Terms and Conditions of Employment
1.1 What are the main sources of employment law?
The main source of employment law is legislation. Rights agreed at a European level are normally brought into force through national legislation. Other rights are included in contracts of employment.
There are likely to be future changes to employment law following the UK’s decision to leave the European Union. However, at the moment, the UK continues to be subject to obligations under EU law and employment rights remain unchanged.
1.2 What types of worker are protected by employment law? How are different types of worker distinguished?
The law distinguishes between employees, workers and the self-employed. Employees have the most extensive rights. Individuals are employees if: the employer has control over the work; there is mutuality of obligation (an obligation on the employer to offer and on the employee to perform work); and there is nothing inconsistent with an employment relationship.
Individuals are workers if they are obliged to perform services personally and do not carry on a business. Workers are not protected against unfair dismissal and are not entitled to receive redundancy payments.
The self-employed typically have very limited protection.
1.3 Do contracts of employment have to be in writing? If not, do employees have to be provided with specific information in writing?
Contracts of employment do not have to be in writing. However, employees must be provided with a written statement of particulars including: the names of employer and employee; job title; when continuity of employment began; pay rates and payment intervals; place and hours of work; holiday entitlement; sick pay; disciplinary and grievance policies; notice provisions; and whether the terms of employment are governed by a collective agreement.
Employee shareholders must receive an additional statement setting out their employment rights and rights as a shareholder.
1.4 Are any terms implied into contracts of employment?
Various terms are implied into employment contracts. The duty of mutual trust and confidence is particularly important: employers and employees should not behave in a way that is calculated or likely to destroy or damage the relationship of confidence and trust between them.
The implied duty of loyalty and fidelity prevents an employee from competing with his employer while he remains in employment and from disclosing confidential information. Employees are under an implied obligation to exercise reasonable skill and care and to obey reasonable instructions. Employers have a duty to pay wages and to provide a suitable and, so far as practicable, safe environment.
Terms can also be implied by custom and practice if an employer invariably follows a particular practice over a period of time.
1.5 Are any minimum employment terms and conditions set down by law that employers have to observe?
Employees have certain minimum legal rights, including the right to receive a week’s notice per year of service up to a maximum of 12 weeks.
A national minimum wage of £7.20 per hour (for workers aged 25 or over; lower rates apply to younger workers) and a maximum average working week of 48 hours apply to most workers. Workers can “opt out” of the maximum working week.
Workers are entitled to minimum daily and weekly rest periods and to 5.6 weeks’ holiday each year.
1.6 To what extent are terms and conditions of employment agreed through collective bargaining? Does bargaining usually take place at company or industry level?
According to government statistics, in 2015 around 27.9 per cent of the total UK workforce, but only 16.1 per cent of private sector employees, were covered by collective agreements.
Collective bargaining takes place almost exclusively at company or workplace level.
Employee Representation and Industrial Relations
2.1 What are the rules relating to trade union recognition?
Trade unions can gain recognition through agreement with an employer, or under the statutory recognition process. Under the statutory process, unions are entitled to apply to the Central Arbitration Committee (CAC) for recognition if the employer, in conjunction with any associated employer, has 21 or more employees and at least 10 per cent of employees are trade union members. The application will succeed if it is supported by a majority of workers, demonstrated by trade union membership or employee surveys. The CAC may arrange a ballot to check support. The trade union must secure the votes of the majority of workers voting and at least 40 per cent of the total workers constituting the bargaining unit. If successful, the trade union will be entitled to collective bargaining on pay, hours and holidays.
2.2 What rights do trade unions have?
Recognised trade unions have a variety of rights, including the disclosure of information for collective bargaining, to be informed and consulted in relation to collective redundancies and transfers of undertakings, pension matters and training, and given information on health and safety issues.
2.3 Are there any rules governing a trade union’s right to take industrial action?
Complex rules govern a trade union’s right to take industrial action. A union must obtain support for industrial action from members in a secret ballot, and must provide the employer with details of the ballot and its result. If the union fails to comply with the requirements, employers can obtain an injunction to prevent the action.
2.4 Are employers required to set up works councils? If so, what are the main rights and responsibilities of such bodies? How are works council representatives chosen/appointed?
Employers are not obliged to set up works councils in the UK unless they have 50 or more employees and a request is made by at least 10 per cent of the workforce. Such requests are unusual.
If a request is made and a works council is set up, its rights and responsibilities will be a matter for agreement. In the absence of agreement, default rules require representatives to be elected and to be informed and consulted about the economic situation, threats to employment, and substantial changes in work organisation.
2.5 In what circumstances will a works council have co-determination rights, so that an employer is unable to proceed until it has obtained works council agreement to proposals?
Works councils do not have co-determination rights.
2.6 How do the rights of trade unions and works councils interact?
Trade union rights generally take precedence over those of a works council. If collective redundancies or a transfer of an undertaking is proposed, an employer must consult with a recognised trade union and (if the default rules apply) must notify, but does not have to consult, the works council.
2.7 Are employees entitled to representation at board level?
There is currently no general statutory right to representation at board level. It is very rare for an employer to appoint employee directors voluntarily.
3.1 Are employees protected against discrimination? If so, on what grounds is discrimination prohibited?
Employees and workers are protected against discrimination because of age, disability, gender reassignment, pregnancy, race, religion or belief, sex, sexual orientation or marriage or civil partnership status (“protected characteristics”). They are also protected against certain types of discrimination because someone with whom they are associated has a protected characteristic.
Discrimination is prohibited at every stage of the employment relationship, including recruitment and after termination.
3.2 What types of discrimination are unlawful and in what circumstances?
Direct discrimination occurs if an employee is less favourably treated because of a protected characteristic. Only direct age discrimination can be justified.
Indirect discrimination occurs where an employer adopts a “provision, criterion or practice” which puts people who share a protected characteristic at a particular disadvantage. If employers can justify a “pcp” by showing it is a proportionate means of achieving a legitimate aim, the treatment is not unlawful.
Harassment is conduct related to a protected characteristic which has the purpose or effect of violating an employee’s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment.
It is unlawful to victimise an employee because they have taken action to enforce their right not to be discriminated against, or because they have made or supported someone else’s allegations of discrimination.
Disabled employees have a right not to be treated unfavourably for a reason arising from a disability and to have reasonable adjustments made for them if they are put at a disadvantage by a provision, criterion or practice adopted by the employer or by a physical feature of an employer’s premises.
3.3 Are there any defences to a discrimination claim?
An employer is vicariously liable for the acts of its employees, so is liable if one employee discriminates against another in the course of employment. An employer can avoid liability if it can show that it has taken all reasonable steps to prevent the discrimination occurring.
3.4 How do employees enforce their discrimination rights? Can employers settle claims before or after they are initiated?
Employees can bring discrimination claims before the Employment Tribunal.
Claims can be settled before or after they are initiated if a settlement agreement is entered into which complies with various formalities. For example, the employee must have received independent legal advice on the terms and implications of the agreement. Claims can also be conciliated by the Advisory, Conciliation and Arbitration Service (ACAS) and any settlement will be binding.
3.5 What remedies are available to employees in successful discrimination claims?
Compensation is the main remedy in discrimination claims, comprising an injury to feelings award and a loss of earnings award. Injury to feelings awards range between £660 and £33,000 depending on how serious the discrimination was and how long it lasted. A loss of earnings award compensates the employee for the financial loss they have suffered because of the employer’s discrimination. There is no limit on compensation in a discrimination claim.
Employment Tribunals can make recommendations requiring an employer to take steps to reduce the impact of the discrimination.
3.6 Do “atypical” workers (such as those working part-time, on a fixed-term contract or as a temporary agency worker) have any additional protection?
Part-time workers have the right not to be treated less favourably (on a pro rata basis) than those who work full-time.
Fixed-term employees have the right not to be treated less favourably than comparable permanent employees. The use of successive fixed-term contracts is limited to four years, unless the use of further fixed-term contracts is justified on objective grounds.
Agency workers who have been engaged for a period of 12 weeks have an entitlement to the same basic terms and conditions in relation to pay and working hours as comparable employees.
Maternity and Family Leave Rights
4.1 How long does maternity leave last?
Employees are entitled to a period of six months’ ordinary maternity leave (OML) and six months’ additional maternity leave (AML). At least two weeks’ leave must be taken after a child’s birth (compulsory maternity leave).
4.2 What rights, including rights to pay and benefits, does a woman have during maternity leave?
A woman’s usual terms and conditions of employment continue throughout OML and AML, except remuneration. Remuneration is replaced by Statutory Maternity Pay (SMP) which is currently paid at a rate of 90 per cent of normal pay for the first six weeks, followed by a flat rate of £139.58 a week (from April 2015; the rate was not increased in 2016) (or normal weekly pay if lower) for a further 33 weeks. Some employers offer enhanced company maternity pay.
4.3 What rights does a woman have upon her return to work from maternity leave?
A woman returning to work from OML is entitled to return to the job in which she was employed before her maternity leave on the same terms and conditions, and with the benefit of any general improvement in terms and conditions. A woman returning to work from AML has the same right, unless it is not reasonably practicable for her to return to the old job, in which case she is entitled to return to a job which is suitable and appropriate and on no less favourable terms and conditions.
4.4 Do fathers have the right to take paternity leave?
Eligible fathers are entitled to one or two weeks’ paternity leave, which is paid at a rate of £139.58 per week (from April 2015; the rate was not increased in 2016). Some employers offer enhanced company paternity pay.
4.5 Are there any other parental leave rights that employers have to observe?
Adoptive parents enjoy rights to ordinary and additional adoption leave which are broadly similar to maternity leave rights. Parents have the right to 18 weeks’ unpaid leave to care for a child under the age of 18, although a maximum of four weeks’ leave is generally permitted each year. Employees have the right to take unpaid time off work to deal with family emergencies.
A new right to shared parental leave was introduced in 2015. If a woman chooses to bring her maternity leave to an end early, the balance of any leave and pay can be taken by either parent as flexible shared parental leave before the baby is a year old. Similar rights apply to adoptive parents.
4.6 Are employees entitled to work flexibly if they have responsibility for caring for dependants?
Employees with at least 26 weeks’ service are entitled to request flexible working, regardless of their reasons for doing so. Employers must consider requests reasonably. There is no right to have a request granted and employers can reject requests for a number of business reasons. The penalty for failing to follow the correct procedure is fairly low (a maximum of £3,832) but the employer could also face discrimination (particularly indirect discrimination) claims if a request is refused.
5.1 On a business sale (either a share sale or asset transfer) do employees automatically transfer to the buyer?
An asset sale will generally amount to a transfer of an undertaking if tangible and intangible assets are transferred and the business continues as a going concern. The contracts of employment of employees employed by the seller and assigned to the business will automatically transfer to the buyer. In the UK, an outsourcing will often amount to a transfer of an undertaking.
In a share sale, there is no change in the identity of the employer.
5.2 What employee rights transfer on a business sale? How does a business sale affect collective agreements?
Employees transfer to the buyer on their existing terms and conditions and with their continuity of employment preserved. The buyer must observe those terms following the transfer. Most pension benefits do not transfer. Collective agreements are treated as having been made with the buyer, so their terms may continue in force.
On a share sale, employees continue to be employed on their existing terms and conditions.
5.3 Are there any information and consultation rights on a business sale? How long does the process typically take and what are the sanctions for failing to inform and consult?
Representatives of affected employees (trade union representatives or, in their absence, elected representatives) must be informed and may need to be consulted on an asset transfer. They must be told about the fact of the transfer, when it is likely to take place, the reasons for it, the implications for the employees, and whether any measures are proposed by the buyer or seller. If measures are proposed, the employee representatives should be informed long enough before the transfer to allow consultation to take place. A failure to inform and consult can result in a protective award of up to 13 weeks’ pay per employee.
Unless the company has an information and consultation agreement (which is still unusual) there should be no information and consultation obligations on a share sale.
5.4 Can employees be dismissed in connection with a business sale?
Dismissals because of a transfer are effective but automatically unfair unless the employer can point to an “economic, technical or organisational” reason entailing changes in the workforce, such as a genuine redundancy situation. Dismissals that are not automatically unfair may be unfair on normal principles.
No special rules apply to dismissals in connection with a share sale.
5.5 Are employers free to change terms and conditions of employment in connection with a business sale?
Changes to terms and conditions because of a transfer are only allowed if the buyer can point to an “economic, technical or organisational” reason entailing changes in the workforce. This is difficult to show.
No special rules apply to changes to terms and conditions in connection with a share sale.
Termination of Employment
6.1 Do employees have to be given notice of termination of their employment? How is the notice period determined?
Employees have to be given notice of termination unless they are dismissed for gross misconduct. The length of the notice period is set down in an employee’s contract of employment, subject to the statutory minimum (see question 1.5).
6.2 Can employers require employees to serve a period of “garden leave” during their notice period when the employee remains employed but does not have to attend for work?
An employer can require employees to serve a period of “garden leave” if this is permitted under the employee’s contract. Garden leave may also be permitted if the employee has indicated that he does not intend to be bound by the terms of the contract (for example, he has sought to misuse confidential information).
6.3 What protection do employees have against dismissal? In what circumstances is an employee treated as being dismissed? Is consent from a third party required before an employer can dismiss?
Employees with more than two years’ service are protected against unfair dismissal. An employee is treated as dismissed if his employer terminates his contract (with or without notice), if he is employed on a fixed-term contract which expires, or if he resigns in response to a fundamental breach of contract by the employer. Consent from a third party is not required before a dismissal takes place.
6.4 Are there any categories of employees who enjoy special protection against dismissal?
It is automatically unfair to dismiss an employee for a variety of reasons, including: reasons related to pregnancy or maternity or family leave; reasons related to health and safety; for acting as an employee representative or taking part in trade union activities or protected industrial action; for making a protected disclosure; for making a flexible working request; or for working as a part-time or fixed-term employee. There is no qualifying period of employment to bring such claims.
6.5 When will an employer be entitled to dismiss for: 1) reasons related to the individual employee; or 2) business related reasons? Are employees entitled to compensation on dismissal and if so how is compensation calculated?
Employers must show that they have a potentially fair reason for dismissal. The potentially fair reasons are misconduct, capability (health or performance), illegality, redundancy or “some other substantial reason”.
Employees are entitled to receive a statutory redundancy payment if they are dismissed for redundancy. This is calculated as a week’s pay (capped at £479) for each year of service, with certain age-related discounts and uplifts. The maximum statutory redundancy payment is £14,370. Employees dismissed for a reason other than redundancy are not entitled to receive a statutory payment.
6.6 Are there any specific procedures that an employer has to follow in relation to individual dismissals?
Employers must follow a fair procedure to avoid a finding of unfair dismissal. What amounts to a fair procedure depends on the reason for the dismissal, but will generally involve warning the employee that he is at risk of dismissal, giving him a chance to comment on the employer’s reasons for wanting to dismiss and a chance to appeal against a decision to dismiss. It is unlikely to be fair to dismiss on capability grounds unless the employee has been given a reasonable opportunity to meet the required standard of performance or attendance, and in this case the process can take a number of months. Medical evidence about an employee’s condition might also be required in a capability dismissal.
6.7 What claims can an employee bring if he or she is dismissed? What are the remedies for a successful claim?
An employee with more than two years’ service can bring an unfair dismissal claim in the Employment Tribunal. If the claim succeeds, the employee would be entitled to a basic award (a week’s pay capped at £479 per year of service, with permitted age-related discounts and uplifts, to a maximum of £14,370). The employee would also be entitled to a compensatory award, to reflect the financial loss caused by the dismissal. The maximum compensatory award is currently £78,962, or 12 months’ pay if lower.
There is no qualifying period of service for a claim of automatic unfair dismissal (see question 6.4).
Employees can also bring a discrimination claim if they believe their dismissal was because of a protected characteristic. There is no qualifying period of service for discrimination claims and no cap on compensation. There is also no cap on compensation for a claim that an employee was dismissed for making a protected disclosure. In practice, many claims for unfair dismissal are accompanied by one or more claims of discrimination and/or dismissal for making a protected disclosure.
6.8 Can employers settle claims before or after they are initiated?
Unfair dismissal claims can be settled in the same way as discrimination claims (see question 3.4).
6.9 Does an employer have any additional obligations if it is dismissing a number of employees at the same time?
If an employer has proposals to dismiss 20 or more employees as redundant within a period of 90 days, it must consult with trade union representatives or employee representatives before any final decisions are taken. Consultation must last at least 30 days if between 20 and 99 dismissals are proposed, and at least 45 days if 100 or more dismissals are proposed. Consultation must take place about avoiding dismissals, minimising the number of dismissals and mitigating the consequences of dismissals. The employer must also notify the Department for Business, Energy & Industrial Strategy of the proposed redundancies.
6.10 How do employees enforce their rights in relation to mass dismissals and what are the consequences if an employer fails to comply with its obligations?
If an employer fails to inform and consult on a collective redundancy, claims can be brought in the Employment Tribunal. If the claim is successful, the tribunal can order the employer to pay a protective award of up to 90 days’ pay per affected employee.
Protecting Business Interests Following Termination
7.1 What types of restrictive covenants are recognised?
Covenants typically prevent an employee from competing with, dealing with customers of, or soliciting the customers or staff of a former employer.
7.2 When are restrictive covenants enforceable and for what period?
Employers will only be able to enforce covenants if they can show that they have a legitimate business interest to protect (such as confidential information or customer connections) and that the covenant goes no further than reasonably necessary to protect that interest. If the covenant is too wide in its scope or duration, it will not be enforceable. Restrictions usually last between three and 12 months, depending on the seniority of the employee and the nature of the interest to be protected.
7.3 Do employees have to be provided with financial compensation in return for covenants?
Employees do not have to be given financial compensation in return for covenants. If a covenant is not justified, or it is too wide in scope or duration, a court is unlikely to enforce it, even if the employer makes an offer of financial compensation.
7.4 How are restrictive covenants enforced?
If a former employee is acting in breach of his covenants, an employer can apply to the court for an injunction to prevent further breaches. The employer may also be entitled to recover damages to compensate for any loss caused by the employee’s breaches.
Data Protection and Employee Privacy
8.1 How do employee data protection rights affect the employment relationship? Can an employer transfer employee data freely to other countries?
Employers must comply with the Data Protection Act 1998 (DPA) when processing employee data. In particular, data must be processed fairly and lawfully, for specified and lawful purposes, and adequate security measures must be in place. There are restrictions on transferring data outside the EEA unless adequate protection for the data is in place. The Information Commissioner can impose fines of up to £500,000 for serious breaches of the DPA.
8.2 Do employees have a right to obtain copies of any personal information that is held by their employer?
Employees are entitled to make a subject access request (subject to payment of a £10 fee). Employers then have 40 days to tell the employee whether their personal data is being processed, the purposes for which data is processed and to whom it is disclosed, and to provide a copy of all personal data that is held unless this would involve “disproportionate effort”.
8.3 Are employers entitled to carry out pre-employment checks on prospective employees (such as criminal record checks)?
Employers can carry out pre-employment checks, but it is good practice to limit this to checking information provided by the candidate. More detailed vetting may be appropriate where the role entails risks to the employer, clients, customers or others. Criminal records checks can be made through the Disclosure and Barring Service in relation to specified roles. Different levels of disclosure are available depending on the nature of the job applied for, with more detailed disclosures available where candidates will be working with children or vulnerable adults.
8.4 Are employers entitled to monitor an employee’s emails, telephone calls or use of an employer’s computer system?
Monitoring may be permissible if there is a good reason for it and it is a proportionate response to the problem it seeks to address. An employer will normally need to conduct an impact assessment, weighing up the purpose of monitoring against the adverse impact for employees or others, to judge whether monitoring is justified. If electronic communications are being intercepted, the employer will also need to make sure that it complies with the Regulation of Investigatory Powers Act.
8.5 Can an employer control an employee’s use of social media in or outside the workplace?
Misuse of social media in or outside the workplace may amount to misconduct, which an employer can deal with in the normal way through its disciplinary procedure. Whether a dismissal is fair will depend on the damage or potential damage to the employer’s reputation, whether the employer has a clear policy on the issue, and whether dismissal is proportionate (as well as whether a fair procedure has been followed).
Court Practice and Procedure
9.1 Which courts or tribunals have jurisdiction to hear employment-related complaints and what is their composition?
Employment Tribunals have jurisdiction to hear most employment-related complaints. They are composed of an Employment Judge (who is legally qualified) and two lay representatives, who usually have relevant experience as trade unionists or HR professionals. Many claims (including claims of unfair dismissal) are now heard by an Employment Judge sitting alone.
9.2 What procedure applies to employment-related complaints? Is conciliation mandatory before a complaint can proceed? Does an employee have to pay a fee to submit a claim?
Employees normally have to refer disputes to ACAS for pre-claim conciliation. If pre-claim conciliation is not successful, claims can be lodged with the Employment Tribunal. Generally, claims have to be lodged within three months of the matter complained of, with extensions to allow pre-claim conciliation to take place.
The parties must exchange documents and witness statements, and there is a hearing to decide the complaint. Normally, an employee has to pay a fee of up to £250 to lodge a claim, and a further hearing fee of up to £950 (although the employer will usually be ordered to reimburse those fees if the employee’s claim is successful). It is still relatively rare for the losing party to be ordered to pay the other party’s costs.
9.3 How long do employment-related complaints typically take to be decided?
A case generally takes around six months from being lodged until it is heard by the Tribunal.
9.4 Is it possible to appeal against a first instance decision and if so how long do such appeals usually take?
Employment Tribunal decisions can be appealed on a point of law to the Employment Appeals Tribunal, which is a specialist appeal tribunal that normally comprises a judge sitting alone. In cases of particular importance, the judge may sit with lay members with practical experience of employment relations. Appeals typically take nine to 12 months. There are fees to lodge a claim and before a hearing.