Distinguishing contractual and statutory employment rights HR Management

In a chapter such as this, it is impossible to provide a complete and comprehensive analysis of the employment relationship and its legal regulation – employment contracts and employment statutes are subject to change as practices that were previously ‘outwith the law’ become subject to legal regulation, for example the recent emergence of paid paternity leave for fathers, hence the law may be further updated after this edition is published.

Equally, many areas of contractual and statutory regulation are extremely complicated and disputes between an employer and an employee may require specialist analysis by employment lawyers. Examples of these areas include discrimination claims with respect to pension rights for part-time women employees, disability discrimination claims that relate to the status of an employee as HIV positive and the interpretation of working time regulations for a particular group of employees. Thus, bearing in mind that contractual and statutory regulation of the employment relationship is a ‘moving target’, our examination of regulation within the employment relationship divides between a discussion of contractual and statutory employment rights.

  • Contractual rights

All employees have a contract of employment that governs the relationship between the employer and an individual employee. As we discuss below, an employment contract has three types of terms and conditions within it – express terms that are usually written down and which govern the specific details of the employee’s contract of employment, implied terms that are unlikely to be written down but which nevertheless are considered to be part of an employee’s contract of employment.

For example, an employer is under a legally enforceable duty to provide a healthy and safe workplace. Equally, employees are likely to find themselves subject to various duties that are derived from custom and practice arrangements in the workplace even though many of them may be unwritten. The third type of term and condition within a contract of employment relates to statutory protection against unfair or unreasonable treatment by an employer and these statutory terms and conditions are incorporated into individual employment contracts.

In summary, contractual rights flow from the express, implied and statutory incorporated terms and conditions that create an individual contract of employment. It is important to point out that while employees receive protection via elements of these terms and conditions they are also subject to regulation by them; hence the contract of employment is made up of a balance of rights and obligations between the employer and the employee.

  • Statutory rights

Statutory employment rights provide a basic floor of rights for all workers. Statutory employment rights are created by legislation in the form of Acts of Parliament and, increasingly, European Union directives that must be incorporated into UK law. A recent example of the latter is the emergence in the UK of the statutory regulation of working time and the introduction, from April 2003, of paid paternity leave for fathers.

In the drafting process, government and European Union civil servants seek to ensure that the legislation covers most eventualities. However, because legislation is necessarily general in its coverage of a particular issue an employer, trade unions and the judiciary must interpret legislation. Interpretation of legislation is a complicated and controversial matter and often turns on the issue of what is ‘reasonable’.

For an employer’s interpretation of a statute to be reasonable the employer must be able to demonstrate to an employee, trade union or, in a matter of dispute, an employment tribunal that another employer faced with the same or a similar situation would have acted in the same way. In a matter of dispute an employee or a trade union must be able to demonstrate that another employer would not have acted in a particular manner.

For example, until recently it was common practice for many employers to exclude their part-time workforce from occupational pension schemes on the basis that the salary or wage level of part-timers was too low to generate a sufficient pension fund, particularly as this would reduce the take-home pay of such workers because of the necessary deduction of an employee’s contribution to the pension scheme.

After a long legal campaign several trade unions, supported by the Equal Opportunities Commission, have established that this practice is unreasonable because many part-time workers are women and their exclusion from company pension schemes amounts to indirect sex discrimination. This is the case because, although the exclusion of part-time workers from pension schemes appears to be sex neutral in its effects, such exclusion has a disproportionate effect on women, so the practice is discriminatory. Common law precedent, that is, judicial decisions of interpretation, guide decisions in disputes where there is no relevant Act of Parliament and thus has the status of an Act of Parliament.

A central principle of the English legal system operative in contract law, the common law and statute law is that of reasonableness. The employment relationship and employee rights at work effects on the employer and employee. Thus in many cases judgments in disputes between employer and employee often turn on the question of reasonableness. The notions of reasonable and unreasonable behaviour or instructions are questions of interpretation in the circumstances of particular cases.

As explained above, an express, implied or incorporated term in a contract of employment is reasonable if, in a matter of dispute, it is held that a similar employer would have done the same thing, for example discipline or dismiss an employee, in similar circumstances. The discussion of this point is important for the following reasons. As statutory rights are subject to interpretation, challenge and eventual updating either in the form of statutory amendment or a binding precedent created by a court or employment tribunal, personnel practitioners must keep abreast of developments in employment law to ensure that the procedures set in place by their employer reflect the spirit and the letter of the law.


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