Introduction

SOURCES OF UK EMPLOYMENT LAW

There are three main sources of UK employment law: the common law, statute and European law (in the form of both European Directives and decisions of the European Court of Justice).

Common law. Since all employees in the UK work under a contract of employment with their employer, the common law (particularly the law of contract) forms the legal basis of the employer/employee relationship.  A contract of employment need not be but is usually recorded in writing.  The parties are free to stipulate which law will be the governing law of the contract.  However, certain mandatory statutory employment protection rights will apply regardless of the law of the contract.  In addition, the law of tort will govern matters such as an employer’s liability for the acts of its employees and liability for industrial accidents.

Statute.  Since the early 1970s there has been a dramatic growth in the amount of UK employment protection legislation which has supplemented the common law rules.  The main employment law statutes are:-

Equal Pay Act 1970 Health & Safety at Work etc. Act 1974 Sex Discrimination Act 1975 Race Relations Act 1976 Trade Union and Labour Relations (Consolidation) Act 1992 Disability Discrimination Act 1995 Employment Tribunals Act 1996 Employment Rights Act 1996 Public Interest Disclosure Act 1998 Data Protection Act 1998 National Minimum Wage Act 1998 Human Rights Act 1998 Employment Relations Act 1999 Employment Act 2002 Employment Relations Act 2004 Disability Discrimination Act 2005 Equality Act 2010

In addition, there is a substantial amount of secondary legislation in the form of regulations which contain further provisions which affect the employment relationship.  In some cases the legislation is supported by Codes of Practice drawn up by various government agencies.  Although the Codes do not have direct legal effect, they are often, and in some cases have to be, taken into account by Employment Tribunals when deciding whether an employer has complied with its statutory obligations.

European law.  If UK domestic law has failed properly to implement EC Treaty obligations, individuals may rely on the EC Treaty in the UK courts.  EC legislation has been particularly important in the areas of equal pay, discrimination and employees’ rights on business transfers. In addition, since the European Court of Justice is the final arbiter in matters of interpretation of European legislation, its judgments are important when it comes to questions relating to the interpretation of obligations derived from European Directives.  

TYPES OF WORKER IN THE UK

There have traditionally been three main categories of worker in the UK: self-employed independent contractors, agency workers or temps, and employees, with each category enjoying different employment protection rights.  In recent years, however, a fourth category, ‘workers’  has been established.  Confusingly, this category overlaps with the others.

Independent Contractors.  In essence, an independent contractor is someone who is in business on their own account and who is responsible for making their own decisions as to how the job is performed.  There are advantages for both the employer and the individual in having a relationship of this nature; the employer is freed from most statutory employment protection legislation, and the individual enjoys a favourable tax position.  However, these types of relationship have come under increasingly closer scrutiny by the courts and HM Revenue & Customs (HMRC) (formerly the Inland Revenue).  The fact that an individual is labelled an independent contractor by both parties to the relationship is not the determining factor. Current decisions suggest that the most important considerations are whether there is mutuality of obligations and an obligation on the part of the contractor to do the work personally. If there is, then the court and/or HMRC is likely to find that the relationship is actually one of employer/employee.

Agency Workers.  Some workers are employed or engaged by an employment agency which then supplies their services to the hirer.  Although the hirer will owe certain statutory duties (e.g. duties under the discrimination and health and safety legislation) it will not owe the agency worker many of the employment protection rights enjoyed by employees.   Agency workers are generally used for temporary engagements although it is not uncommon for engagements to last for several months or even years.  Case law has emphasised, however, that if an agency worker is used by a hirer for an extended period, and other facts point to an employer/employee relationship, the agency worker may be able to claim employment rights directly against the hirer (even if there is no contract directly between the agency worker and the hirer).

Employees.  The majority of workers in the UK are employees of the company to which they provide their services.  Unlike in some EU countries, there is no legal distinction between blue collar workers, white collar workers and senior directors, other than whatever may be written into their employment contracts.  The basic principles of the common law and statutory employment protection legislation apply to all employees regardless of their status.  As long as they satisfy the relevant qualifying conditions, employees will benefit from greater statutory employment protection rights than independent contractors and agency workers.  In particular, after two years’ service, an employee will benefit from the right not to be unfairly dismissed.

Workers.  The idea of a separate legal category of ‘workers’ is a relatively new one in UK law.  The concept derives from European law.  In broad terms, a worker is someone who works under an employment contract, or some other contract under which they agree to provide services personally.  In addition, to qualify as a worker the organisation to which the individual is providing their services must not be a client/customer of their profession or business.  So, for example, some independent contractors may qualify as workers.  Workers enjoy fewer rights than ‘full’ employees, but still benefit from, for example, rights relating to the number of hours they work, the amount of annual leave they can take, and the amount they are paid.   

UK EMPLOYMENT COURTS

There are three forums which decide legal disputes between a worker and whoever employs them: Employment Tribunals, the common law courts (the High Court or County Court) and the recently introduced arbitration scheme operated by a government body called the Advisory Conciliation & Arbitration Service (“ACAS”).

Employment Tribunals. These are specialist employment courts which hear the majority of disputes which arise between employers and the staff they engage.  They deal mainly with claims brought under the employment protection legislation such as unfair dismissal and discrimination claims.  They also have jurisdiction to hear contractual claims (subject to a maximum award of £25,000) provided the claim arises or is outstanding on the termination of employment.  Employment Tribunals usually comprise three members: a legally qualified chair and two lay members (one from a Trade Union background and one from a management background). Their decisions can be appealed to the Employment Appeals Tribunal.

 Common law courts.  An employee who wishes to bring a contractual claim (such as for notice pay) may elect to pursue it in either the High Court or the County Court instead of the Employment Tribunal.  In general, a claim may only be brought in the High Court if its value is more than £15,000.  The process in the High Court and the County Court tends to be more formal and lengthy than in the Employment Tribunal, although the successful party can usually recover most of their costs from the unsuccessful party, which they cannot in the Employment Tribunal.

ACAS Arbitration Scheme.  This is a voluntary scheme which came into force on 21st May 2001 and is intended to provide a faster, non-legalistic and more cost effective alternative to Employment Tribunals.  It is currently only available for the resolution of straightforward unfair dismissal complaints, and in relation to flexible working disputes.  Both parties must agree to opt for the scheme.  The hearing is conducted in private before a single ACAS arbitrator who may award exactly the same remedies as would be available from an Employment Tribunal.

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