CONTRACTS OF EMPLOYMENT

OBJECTIVES
to consider the role of common law in
employment law
to examine the definition of employee
to examine the nature and content of the
employment relationship

Contract of Employment
THEMES
which group of workers should labour law
aim to protect?
what role should the employment contract
play, as a source of terms and conditions
of employment?

WHY IS THE CONTRACT OF

EMPLOYMENT STILL IMPORTANT?
to fill in gaps left unregulated by statute
because employment protection
legislation has been drafted in reliance on
contractual definitions
the role played by breach of contract in the
law of industrial action
employees still look to contractual
remedies as a more effective form of job
protection

Contract
1.Historical Origins of contract of employment
The move from status to contract and back to
status?
2. Characteristics of the contract of employment
Law v London Chronicle [1959]
C - Consideration
I - Intention
A - Acceptance
0 - Offer

Definition of an employment
contract
Who is an employee?
1. Statute: statutory definition:
S 230 ERA
S 295 TULR(c)A
An employee means an individual who has
entered into or works under a contract of
employment
Contract of employment means a contract
of service or apprenticeship

2.Definition in common law:

Tests:
Control
Integration
Economic Reality
Mutuality of obligations
Multiple test
Contextual Approach
Label applied by the parties

Tests
1. Control: Bramwell test:
a servant is a person who is a subject to
the command of his master as to the
manner in which he shall do his job.
Yewens v. Noakes 1880
2. Integration Test
A person under a contract of service does
his work as an integral part of the
business. Stevenson & Jordan 1952

3. Economic Reality
Market Investigations Ltd v. Minister of Social Security

control will be important, but it is not the sole

determining factor
other factors are whether the worker provides
his own equipment
whether he hires his own helpers
what degree of financial risk he takes
what degree of responsibility for investment and
management he has, and
whether he could profit from what the judge
called sound management

4. Mutuality of Obligations
Cases: Nethermere Ltd v Gardiner
O Kelly v Trusthouse Forte
Necessity to show mutuality of obligations
Important in relation to atypical workers:
seasonal workers, casual workers, home
workers, catering workers

5. The Multiple Test

Case Ready Mixed Concrete
Factors
To wear the companys uniform
Use the lorries only on a company business
Place them at the companys disposal for a set number of
hours
Obey the foremans orders
Other factors
They had to maintain their lorries and pay the running
cost
They could own more than one lorry and hire substitute
drivers.
They had no set hours of meal breaks
They decided on routes and paid their own national
insurance

6. Contextual approach
Case Lane v. Shire Roofing Co (Oxford)
He fell off a ladder and suffered serious
injuries
A real public interest in recognising the
employer/ employee relationship

5.The label applied by the parties

Case Ferguson v Dawson & Partners

(Contractors) Ltd
Case Massey v Crown Life Assurance Co

Illegality
Principle: ex turpi causa non oritur actio
action is not available on an illegal contract
Case Tomlinson v Dick Evans U Drive Ltd
Case Salveson v Simons
Case Leighton v Michael

SOURCES OF CONTRACTUAL
TERMS
How far does the law recognise the
normative effect of the different sources?
How does the law deal with conflicts
between different sources?

SOURCES OF CONTRACTUAL
TERMS
Express terms (letter of appointment,
items in a staff book)
Imposed terms (minimum notice, tax,
insurance, pension contribution)
Implied terms (duty of cooperation)
Terms incorporated from collective
agreements

SOURCES OF CONTRACTUAL
TERMS: IMPLIED TERMS
at common law, employees owe their employer a
duty to:
obey lawful orders and instructions
co-operate with their employer and be adaptable
exercise reasonable care and skill
serve the employer faithfully and honestly, and
maintain the relationship of mutual trust and
confidence
in turn, employers have an obligation to:
pay wages for work performed, or for which the
employee is ready to perform
provide work
take reasonable care for the safety of the employee,
and
maintain the relationship of mutual trust and

Duty of the employer

Duty to provide a safe workplace is onerous.

Wilsons & Clyde Coal Co. Ltd. v. English [1938] AC 57.

Waltons & Morse v. Dorrington [1997] IRLR 488.

Workplace stress has become an enormous issue for employers:

Intel Corporation v. Daw [2007] IRLR 355.

Majrowski v. Guys and St. Thomass NHS Trusts [2006] IRLR 695.
Dickins v. O2 plc [2008] EWCA Civ 1144; [2009] I.R.L.R. 58.
Connor v. Surrey County Council [2010] EWCA Civ 286; [2010] 3 All E.R.
905.
Veakins v. Kier Islington Ltd. [2009] EWCA Civ 1288; [2010] I.R.L.R. 132.

Provision of references is not free of risk:

Spring v. Guardian Assurance Plc. [1994] IRLR 460.

Bartholomew v. London Borough of Hackney [1999] IRLR 246.
McKie v. Swindon College [2011] EWHC (QB) 469; [2011] IRLR 575.

Duty of the employee

Duty of co-operation and adaptation:

Secretary of State for Employment v. ASLEF (No. 2) [1972]

2 QB 455.
Sim v. Rotherham MBC [1987] Ch. 216.
Ticehurst v. British Telecommunications Plc. [1992] IRLR
219.
Cresswell v. Board of the Inland Revenue [1984] IRLR
190.

Employees corollary of mutual trust and

confidence?
Complicated by potential for rule books etc. to
become part of the contract of employment?

Duty of the employee

Duty of care:

Lister v. Romford Ice & Cold Storage Ltd. [1957] AC

555.
Jones v. Manchester Corporation [1952] 2 QB 852.

Duty of fidelity:

Employees generally NOT fiduciaries.

Obligations on employees are not generally strict
seldom will the law condone heavy restrictions on
employees activities.
Many complex IP and trusts law issues can arise.

Incorporation of Terms from

Collective Agreements
Section 179 of TULRCA 1992: the collective
agreement is presumed not to have been
intended by the parties to be a legally
enforceable contract.
Two functions of Collective Agreements
A) procedural: regulating relations between
employer and Trade Unions
B) normative (substantive) regulating the terms
of employment contract (hours of work, pay)

Collective Agreements
How terms of collective agreements can
have legal effect in employment contract?
Express and Implied Incorporation
sufficient contractual intention (express)
Sufficient evidence (implied)

Collective Agreements
What is the position of employees who are
not members of the Trade Union?
In practice, the terms and conditions
contained in collective agreements are
normally applied uniformly across the
entire workforce, to members and not
members alike.

Collective agreements.

Less prevalence than in earlier decades.

Still important in some industries and the public sector.
Can have huge significance in some redundancy cases.
Have created some uncertainty.

Trade Union and Labour Relations (Consolidation) Act

1992, s. 179(1):
A collective agreement shall be conclusively presumed not to
have been intended by the parties to be a legally enforceable
contract unless the agreement
(a) is in writing, and
(b) contains a provision which (however expressed) states
that the parties intend that the agreement shall be a
legally
enforceable contract.