A verbal contract isn’t worth the paper it’s written on…

Defining the `employee/employer` relationship

It should be noted that the status of an `employee` is a legally contentious one. The Employment Rights Act (1996) section 230 identifies an `employee` as an individual with a contract of employment. The courts are sometimes confronted by `casual` workers claiming they are denied employment rights by virtue of their none `employee` status, i.e. where no contract of employment exists. The courts when looking at this issue focus on evidence of “mutuality of obligation” as outlined in O`Kelly v Trusthouse Forte plc, where `casual` workers were held not to be in an employee/employer relationship.

The significance of the ERA 1996 and the provisions linked to rights emanating from a contract of employment are explored in the case McLeod v Hellyer Bros Ltd and in McMeechan v Secretary of State for Employment, it is clear that the determining factor in establishing one`s rights as an employee is evidenced by the existence of a contract of employment.

Mike`s story

Mike is an unemployed graduate with enough qualifications to sink a battle-ship, despite this, permanent employment has evaded him. Like many graduates he has debt and has been signing on for job seekers allowance since last summer, eventually securing work with a job agency in a factory on a casual basis.

Mike`s interview with the agency was brief and he was informed that he would not have a contract of employment, a fact stipulated in writing. Employers who recruit personnel on `zero-hours contracts` are likely to outline this feature to offset any potential litigation. Any ambiguity in the relationship may possibly allow a court to infer that a contractual relationship exists.

There are rights outside this arrangement of course, a `worker` for example must be paid a minimum wage and paid holidays, in O`Kelly v Trusthouse Forte the `casual` workers had their income tax and national insurance deducted by the employer and holiday pay was allocated by virtue of weeks worked in the previous year.

The agency made its position clear to Mike informing him that they would endeavour to find him work a promise they honoured. It was also explained that if he signed on with them there was no guarantee of work. The work was tedious and boring but Mike needed to start earning and hoped for as many hours as possible.

Plenty of work was initially available and Mike was treated well by the agency, he was given adequate breaks his hourly rate was also above the national minimum wage. After a few week`s Mike found little work with the agency, this was bad for Mike but not so bad for the agency who had a surplus of staff on stand-by on `zero-hours contracts`. On several occasions Mike turned up at 6am only to be informed no work was available for that day, he made his way home without any pay. It should go without saying that this state of affairs could not have occurred if Mike possessed a contract of employment.

Mike eventually contacted the agency and exercised the option to leave; he signed on with the Benefits Agency (after an initial delay) and began searching for work consistent with his qualifications.

Sadly, there is currently a race to the bottom in terms of employment conditions in the UK, no gold medals are on offer but employers appear to be desperate to win a contest that reduces the standards of all working people in GB. Legal Eagle believes that trade unions must resist the temptation to employ staff on `zero-hours contracts` unions the antidote to `zero-hour’s contracts` must not be infected by the disease.