Last Updated: 13 November, 2014

Introduction

There are a number of employment models that are utilised by the various organisations in the fitness boot camp and military fitness market. It is also important for employers, and employees, to understand and appreciate the difference, legally and practically, between employees and workers. This section will provide a basic overview of this and other issues that are pertinent to the fitness industry.

Statement of Terms and Conditions of Employment

This is the basic legal minimum, which must be given to all employees whose employment will last for one month or more. The only exceptions are where the employee works wholly or mainly outside Great Britain, but even these employees are entitled to a statement if they ordinarily work inside Great Britain and the work outside is for the same employer, or if the law which governs the contract is the law of England and Wales or Scotland. Independent contractors or freelance agents are not entitled to a statement.

The Employment Rights Act 1996 stipulates the essential minimum information which must be included in the statement, which must be provided within two months of the employee joining the organisation. The statement will not necessarily cover every aspect of the contract, but can provide important evidence of the main terms and conditions.

Contracts of Employment

Contracts of employment are made up of the following:

  • The job offer;
  • Any contractual elements included in the Employee Handbook;
  • The terms stipulated in the statement, contract or agreement;
  • Any collective agreements which apply to the employee; and
  • Any policies and procedures which are contractually binding.

Legal Considerations

There is a host of legislation which impacts on the employment contract, such as:

  • Working time;
  • Equal opportunity;
  • Equal pay;
  • Minimum wage;
  • Employee rights;
  • Part-time employees;
  • Foreign nationals;
  • Maternity and parental leave;
  • Young people;
  • Sick pay including Statutory Sick Pay;
  • Key statistics;
  • Disability discrimination;
  • Employees with convictions; and/or
  • Fixed-term contracts.

Making Changes

Employers cannot make a change to a contract by simply issuing a new one. If an employer is considering making significant changes to the terms of the contract, then unless these changes are made with the voluntary agreement of the employee (in which case, either write and confirm them or issue a new contract if the changes are sufficiently substantial), the employer runs the risk of a claim of constructive dismissal and/or breach of contract.

The Devil’s in the Detail

The detail(s) in a workers or employees contract must be right, or the employer could regret it later. Take the time to carefully input the details relating to the particular employee and his/her terms. It is more difficult to change a contractual term later than to get it right in the first place!

Employees Who refuse to Sign the Statement

Legally, an employer is under an obligation to issue the statement, not to get the employee to sign it. If the employee starts work under the terms and conditions as set out in the statement it will be broadly assumed that he or she has accepted these and any tribunal would look at custom and practice to see what happens in practice.

However, the employer will not know which terms have been accepted until they are tested. For example, if the employer includes a relocation clause in their statement, the employer will not know whether the employee is agreeable to this unless, and until, the employer tries to enforce it.

This is not quite as straightforward as it sounds and it is always advisable to find out why the employee refuses to sign it and sorting out and resolving any potential disagreements over the terms and conditions before a dispute arises, taking advice before proceeding.

Probationary Periods

There is no legal requirement to have a probationary period, but these are very common at the start of employment or in the event of promotion. Probationary periods are essentially a management process with no legal standing.

Probationary periods give an employer the opportunity to assess the suitability of the employee for the post, and give the employee the opportunity to prove to the employer that he/she can do the job. A performance review shortly before the end of the probationary period provides an excellent opportunity to give positive feedback on the behaviours the employer wishes to enforce and tighten up on any which could be improved.

If an employer decides to have a probationary period, they should choose one which is appropriate to the skills and seniority of the job. Any extension to this period should be reasonable and limited. An employer may also wish to stipulate a shorter (often minimum) notice period, except where the period is introduced because of a person’s promotion within the business.

When the period expires, if an employer takes no action to advise the employee whether he/she has met the required standards, the employee will be automatically confirmed into position. Therefore, employers should monitor the period carefully, give appropriate and timely feedback, and send the employee a letter to either extend the period (providing a reason or reasons for this) or confirm its successful completion.

If an organisation’s disciplinary procedure is contractual, it is also advisable to include provision for a shorter disciplinary procedure for new employees.

Employee versus Worker: Is There A Difference?

When employees turn up for work each morning they may not have considered that the person sat next to them in the office, standing on the gym floor, or even the person responsible for the latest e-mail in their inbox may be a worker, not a fellow employee. However, what is the actual relationship between such workers and the employer, and what employment rights do they have? They could very well be doing the same or similar work to other employees but their contractual relationship with the organisation could be quite different. This can, and does, have an impact on the rights they have through employment legislation.

Below are some of the key issues that employers, employees and workers need to consider when entering into contractual agreements.

Employment Models

Employed Workers

A useful place to start is to establish the difference between workers who are employed and those who are self-employed, which can be determined through the agreement entered into by the parties. A contract of employment (contract of services) is quite different from a contract to provide services (contract for services).  In general an organisation has an employee if they:

  • Have a duty to provide work to them (or pay them even if there is no work to be done) and they personally have a duty to perform this work (i.e. they cannot get someone else to do it);
  • Control how it is done. This may involve directions on how to do the work but in the case of highly skilled employees is more likely to cover whether the contract stipulates hours of work, paid holiday, disciplinary procedure etc.;
  • Supply resources, tools and/or equipment to do the work; and
  • Pay tax and national insurance on the employee’s behalf.

Self-employed Workers

A person is more likely to be self-employed if he or she:

  • Can work for more than one employer at the same time doing the same or similar work;
  • Has the autonomy to decide what work to accept or reject;
  • Makes his/her own provision for sickness and holiday absence;
  • Pays his/her own tax and national insurance;
  • Takes a degree of financial risk and responsibility; and
  • Provides his/her own equipment.

The distinction is important because an employee will benefit from all the rights during employment that have evolved through the terms of the contract, Acts of Parliament, EU legislation and case law.

A non-employee will only benefit from some of these. However, they may have more protection than you think! Workers are protected under:

  • The Working Time Regulations;
  • The National Minimum Wage Act;
  • The Public Interest Disclosure Act; and
  • The Employment Rights Act 1999 (including for example the right to be accompanied at a disciplinary or grievance hearing).

The Part Time Workers Regulations applies to all workers. Such workers are also protected against discrimination on grounds of sex, race or disability and have the right to be provided with a safe place and safe system of work. Both employees and non-employees are classed as ‘workers’ and where the legislation applies to them, a non-employee can pursue a claim through Employment Tribunals.

Agency Workers

The status of agency workers creates confusion for many employers. Whilst they may occupy the workplace, their employment contract is usually with a temporary work agency. The attraction for employers is that agencies can provide staff with specific skills at relatively short notice; ideal if the employer wants cover for absence or busy periods. The host organisation still has obligations, i.e. to provide a safe place or system of work, but issues such as tax, NI, rate of pay, holiday pay are the responsibility of the agency. The host organisation will normally just pay a fee at an agreed rate.

Essentially, workers engaged via an agency or employment business can accrue rights as employees against the employer rather than the agency. However, employers should remember the following:

  • Workers do not automatically accrue some employment rights after a set period of time. The test used by the law for employment status is whether an ‘implied contract’ has arisen between the worker and the end user. Such an implied contract will arise only when it is necessary.
  • Some employment rights apply to workers regardless of whether or not they can show an implied employment contract.
  • Workers engaged via an agency may also be able to claim unfair dismissal if they are dismissed. Employers should remember that some employees can make a claim for unfair dismissal when they have only one year’s continuous employment. Some employees do not have to show a qualifying period at all if they fall within one of the exceptions to the qualifying period. However, employees who started work on or after 6 April 2012 will have to show an unfair dismissal qualifying period of two years rather than one.
  • The Agency Workers Regulations 2010 which came into force on 1 October 2011 give certain rights once twelve weeks have gone by. However the Regulations do not affect the ability of agency workers to claim rights as employees and to lodge unfair dismissal claims.

Agency workers who are supplied to an employer by an agency or employment business may be:

  • Employed by the employer; or
  • Employed by the agency; or
  • Self-employed.

This area was subject to a series of high level cases during 2003-2007 attempting to provide guidance concerning whether agency workers are employees or not and, if they are, whose employees they are. In some of the cases the judges have commented that the UK needs new legislation to address this complex issue.

To decide if an agency worker is an employee, numerous cases have now followed the James decision (James v Greenwich Council (unreported, [2008] EWCA Civ 35 5 February 2008, CA) and many seem to follow a three stage approach:

  • Do the express contractual arrangements adequately explain the actual relationship of the three parties involved at the outset?
  • Have any subsequent words or conduct of the parties changed matters?
  • Is it necessary to imply a contract of employment?

Other cases that have now followed the James decision include Muschett v HM Prison Service [2010] IRLR 451, CA. This confirms that:

  • Where there is a valid three way contractual relationship between an agency, a worker and an end-user, the courts will rarely imply a contract between the worker and end-user; and
  • Where the contractual terms are clear by an analysis of the elements of control, personal performance and mutuality of obligation, there is no need to imply a contract of employment.

Part-time Workers

The Part-time Workers (prevention of Less Favourable Treatment) Regulations were introduced to ensure that part-time workers received equitable treatment to comparable full-timers. In essence this means they should:

  • Receive the same rates of pay;
  • Receive pro rata holiday entitlement;
  • Have access to contractual sick pay and maternity pay and pension schemes;
  • Have access to contractual maternity and parental leave and any career break schemes;
  • Not be excluded from training just because they work part-time; and
  • Not be treated less favourably in criteria selecting workers for redundancy.

If part-time workers believe the above rights have been infringed, they have a further right to request a written statement from the employer, within 21 days, explaining reasons for the treatment.

The Part Time Workers Regulations provide additional protection for both workers who are employees and those who are non-employees. For employed staff this essentially covers unfair dismissal and selection for redundancy where the main reason for dismissal is that:

  • They exercised or sought to enforce rights under the regulations, refused to forgo them or alleged the employer had infringed them; or
  • They gave evidence or information in connection with the proceedings brought by an employee under the regulations; or
  • The employer believed the employee intended to do any of these things.

For non-employees, if their contract is terminated for any of the above reasons they also have recourse to an Employment Tribunal on the grounds that they had received detrimental treatment, i.e. an agency worker giving evidence to support an employee. Compensation awarded is on the same basis as unfair dismissal.

Fixed Term (or Defined Project) Workers

The Regulations define fixed-term contracts as contracts made for a specific term and contracts which terminate on the completion of a task or the occurrence/non-occurrence of a specified event.

Fixed term workers now have a right to no less favourable treatment than a comparable permanent employee with regard to terms and conditions of employment. The rights extend to being informed of suitable permanent vacancies in the organisation.

Fixed term contracts can be renewed and if there are a series of renewals that effectively mean employment is longer than 4 years then the contract will be treated as if it were a permanent contract. The same is true of a contract that is fixed term for 4 years or more.

Irrespective of the length of service, when a fixed term contract ends, it is deemed to be a dismissal and if the employee has more than two year’s service they may claim unfair dismissal if they believe the contract was ended without a fair reason and/or the employer did not follow a fair process.

There are some excluded categories of worker are excluded from the regulations, such as:

  • Apprentices;
  • Employees on certain Government training schemes;
  • Students on occupational placements as a part of a higher educational programme; and
  • Agency workers.

Casual Workers

Some employers meet their staffing requirements through the use of casual workers. These are workers who are only used on an occasional basis and may, like agency workers, provide cover at short notice or during busy periods. Advantages to this arrangement include:

  • No agency fees to pay;
  • No continuity of employment between the periods of casual work;
  • Clarifies the obligations on both sides; and
  • Offers protection to the employer.

However, utilising this model may necessitate a significant bank of casual workers in order to have access to individuals who are readily available for work.  This is the model used by the regional and national-based training providers.

Although casual employees are protected by employment legislation in many areas, there are limitations because often legislation cover is linked to continuous periods of service. Employers should take care to ensure casual contracts of employment – also known as casual agreements – make a distinction that each period of work is regarded as separate and where there is no work this is not regarded as a temporary cessation.

It is advisable for employers utilising casual workers to ensure that they are issued with a specific casual agreement, which clearly identifies the nature of the relationship and does not afford them employment rights.

If employers are looking for periods of work that are greater than a few days or weeks then other arrangements, such as fixed term contracts, may be more appropriate. Employers should take particular care with casual workers that they do not begin the arrangement properly and then allow this to drift into a regular pattern of work, whereby the nature of the agreement changes into that of an employee/employer one without realising. Employers should monitor the use of casual employees to ensure that where possible the employer does not use them for more than 10 weeks, and ensure that sufficient breaks are given to break the continuity of their employment.

Contract of Employment for Senior Management and Key Staff

This should include everything required to be included in the statement, plus more! A range of optional clauses can provide the employer with restrictive covenants (designed to prevent the employee from poaching employees or customers after the termination of employment), and also a wider range of options on pay and benefits as it is more likely that staff at this level may enjoy bonus schemes, company vehicles, mobile phones, health insurance etc. The contract, once signed by both parties, is legally binding on both sides.

Directors Service Agreement

Very similar to the Contract of Employment and is designed for executive directors who are also employees, but with additional clauses relating to the responsibilities that the title of ‘director’ confers in law.

Summary

It is clear that there are numerous types of worker relationships! For the employer it is important to choose the appropriate type of arrangement for their business needs and to be aware of the implications for workers rights, even when workers are non-employees.

If employers treat individuals as self-employed and they are later found to be employees then the employer will inherit a number of obligations, which may include redundancy payments, holiday pay, sick pay, unfair dismissal claims etc, and also the possibility of having to pay National Insurance and tax which should have been deducted through PAYE (pay-as-you-earn) from the employee’s earnings.

It is also advisable that employers, and employees, regularly review the situation to ensure that these arrangements do not develop into a different relationship by default, which was never the intention of either party.

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