IN154 - Key Labour Law Issues in England and Wales

UK employment law makes a distinction between employees, who work under a contract of employment, and independent contractors, who work under a contract for services. An employee enjoys more legal rights than an independent contractor. However some rights apply to both.

Some of the statutory employment rights also require additional qualifications, for example, for protection against unfair dismissal a one-year period of continuous employment is generally necessary.

The Contract of Employment

A contract of employment exists only between an employer and an employee. An employment contract is a contract like any other in that it is governed by common law and for there to be the formation of a contract there must be an offer and acceptance, consideration and an intention to create legal relations. However, contracts of employment are special in that the courts will imply certain rights and obligations into them. Also employees have certain statutory protections.

An employee is entitled to a statutory minimum statement of employment terms within two months of commencing employment.

Working Time

The Working Time Regulations (derived from the European Directive) provide the following restrictions on working time:

- All workers are entitled to at least 4.6 weeks’ paid annual leave per annum (pro rata for part time workers). Such leave may not be replaced by a payment in lieu except where the employment relationship is terminated.
- A maximum 48-hour working week. Currently, employees may opt out of this restriction but must have a right to opt back in on not more than 3 months notice.
- Night work is restricted to 8 hours.

Remuneration

All workers are entitled to be paid a national minimum wage (NMW) provided they have reached school-leaving age and ordinarily work in the UK.

Subject to specified exemptions, all employees earning more than the lower weekly earnings limit for national insurance liability (currently £87) are entitled to receive statutory sick pay (“SSP”) from their employers of up to 28 weeks in a three-year period of £72.55 per week (as from April 2007).

Termination of Employment

All employees have a right not to be wrongfully dismissed.

Wrongful dismissal is a dismissal in breach of contract. For a firm to avoid a wrongful dismissal claim they must ensure that all contractual rights are observed or compensation is paid in lieu of damages. A claim for wrongful dismissal is usually primarily a claim for pay and benefits during the notice period. At the first stage of any consideration of dismissal of an employee the organisation must review the individual employee’s contract - notice periods should be noted having regard to the statutory minimum. The statutory minimum notice period is such period as is reasonable and not, in any event, less than one week’s notice for each year of service after two years with a maximum of twelve weeks’ notice. Where a contract provides for less than the statutory minimum, the statutory minimum applies.

Industrial Action

English Law does not give workers a positive right to organise and participate in industrial action (unlike many other countries) and lawful industrial action can be difficult to achieve because of the detailed requirements that must be fulfilled for the action to be lawful.

The law encourages conciliation, mediation and arbitration.

Equal Opportunities

Employees are protected from discrimination on the grounds of sex, race, marital status, disability, religion and belief, sexual orientation and (since October 2006) age. Employees also have a right to equal pay for work of equal value and have protection from less favourable treatment if employed as part time or fixed term workers.

Maternity Leave

All working mothers are entitled to 39 weeks’ paid ordinary maternity leave (“OML”). Since April 2007 all working mothers have an increased right to 52 weeks maternity leave (regardless of period of service).

Working mothers have the right to return to the same job after OML, unless it is not reasonably practicable to do so, in which case the right is to return to another job which is both suitable and appropriate.

A woman is protected from dismissal by reason of pregnancy. Any dismissal connected with her pregnancy will be automatically unfair and no qualifying period is necessary. Such a dismissal may also amount to sex discrimination.

Additional Information

Dixcart has a more detailed information note (number 154A) available regarding labour law issues in England and Wales. If you would like a copy of this note please contact us