We are often asked - do I need an employment contract? The employment status of an individual isn't always easy to answer, but is important for a number of reasons. Certain legal rights only apply if an individual is an employee: e.g. the right not to be unfairly dismissed and the right to receive a statutory redundancy payment. If you don't have an employment contract is that a problem?
By law an employee is defined as an individual who has entered into or works under a contract of employment. While a contract doesn't have to be in writing every employer MUST give an employee written particulars of their main terms within 2 months of starting employment.
What is a contract of employment?
- It's defined as a contract of service or apprenticeship, whether express (oral or in writing) or implied."
- In simple terms, under a contract of service, A agrees to serve B.
The following factors point to employment status:
- The employee provides his own work or skill for the employer ('personal service')
- In return for wages or remuneration ('mutuality of obligation')
- The employer controls the employee ('control').
- Other aspects are consistent with a contract of service ('other factors').
Three areas (personal service, mutuality of obligation and control) are viewed as key in determining whether an employment relationship exists. If any one of these key areas is not established, there is no contract of employment.
The recent case of Quashie v Stringfellows Restaurants Limited illustrates this well.
- Q worked as a lap dancer for Stringfellows under a so called standard contract.
- It was assumed she was self employed.
- She worked on a rota; was expected to provide her own skill, was entitled to work when on the rota, and was paid by Stringfellows for the vouchers she received from clients, subject to agreed deductions.
- Stringfellows controlled Ms Q's activities at work.
- There was an expectation she would continue to be engaged by them.
The Tribunal held that Ms Q was an employee.
However it is important to remember 'employment status' has been blurred in recent years by the evolution of the status of the "worker".
While workers have less extensive rights than employees, statutory employment protections often cover workers as well as employees, eg the right to paid holidays and the right to the National Minimum Wage.
If you are unsure whether an individual is a worker or an employee, please get in touch with our employment team for further information and advice.