Types of Employment Contracts and UK Employment Legislation

Describe the different types of employment contract and how they’re formed.

Employment law is highly complex area. There are five forms of employment contracts, these being:

• Part-time contract: Part time contracts are employment opportunities that offer fewer hours per week. These employees work rotational shifts, however, can be called when free and during annual leave. To be deemed part-time, workers generally must work under 30 hours per week. An example of which is a sales assistant at Lloyds Pharmacy; working three hours every week day. The advantages for the employer and employee is the simplicity of the contract; the employee works shorter hours and therefore cannot over extend themselves at work and the employer spends less of their wage budget on them. The disadvantages of this arrangement is that the employee receives less money and if they are effective in their role, the employer cannot use them permanently and can only use their abilities in correlation with their contract.

• Fixed-term contract: Fixed-term contracts are provided by employers – agreeing that the contract will expire upon the end of a specified period or the completion of a job. An example of this could be a Christmas temporary contract in a retail store such as Ralph Lauren, keeping the employee in work over December. Fixed term contracts are advantageous as they provide the employer with extra staff in times where they are required, without over exercising their budget permanently upon the time of expiry. It aids the employees in the sense that it is temporary, therefore would be used to supplement an existing income. It is disadvantageous because it temporary and will eventually expire, like the disadvantages of part-time contracts.

• Agency staff: Agency staff belong to a business that is paying them to find workers for other companies – for example, there can be IT agencies that actively look out for employing young potential workers and provide them with employment for the benefit of their patron. This aids the employee & employers as it promoted bringing in young talent, however, the agency will not be able to benefit from the crop of youngsters being approached.

• Freelancers: A freelance worker is self-employed however hired externally by another company to complete a job. For example, freelance plumbers may be hired by other businesses to provide services without being a part of that business. This aids freelancers as they can work as they wish without the complications of being legally bound to the company they are providing services for. It is also helpful for the employers as they are signing off a single fee for the freelancer and do not need to concern themselves with wages. The negative side of this is the large sum of money that could potentially be paid up front.

• Consultants: A consultant is a person who provides other businesses or freelancers professional advice in exchange for payment. Most larger businesses hire their own consultants, an example of which are the Mercedes Benz legal consultants. An advantage of using a consultant is that they provide the firm with a greater scope of knowledge regarding a certain business venture however, it is risky as it relies placing trust in one individual in a decision that could prove imperative regarding the progression of a business.

• Contractors: Contractors are usually organisation that work similarly to freelancers, seeking contracts from other businesses. An example of which could be a construction firm who are hired by the council to redevelop state schools. An advantage of the use of contractors is the fact a firm can bring in specialists who can carry out a specific job they themselves are unable to. A negative aspect of this is the lump-sum feed needed to facilitate the task.

• Zero hour contracts: Zero hour contracts are contracts that do not have specified hours or shifts. They are simply the agreement to be available when needed at short notice by their employers in the event any other member of staff cannot attend or more staff are required in a busy period. An example of a zero-hour contract is also seen in Lloyds Pharmacy; individuals who are called when another is either late or cannot attend. Zero hour contracts are good for an individual to quickly work without the restrictions of routine shifts, the negative aspect of this is the fact it is not a reliable source of income for an employee as they lack consistency with their hours.

Separating legally binding contracts from other agreements requires an identified offer. The must be identified via the means of advertisement – being classed as invitations to treat. Additionally, the employer making the contract offer to potential employees must have necessary authority to do so. Conditions within offers of employment must be met once documented for the contract to become valid; an example of which could be x amount of GCSE’s needed for acceptance. Any promises made by the employer towards the employee in interview conditions are legally binding. Both parties MUST gain from the contract; the employer acquiring the work of the employee and the employee guaranteeing an income. This is known as consideration.

If the parties intentionally decide that the contract is not legally binding when it is drafted, it will not be able to be later enforced in court. Mistakes and misrepresentation from the parties mean that a valid contract can be brought to court. All terms of a legally binding contract must be documented in writing with signature proof; this is known as written terms.

P2 – Describe the impact of current legislation and regulations on two contracts; for example minimum wage, flexible working provisions and disability provisions.

Impact of current legislation and regulations on zero-hour contracts

The utilisation of zero-hour contracts provide flexibility in both the employer & employee’s situations, although cannot be viewed as a permanent arrangement unless there is a justifiable excuse for doing do. By law, they are not appropriate if the job requires the employee to work regularly for a continuous amount of time on a permanent basis; this has an adverse effect on the employer as it means that if they like the employee & want to see them work more frequently then they must first offer them a new contract which is problematic. An example of this is if an individual is required to work from 8-1 on a Monday to Wednesday over the course of a working year. In this instance, the Prevention of Less Favourable Treatment regulations would decide that the employee is entitled to a full-time role.

Zero-hour contracts additionally do not grant employers with the right to evade all responsibility. Staff, despite their contracts, must be entitled to full employment rights and need to be lawfully treated. An example of which means that employers cannot deny those who work under zero-hour conditions perks such as sick-leave and equal pay. This impacts employers closely as it means that they must ensure the employees operating on zero-hour contracts are treated with the same degree of fairness all others are, else they are breaching the Prevention of Less Favourable Treatment regulations and face harsh fines & negative publicity. Zero-hour contracts are inappropriate to be used as the backbone of a business. They are only useful for spontaneous or unexpected events that occur; for example emergency leave from over staff. By this logic, zero-hour workers can only be used irregularly – limiting the progression the employee can have in that business as regulation limitations impede the company from excessively using them.

Impact of current legislation and regulations on full-time teaching staff

According to the Appendix 4,

P3 – Difference between contracts of employment and contracts for services.

P4 – Identify the rights and responsibilities of employees and the employer in a selected business organisation.

P5 – Explain the key features of employer and employee relations and welfare.

P6 – Investigate an organisation’s policies on remuneration and describe those policies and methods of remuneration.