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 duties.
 
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).
 
6. Contracts 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 legal term.
 
7. 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.
 

8. 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.

 

9. 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 dismissal.

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.

 

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