissal is not tax as employee’s earnings rather it is considered a residual termination payment and is exempt from tax and National Insurance.
Redundancy
An employee is dismissed by reason of redundancy where the only or main reason for dismissal is the following –
- The employer has ceased or intends to cease the business in which the employee was employed
- The requirements for employees to perform work or Pacific type, or to conduct it at the location in which they employed call mom have ceased or diminished, or expected to do so in the future
Statutory redundancy payment must be made where an employee with two or more years of continuous employment is dismissed by reasons of redundancy. The payment is calculated in accordance with the statutory scale and is based on the employee’s age, weekly pay and length of employment. There is a statutory cap on the number of weeks’ pay, up to £30,000 is tax exempt.
Statue redundancy payments are not treated as earnings although they are treated as residual termination payments
If the reasons for the redundancy or the procedure followed is not fair the employee might have the right to claim for unfair dismissal. Employees who are made redundant have the right to be consulted about the terms of their redundancy and to be offered further opportunity of employment with their employer.
In the context of redundancy, special protections offered to the following –
- pregnant employees who take maternity leave
- employees who had suffered a miscarriage
- employees taking adoption leave
- employees taking shared parental leave
