Name

Subject : Employment law

 

Introduction

The phrase ‘Labour is not a commodity’[1] has been echoed through centuries later being the motto of the International Labour Organization whose principal objective is to protect the rights of the working population.[2] However, this phrase present a paradox and is in total contradiction of the theory of labour power as forwarded by Marx. According to this theory, labour power or the capacity to labour is one of the most lucrative and significant commodity in a capitalist setting. The very notion of commodity however downsizes the objective of humanity in labour which is in almost all circumstances provided by humans. This consequentially implies a licence of subordination of employees by employers which contravenes several human right norms. Nonetheless, labour law stems from the idea of subordination of the individual worker to the capitalist enterprise. This has led to the argument that there is no equality between the parties to an employment contract and mostly, the employers have a higher bargaining power compared to their potential employees. This paper will therefore focus on the nature of the employment relationship as administered by multiple sources and more specifically, the employment contract. Through the use of legislation and court decisions, it shall assess the extent to which the contract of employment favours employers over employees. It is however important to first define common terms to correctly understand their meaning and operation in employment law. A contract is essentially an agreement between two or more parties which creates obligations that are enforceable or otherwise recognizable at law.[3] In employment, a contract sets out the terms and conditions of employment as agreed by the contractual parties- the employer and employee- and also determines the nature of the employment relationship. An employment relationship on the other hand is the legal link between employers and employees.[4] The employment relationship thus creates and determines the reciprocal rights and duties between the contractual parties. Employees provide labour under a consideration of remuneration, employment benefits and social security funds. Its legal definition is thus a highly sensitive issue.[5]

 

Sources of employment law

There are three main sources of employment law in UK and these are the Common law, statutes and contracts of employment.[6] There has been an extensive growth since the 1970s in employment protection statutes that significantly supplement the common law.[7] Some of the recent Statutes include the Employment Relations Act 2004, the Employment Act 2002, the Equality Act 2010 and the Enterprise and Regulatory Reform Act 2013. Statutes are the largest and increasingly the most important sources of employment law.[8] Common law has three main branches that play a significant role in the regulation of employment. These are the law of tort, the law of trust and the law of contract.[9] Contract law is the most relevant as it is the means through which contracts of employment are enforced. Additionally, it is significant as it makes provisions of constructive dismissal, business transfer regulations and the health and safety law. The law of tort comes in to govern the employer’s civil liability for tortious acts done by his employees. Another area of law that interplays with employment law are human rights law which guarantees the protection of the basic human rights of employees such as the freedom from slavery and servitude and the right to fair and equal remuneration for equal work done.

The contract of employment

The law of contract forms a fundamental legal basis in the employment relationship. Whereas there are several statutes that restrict the employer’s freedom, the employment relation remains governed by the contract as it is contractual in nature whether it is written or not. The contract binds both parties and any conduct that alters or departs from the provisions of the contract if done unilaterally amounts to a contractual breach. A contract of employment is often but not necessarily in writing. As noted by the International Labour Organization, there is an increasingly vast phenomenon of workers who lack protection since their employment relationship is ambiguous and is not clearly defined.

The employment relationship is broadly categorized into three divisions:[10]

1)      The employer-employee relationship;

2)      The trade union-employee relationship; and

3)      The trade union-employer relationship.

A Collective Bargaining Agreement (CBA) arises out of the third relationship and refers to a contract between an employer and a labour association or trade union which regulates for the benefit of the employees, their wages, conditions of employment, termination of employment, employment benefits and retirement packages.[11]

For the purpose of this discussion, this paper focusses on the first employment relationship which has often been referred to as the ‘individual employment law’. This relationship is governed by rules relating to dismissal, health and safety, discrimination, wages, maternity rights, annual leave and a broad category of reciprocal rights and duties of the employer and employee.

Restrictive covenants

Faccenda chicken Ltd v Fowler[12] is a leading case in relation to breach of confidence in an employment setting by ex-employees. Where an employee leaves to compete against the employer there are five possible causes of action the employer could seek to rely upon and these are:-

i)                    Breach of a restrictive covenant;

ii)                  Confidentiality Clauses

iii)                Implied terms

iv)                Unauthorised use of trade secrets learnt during the course of employment; and

v)                  Interference with intellectual property rights

The respondent in this case was employed as sales manager of the plaintiff, a company which sold chickens. His employment later ended and he then set up his own business of selling chicken from refrigerated vehicles. He took 5 of the 10 van salesmen of the appellant, their supervisor and two office staff. He competed with the appellant and the majority of his customers were former customers of the appellant. None of the appellant’s employees were subject to a restrictive covenant. The appellant argued that the respondent had broken his contract in particular the implied duty of good faith and fidelity by using customer lists and pricing information.

This indicates that employees are often subjected to various restrictions, some of which restrain their freedom to trade even after the expiry of their employment. This is particularly grievous, more so because most often than not, it is the employers who draft the contracts of employment thus at a higher competitive advantage than their employees. Additionally, good faith has been held to extend to certain instances after termination of employment thus requiring employees not to use the knowledge acquired during their course of employment to compete against their employers. So far, it can be observed that the legal framework on labour accords a vast protection to employers to the detriment of the employees. The springboard doctrine established in Seager Limited v Copydex Limited[13]  further limits employees from use of any confidential information they come across in the course of their employment as this may amount to breach of confidence particularly where the employee derives a substantial benefit from the use of that information.

Modern employment law

Stephen Taylor and Astra Emir note that contemporary employment law is marred with divergent views leading to complex and vigorous debates particularly in the light of new legislation.[14] The employment relationship involves two parties with dissimilar objectives and this gives rise to the conflicting views. Most of the recent regulation favour the interests of employees which are vibrantly opposed by most employers. Precedence has over the centuries required that all contracts of employment contain certain terms impliedly, thus even when excluded from the contract, those implied terms still protect the rights of employees.[15] In instances of constructive dismissal, the law now recognises the liability of employers arising from their conduct which leads to the resignation of the employee. If the employer’s conduct amounts to repudiation of the contract, then the employee’s resignation is warranted and the employee can sue for unfair dismissal. There is nevertheless a common argument that the legislation does not offer adequate protection to employees. This is because employment statutes are often poorly drafted thus lack clarity leaving both contractual parties confused with regard to the nature and extent of their rights. The Legislation on Transfer of Undertakings (TUFE) is for example still blurry even after thirty years in its operation.[16] Additionally, inadequate sanction in legislation cause unsatisfactory redress for employees whose right are infringed. Whereas employment legislation prohibits discrimination, it also permits justification of discriminatory practices that may perpetuate social inequality.

The concept of subordination

There are extensive widespread changes in the contemporary labour market which makes it difficult for one to determine the type of employment relationship that exists in a particular circumstance. As observed, identifying the nature of employment relationship is of utmost significance because this governs the reciprocal rights and obligations that arise thereof. Social security and other employment rights are dependent on this relationship.[17] A persons working under a contract of service is an employee thus entitled to these rights whereas a person working under a contract of services is a dependent contractor and consequentially do not enjoy some rights. The concept of subordination has historically and is still in use today to identify the employment relationship. The statute of the employee is thus founded on the concept of subordination.[18] This concept is also criticized as it gives employers a wide range of powers over their employees. A worker under an employment contract cannot claim the results of the work done but are legally the property of the employer. As brought out in the control test, and through case law such as Yewens v Noakes[19] the master (employer) has total control over what and how the servant should carry out his duties. Yewens was a tax case, in which the court decided that a clerk, earning a substantial yearly salary was not a servant, any more than were ‘the manager of a bank, a foreman with high wages almost in the position of gentlemen.  Control was used to exclude from the scope of regulation those higher-status employees for whom the court considered protective legislation inappropriate as well as workers who were not in a direct employment relationship with the ultimate employer. However, in skilled professions, the employer may have little or no actual control over what and how the employee carries out his duties. Nonetheless, the results of the work are legally the works of the employer.  However, other tests have been employed to determine the nature of the employment relationship due to the inadequacy of the control test. In Minister of Agriculture and Food v Barry[20] the court used the economic reality test which examines whether the workers is in the business on his own account for personal benefit or works for the benefit of the employer. These multiple tests are therefore not conclusive and in many circumstances lead to confusion sometimes to the detriment of the employee.

Conclusion

Although the contract of employment presumes that both parties have relatively the same bargaining power, employees have often a lower bargaining power. Additionally, the employment contracts are often already drafted by the employers such that potential employees have either little or no power at all as to the provisions of the contract. The contract of employment therefore leads to subordination of employees with their rights being infringed on. Although case law has implied certain terms in an employment contract, most often than not, the employees have little knowledge on their rights. Having noted the significant role of contract law in issues of employment, the contractual terms are thus of paramount significance to the employees. Nevertheless, UK legislation on employment law has widely advance to capture fundamental human rights as well as the employment rights of employees. This is significant because in unconscionable contracts of employment, the implied terms richly adopted from legislation will supersede the restrictive terms under the contract. On the other hand, legislation is still inadequate as it also contains provisions that may be used by employers to the detriment of their employees. To reiterate the motto of the International Labour Organization, labour is not a commodity, therefore with the continuing change in the labour market, the law also needs to change to ensure that unscrupulous employers do not rely on contracts of employment to infringe on the rights of their employees.

 

 

 

 

 

Bibliography

Case law

Seager Limited v Copydex Limited [1967] RPC 349

Minister of Agriculture and Food v Barry

Faccenda chicken Ltd v Fowler (1986) 1 All ER 617

Yewens v Noakes

Legislation

Employment Relations Act 2004

Employment Act 2002

Equality Act 2010

Enterprise and Regulatory Reform Act 2013

Books and articles

Stephen Taylor & Astra Emir, Employment Law: An Introduction (4th edn OUP, 2015)

Norman M Selwyn, Selwyn’s Law of Employment (14th edn, OUP 2006)

Stephen Taylor & Astra Emir, Employment Law (3rd edn OUP, 2012)

Hugh Collins, Employment Law, (OUP, 2010)

Tamara Lewis, Employment Law: An Adviser’s Handbook (Legal Action Group, 2007)

Jonh Duddington, Employment Law (Pearson Longman, 2007)

Kemp Little, A guide to UK Employment Law (march, 2014)

Felicia Rosioru, The Changing Concept of Subordination (2014)

Richard Kidner, Statutes on Employment Law (OUP, 2002)

Daniel Barnett & Henry Scope, Employmen Law Handbook (Henry Scope, 2008)

Simon Deakin & Gillian S Morris, Labour Law 2nd Edition   (Butterworths)

Websites

International Labour Organization, Employment Relationship http://www.ilo.org/ifpdial/are Accessed 5 July 2016



[1] See Declaration of Philadelphia 1944

[2] Hugh Collins, Employment Law, (OUP, 2010) p.3

[3] Black’s Law Dictionary, 9th edition, see also William R. Anson, Principles of the Law of Contract 13 n.2 (Arthur L. Corbin ed., 3d Am. ed. 1919).

[4] International Labour Organization, Employment Relationship http://www.ilo.org/ifpdial/are Accessed 5 July 2016

[5] Felicia Rosioru, The Changing Concept of Subordination (2014)

[6] Kemp Little, A guide to UK Employment Law (march, 2014)

[7] Ibid, p.

[8] Stephen Taylor & Astra Emir, Employment Law: An Introduction (4th edn OUP, 2015) p.31

[9] ibid

[10] Stephen Taylor & Astra Emir, Employment Law: An Introduction (4th edn OUP, 2015)

[11] Black’s Law Dictionary, 9th edition

[12] Faccenda Chicken Limited v Fowler (1986) 1 All ER 617

[13] [1967] RPC 349, at 368)

[14] Stephen Taylor & Astra Emir, Employment Law: An Introduction (4th edn OUP, 2015) p.19

[15] Ibid, p.39

[16] ibid

[17] Countouris, p.1; Mark Freedland, The Personal Employment Contract, Oxford University Press, Oxford, 2003, p. 3.

[18] Maty Diakhaté-Faye, Un régime pour le travail indépendant : une autre lecture des décisions requalifiant les contrats de location de véhicule équipé taxi (VET), Jurisprudence Sociale Lamy, n° 91, 4 décembre 2001, p. 4. 

[19] Yewens v Noakes (1880)

[20] [2008]

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