Contracts of Employment
1. The contract of employment
(as opposed to a contract for services, i.e., a self-employed one), is the
legal bedrock of most employees’ relationships at work.
It is the legal form in which the rights and duties of that relationship are
expressed, enabling managers and individual workers to enforce those
rights and duties. Although the fiction is of equal parties to a bargain, in
reality the relationship is most unequal, with the interests of the business
uppermost in all crucial terms.
2. The legal
principles by which this contract is interpreted by the courts go back in
history of English ‘common law’ and grew up from case to case in a
judge-made law. It used to be called the law of ‘Master and Servant’ and
that concept often captures the spirit of the law even today. So, the
‘servant’ must obey the ‘master’ and carry out his/her instructions in
return for pay. There must be an ‘offer’ and ‘acceptance’ before there is
any contract. ‘Consideration’ (i.e., some financial benefit – wages) must
pass between the parties, with worker agreeing to work to the duties of
his/her the particular job.
The terms of a contract can be as written,
called ‘express’ terms or unwritten, called ‘implied’ terms. However, the
courts will only ‘imply’ a term if those agreed by the parties do not cover
an obvious issue and they regard it as necessary to the working of the
contract. ‘Custom and practice’ can be brought into the terms, though they
have to be of longstanding and pretty certain
3. It is this unequal
relationship which workers have striven to change over the centuries, mainly
by banding together to bargain collectively in unions. The other main way
they have modified the worst excesses of managerial power is through
statutes, ie., Acts of Parliament, which can override the terms of the
individual contract. Another way is through the courts, where judicial
interpretation of the terms of the contract can sometimes tilt the balance a
bit, where the words of the contract are not clear as to a particular term.
4. Up until the 1960s, there was
very little statutory intervention in the law of contract. Then Parliament
through Labour governments, started to insert some basic minimum employees’
rights, such as periods of notice, redundancy pay and consultation, unfair
dismissal, equal pay, health & safety, pensions, unlawful discrimination on
the grounds of disability, gender, race, religious belief, sexual
orientation, trade union membership and activities, unlawful deduction of
wages etc. The European Union and Court of Justice has also added to these
rights in areas such as transfers of businesses (‘TUPE’ protects the
transferred contract of employment – see ELB 4); discrimination and
redundancy consultation. Today, the law of contract is heavily modified by
all these new employee rights. Employers have to provide
written particulars of the contract to their employees but in drafting these
documents, their lawyers try to limit the workers’ rights and increase their
5. This then is the background
to the agreement a worker enters into with an employer when s/he is offered
and accepts a job. A contract does not need to be in
writing, the very fact that you work and receive pay would do, but these
days they usually are. It usually starts with the letter
a person receives offering the job and the terms contained as regards pay,
hours, holidays, pension etc. That letter will also
usually refer to other contractual documents containing more details of the
terms, which either are attached or can be inspected at the employer’s
office. Once the person replies accepting these terms,
both parties are bound by them as your contract of employment and s/he
becomes an ‘employee’ with more legal rights than a ‘worker’ (see ELB no.
for an explanation of this distinction).
can be and are changed, all the time. For
example, each time pay is increased or other terms improved because of union
negotiations in collective bargaining. However, before
these changes become part of the contract, they must be communicated to the
employee in writing. When this is done, the employee is
deemed to have accepted the change and the contract is ‘varied’, to use the
Strictly speaking, all changes which one party
wishes to make to the contract, requires the consent of the other party.
The reality with an employer is all too often very different.
With a strong union, workers can regulate change, but where they have
no such protection, as with our members in the non-recognised sectors, it is
usually a ‘take it or leave it’ situation. They naturally look to the words
of the law, but the possibilities for legal action are fairly limited.
If a contract gives an employer power to change the terms of the
contract ‘with due notice’, even the possibility of claiming ‘breach of
contract’ can be severely weakened.
Even where a breach of contract could be
established, the ‘common law’ remedy of damages would not
usually restore the previous ‘status quo’. Any such case
must be taken through the more expensive and very uncertain ‘common law’
courts, not the tribunals, unless the employment itself has been terminated.
That is why most contracts of employment rarely come to be litigated.
Instead, such matters are usually taken through the internal
grievance procedures or collective action with union representation, which
of course, requires a lawful ballot. The Employment Relations Act 1999 gave
workers the right to be accompanied in all disciplinary and grievance
hearings by their union official, even where the union is not recognised.
The collective bargain
The most important terms of CWU members’
contracts derive from the collective agreements which the union has
negotiated with the GPO and its successor companies over the years. The
union is recognised by the Post Office, BT/O2, Alliance & Leicester/Girobank
and other companies for the purposes of collective bargaining. As a result,
the terms agreed, as varied from time to time, become part of the
individual’s contract, once they are communicated to all employees. This is
confirmed in the letter people get offering them a job.
However, the collective agreement itself
cannot be taken to a tribunal or a court by the union to enforce its terms
directly. That is something which only individuals can do, once the terms
become part of their contract. However, because of its relatively strong
position in these recognising businesses, CWU officials at all levels are
usually able to ensure that the union’s agreements are honoured.
Fixed term contracts
Most permanent contracts last indefinitely
until one or other of the parties terminates, usually after notice is given.
A fixed-term contract however, is for so many hours, weeks or months and
both parties agree that it will end on a specified date or at the completion
of a specific task. It requires no notice and at common
law did not need to be renewed, because the contract usually contained a
clause which meant the employee ‘waived’ their rights to claim unfair
The Fixed Term Employees Regulations 2002
made it unlawful for employers to offer less favourable terms
to employees on ‘fixed-term’ contracts than they offer to those on permanent
ones, unless they can justify that treatment ‘on objective grounds’.
These regulations also banned clauses whereby these contractors could
sign away their rights. Better still, if, (after 10th
July 2002), such contracts are continuously renewed for a period of four
years, they become permanent in law. More information is obtainable on the
DTI Guide to the Regulations. (website: www.dti.gov.uk)
10. ‘Constructive’ dismissal
Normally, if you resign from a job, you
cannot claim unfair dismissal. You are regarded as
having ended the contract voluntarily. Only if you can
show that the employer’s conduct went to the root of and broke a
fundamental term of your contract, so causing you to resign, would you
have any chance. That is known as an unfair constructive
dismissal. The word ‘constructive’ can be confusing, as
to the lay person, it means ‘useful’ or ‘helpful’. In
legal parlance, however, it means something which is not obvious, but which
the tribunals can infer from the real situation.
So, if a manager has fundamentally changed
your job, pay or working conditions despite what was written in your
contract, and you feel you are left with no option but to resign, you might
have a case. The snag is you would have to resign and
gamble on a tribunal seeing it that way. If you put up
with it for any length of time, even for understandable reasons, the law
kicks in against you. That is why our advice is ‘never
resign’, though it is understandable sometimes if this advice is not
followed. Assert your rights through the grievance
procedure with the assistance of your rep. Tribunals are
very slow in finding that people are justified in resigning, even where
managers’ conduct has been atrocious, unless you can show that a fundamental
term of the contract has been broken. Even if you can
get over that hurdle, that is only the beginning. You
must also prove that the employer’s reason for the dismissal was ‘unfair’.
11. This is just an
overview of a most complex area of the law, to assist reps and officers
to understand the basics. Union policy remains to resolve all
differences and disputes with managers through the traditional direct
channels. In furtherance of that policy, the Employment Law Department
provides advice clarifying the legal position, but does not
normally provide assistance in litigating individual breaches of contract,
where the employment is continuing.
From the CWU website
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