Contracts Hours and Pay

Employment contracts, hours, and pay are fundamental aspects of the working relationship between employers and employees in the UK.

Key risks for employers include the potential for disputes over unclear contract terms, failure to comply with wage laws, or breaches of working time regulations. These issues are common grounds for tribunal claims, making careful consideration of these elements essential for maintaining a compliant and positive workplace.

 

Section A: Types of Employment Contracts

 

The most important document in employment law is the employment contract. Employment contracts set the terms and conditions of the employer-employee relationship, covering areas such as job responsibilities, working hours, pay and benefits, and other rights and obligations for both parties.

In the UK, employment contracts come in various forms, suitable for different working arrangements and legal requirements.

 

1. Permanent Contracts

 

Permanent contracts offer ongoing employment until either party decides to terminate the arrangement. They provide stability and long-term benefits, including a fixed salary, paid holidays, and entitlements such as sick pay and pension contributions. These contracts are ideal for roles requiring long-term commitment and consistent performance.

 

2. Temporary Contracts

 

Temporary contracts are used for employment limited to a specific period or project, often to cover short-term needs like maternity leave or seasonal work. These contracts must clearly state the employment duration and any conditions for extension or termination. Temporary employees have the same rights as permanent employees, including holiday pay and protection against unfair dismissal after a qualifying period.

 

3. Zero-Hours Contracts

 

Zero-hours contracts offer flexibility, with no guaranteed minimum working hours. Employees are called to work as needed, often at short notice. These contracts are common in sectors requiring a flexible workforce, like hospitality or retail. Employers must ensure zero-hours employees receive the same statutory rights as other workers, including the National Minimum Wage, holiday pay, and protection from discrimination.

 

4. Fixed-Term Contracts

 

Fixed-term contracts specify employment for a defined period or until a particular project is completed. Unlike permanent contracts, they have a set end date, making them suitable for temporary needs like short-term projects or covering leaves. These contracts are widely used across industries to manage workloads effectively.

 

Section B: TUPE Transfers

 

The Transfer of Undertakings (Protection of Employment) Regulations 2006, or TUPE, safeguard employees’ rights when the business they work for changes ownership. Applicable to employment transfers due to mergers, acquisitions, outsourcing, and insourcing arrangements, TUPE ensures that employees retain their existing employment terms, including pay, holidays, and pensions, providing continuity and protection against unfair dismissal. For TUPE to be applicable, the employer’s identity must change, and the transferred entity must retain its identity.

 

1. Relevant Transfers

 

TUPE applies during specific types of business transfers and service provision changes, including when a business or part of it is sold, outsourced, or transferred to a new contractor. The regulations preserve employees’ terms of employment and ensure continuous employment despite the transfer.

 

2. TUPE Process

 

The TUPE process involves several steps, beginning with identifying whether a transfer qualifies under TUPE. If so, the outgoing (transferor) and incoming (transferee) employers must cooperate to ensure a smooth transition. This includes informing and consulting employees, transferring employee information, and protecting employees against unfair dismissal.

 

Section C: Recruitment & Job Applications

 

Recruitment in the UK is governed by laws and regulations designed to ensure fairness, transparency, and non-discrimination. Employers must adhere to these regulations to conduct their hiring processes legally and ethically.

 

1. Non-Discrimination and Equal Opportunity

 

The Equality Act 2010 prohibits discrimination based on protected characteristics like age, disability, and race. Employers should ensure job advertisements, application forms, and interview processes focus on relevant skills and qualifications, with reasonable adjustments made for disabled applicants.

 

2. Advertising Jobs

 

Job advertisements must be clear, accurate, and non-discriminatory, outlining the role, responsibilities, and qualifications. Preferences for certain characteristics are only permissible if justified by a genuine occupational requirement.

 

3. Application Forms and Interviews

 

Application forms should collect only the necessary qualifications and experience. Interviews should be structured, consistent, and focused on job-related questions to ensure a fair and unbiased selection process.

 

4. Right to Work and Pre-Employment Checks

 

Employers must verify every new employee’s legal eligibility to work in the UK by conducting an appropriate right to work check and retaining evidence of this check. Background checks, especially for roles involving vulnerable individuals, should be conducted with consent and confidentiality.

 

5. Written Statement of Particulars

 

Under UK employment law, employers are required to provide a written statement of employment particulars by the first day of employment, followed by a broader written statement within two months of the employment start date.

 

Section D: Pay and Wages

 

While pay directly influences employee satisfaction, motivation, and financial wellbeing, disputes over pay remain one of the most common workplace complaints.

In the UK, the right to be paid is governed by several laws. For example, employees and workers are entitled to receive at least the National Minimum Wage (NMW) for their work, depending on their age and employment status. Employers must pay wages on time as agreed in the employment contract.

 

1. National Minimum Wage and National Living Wage

 

UK law mandates minimum wage rates, which vary by age and employment status and are reviewed annually. Employers must ensure all eligible employees receive at least the applicable minimum wage to avoid penalties, including fines and back-pay orders.

 

2. Deductions from Pay

 

Deductions from pay must be allowable and comply with legal requirements. Employers should clearly communicate any deductions, ensuring they are lawful and transparent. Employees can bring claims for unlawful deductions from pay to recoup their legal entitlements.

 

3. Pay Slips and Record-Keeping

 

Employers must provide itemised pay slips each pay period and maintain accurate payroll records for at least three years, as required by law.

 

Section E: Flexible Working

 

All employees have the right to request flexible working from their first day of employment, such as requesting changes to working hours, times, or locations. Employers must seriously consider such requests and respond within two months, including any appeals.

Employers should establish clear policies for flexible working, including guidance on remote and hybrid working, outlining expectations, ensuring health and safety compliance, and maintaining equal access to support and development opportunities for all employees.

 

Section F: Working Hours and Rest

 

Working hours are regulated to ensure fair treatment and employee wellbeing.

The Working Time Regulations 1998 set legal requirements for working hours in the UK, limiting average weekly hours to 48 unless employees voluntarily opt out.

Some workers are subject to specific rules and restrictions on working hours, such as sponsored foreign workers, student visa holders, night workers and young workers.

 

1. Break Entitlements and Rest Periods

 

Employees are entitled to specific minimum rest breaks and periods to ensure they have sufficient time to rest. These include a 20-minute break during shifts longer than six hours, 11 consecutive hours of rest daily, and either 24 hours of uninterrupted rest weekly or 48 hours bi-weekly.

 

2. Overtime Policies and Pay

 

Overtime refers to hours worked beyond the standard contract hours. While overtime pay rates are not legally mandated, they must not fall below the National Minimum Wage. Employers should establish clear overtime policies, including whether time off in lieu (TOIL) is offered.

 

Section G: Redundancy

 

When considering making redundancies, employers must follow a fair process, including appropriate notice, consultation with affected employees, and offering redundancy pay. The process must be transparent, with clear selection criteria.

Detailed records of the redundancy process, including consultations and selection criteria, are essential for defending against legal challenges.

 

1. Definition and Genuine Redundancy

 

Redundancy occurs when an employer needs to reduce the workforce due to business closure or a diminished need for certain roles. It is essential that redundancies are genuine, as unfair redundancies can lead to legal consequences.

 

2. Consultation Requirements

 

Employers must consult with employees before redundancy. The consultation process varies depending on the number of employees affected and must be conducted individually or collectively, as applicable.

 

3. Fair Selection Process

 

Selection for redundancy must be fair, transparent, and non-discriminatory, with objective criteria such as length of service, performance, or skills. Employees have the right to challenge the selection if they believe it was unfair.

 

4. Suitable Alternative Employment

 

Employers must offer suitable alternative roles within the organisation to those facing redundancy. Priority for alternative roles must be given to workers who are on maternity leave or who have recently returned from maternity leave.

Refusal of offers of suitable alternative roles can affect redundancy pay eligibility.

 

5. Redundancy Pay & Notice

 

Employees with at least two years of continuous service are entitled to statutory redundancy pay, calculated based on age, service length, and weekly pay, subject to caps. Enhanced redundancy pay may be offered if specified in the contract.

Redundant employees are entitled to a notice period based on service length, with a minimum of one week’s notice per year of service, up to 12 weeks.

 

Section H: Consulting Employees and Representatives

 

Employers are required to consult employees or their representatives during redundancies, business transfers, or changes to employment contracts, following relevant legislation.

Consultation should be meaningful, providing employees with relevant information and considering their input before making decisions. Proper documentation of the consultation process is crucial.

 

Section I: Informing and Consulting Employees (ICE) Agreements

 

In organisations with 50 or more staff, employees can request a formal ICE agreement to discuss significant workplace matters, promoting transparency and collaboration.

 

Section J: Suspension from Work

 

Suspension should be handled carefully, with a clear process to protect both employer and employee rights. It should be a neutral act, not punitive, used only when necessary to investigate allegations or protect business interests.

Suspension may be warranted for reasons such as gross misconduct or health and safety concerns, typically to allow for an objective investigation to be carried out. It should not be used as a punitive measure.

 

1. Process of Suspension

 

Employers should conduct a preliminary investigation before suspending an employee, inform them in person where possible, and follow up with written confirmation. The suspension should be as brief as possible, with regular reviews and updates provided to the employee.

Employers must thoroughly document the suspension process, including reasons, communications, and investigative steps, to defend against potential challenges.

 

2. Employee Rights During Suspension

 

Suspended employees should receive full pay and benefits unless otherwise specified in their contract. Confidentiality should be maintained, with minimal communication about the suspension to others.