An employment contract refers to an agreement between an employer and an employee specifying the various terms of employment. It is one of the most essential documents which an individual has to sign while joining an organization. It contains the terms which both the employee and the employer should abide to for the smooth operation of the organization.
Most of the terms of employment contract are explicitly mentioned in the contract document itself in the form of written contract or oral statements, some others are implied or can be deduced. These implied terms although don’t find an explicit mention in the contract, yet they also have to be abide by. The term such as “not falsely accusing someone of crime” cannot be mentioned in the contract, but it is implied in the contract itself in the clause mentioning about the duty of mutual trust and confidence. There are many examples of cases that have been fought in the past over these implied terms.
To protect the rights of an employee as well as an employer, there are certain statutory terms also that are implied automatically without any mention in the contract itself. The terms such as The National Minimum Wage Act 1998 or the working time regulation act etc. are a part of the employment contract even if they are not mentioned in it. In certain cases, the terms of contract can be decided mutually by the organization and the trade union itself. This type of a setup is collective bargaining. In case either of the parties wants to change the terms of contract, it can be done only by a mutual understanding of both.
The employment contract is functional in the day to day activities in an organization from the time an individual joins the same. Hence it is a document which needs to be read in detail and to be well understood while joining an organization.
The meaning of the term employee is very crucial and is important for Employee Performance Management and essential to determine both for the employee as well as for the employer. An employee needs to know the same because it entitles him for a range of benefits that are not available to non-employees. If we see from the employer’s perspective, he would like to have the least possible number of people working with him as employees because of the added cost of the benefits which he is liable to provide to the employees. Hence, keeping in view the interest of both of the parties, the term needs to be defined with utmost care and precision. The definition given by Employment Rights Act 1996 is vague and does not serve the purpose of clearly demarcating the difference between an employee and a worker. A variety of tests have been developed to find out a definite meaning of the term employee. Some of these tests are
1.The control test
It says that if the employer decides who gets to do what work at what point of time, and also how and where the work has to be done, the person in that case can be referred to as an employee.
2.The integration test
If the worker is a part of the organization in taking management decisions etc for a long duration, he is an employee
3.Mutuality of obligation test
If there is an obligation to perform the work, the worker is an employee.
The employees have been divided into various categories based upon various factors. These are:
- Crown Servants
- Directors and shareholders
- Part timers
- Temporary workers
- Fixed term Employees
Along with the definition and classification of employee, the term worker also needs to be defined. He is a person who works under a contract and has to perform the work given by the other party.
With the knowledge about the difference between the concept of an employee and a worker, both the parties stand to gain and can use their rights effectively.
Redundant, when used in the terms of employment is a reason for dismissal. An employee, who is dismissed for redundancy can claim for statutory redundancy payment, can claim of a wrongful dismissal or for a higher level of severance payment. Redundancy can be defined as a special case of dismissal wherein the dismissal is attributable to the fact that the employer or his business has ceased to exist or is in the process of doing so.. In case of dismissal due to redundancy, the employee is entitled to receive a redundancy payment. For this to happen, he has to satisfy certain conditions such as he should be an employee having served at least 2 years in the service, he has not been dismissed due to any disciplinary reason etc.
If an employee wishes to make certain employees redundant, there are a certain steps which are to be followed for it. These are:
- Planning for redundancy
- Employee Selection Process: Selecting the employees who have to be made redundant
- Consultation with appropriate representatives and individual employees
- Notification to DTI
- Possibility of Alternative work
- Dismissal with redundancy payment.
An employer needs to identify the needs of the business so as to handle redundancy in a better manner. While deciding whom to make redundant, an employer can ask for volunteers for the same. In case no volunteers are available, the decision has to be based on certain criteria. An expert may also be consulted for this purpose. After deciding, the employer should consult the employee also so as to address any grievance regarding it. The employer should provide the option of alternative work to the redundant employee