Keenan and Riches’BUSINESS LAW

Chapter 16

Learning objectives

After studying this chapter you should understand the following main points:

■the legal rules by which the relationship of employer and employee is

established, and the concept of self-employment, together with the

purpose of the distinction in terms of vicarious liability and statutory

Employment contracts

■the special nature of the contract of employment, in particular, the

legislative interference with free negotiation to protect worker rights;

■health and safety at work requirements, and the criminal sanctions and

civil remedies that may arise when the relevant legislative provisions are

infringed;

■discrimination protection in terms of sex, race, disability, religion and

belief, sexual orientation and in regard to transsexuals;

■the termination of the contract of employment and, in particular,

legislative protection in terms of unfair dismissal and in regard to

redundancy.

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In this chapter we are concerned with employment law.
This is based upon and deals with the relationship of
employer and employee. Employment law is made up of
common law and, more and more these days, of statute
law passed by Parliament.

Employer and employee

Generally

It is important to know how this relationship comes
into being and to distinguish it from the relationship
between a person who buys the services of someone who
is self-employed (often called an independent contractor).
Usually it is not difficult to decide whether A is em-
ployed by B so that the relationship of employee and
employer exists between them. If A is an employee, he or
she will have been selectedby B; A will usually work
full-timefor B under a degree of supervisionfor a wage

or salary. Of course, A may still be an employee though

working part time.

Also, if A is an employee, B will deduct income tax

from A’s pay (if it exceeds A’s allowances) under PAYE

(pay as you earn) arrangements. B will also make social

security contributionsfor A and will often provide a

pension schemewhich A can join. In addition, although

a contract of employment (or service) need not be in

writing, if A is an employee, then B must, under the

Employment Rights Act 1996, give A within two months

after the beginning of the employment written particu-

larsof the major terms of the contract.

The control test

In earlier times the above tests would not all have been

available, particularly the deduction of income tax

which, after some earlier experiments beginning in

1799, was finally brought in for good in 1842. Social

security legislation and the modern deductions from

pay, together with contributions from the employer,

Employing labour