part one: Putting a contract out on your staff

Employment rights apply even if there is no written contract, so employers need to read the small print even if it is not there

By Adam Bernstein | Published:  14 January, 2019

There is a common belief amongst employers that if an employee does not have a written contact there is no contract in place, leaving the employee without any rights.
    
However, from a legal perspective, Philip Richardson, a partner and head of employment at Stephensons Solicitors LLP, says: “a contract of employment will be in place at the point where the prospective employee accepts an unconditional offer of employment.”
    
This means, quite simply, that a contract and the obligations under it are often in existence prior to the employee’s first day or signature on a written contract; employers should be mindful of how they conduct themselves from the moment the offer is made.
 
Fundamental terms
Philip says that while it’s true that there is no legal obligation for the employer to provide a written contract of employment, “the employer is under a duty to give employees a written statement of employment particulars. This sets out the fundamental terms of the employment contract such as the names of the employer and employee, brief job description and hours of work along with other key terms of the employment relationship.”
    
It’s worth pointing out that an employee’s right to a written statement arises where the contract lasts for at least one month; the written statement must be given within two months of the start of employment. If the employer fails to provide the written statement within the stipulated period Philip says the employee may be able to obtain an award of up to four weeks for compensation from the Employment Tribunal.
    
“In practice,” says Philip, “it’s beneficial for the employer to draft a full contract of employment as soon as possible so that it can clearly set down its expectations of how the relationship will progress.”

Express and implied
There are two types of contractual term – express and implied. Philip says that an express contractual term is one that is explicitly agreed upon by the parties and as such is binding on both – “the terms included in the written statements or terms referred to above would all be considered to be express terms of the contract.”
    
An implied term is one that has not been expressly stated but is considered to be included in the employment contract. Philip explains that these are often clauses that are implied by law for example the employee’s right to the minimum wage. He says that other terms are implied where they are too obvious to mention, including the duty of care owed by the employer and employee, the duty of mutual trust and confidence, the duty to pay the employee and the employee’s duty to provide the work personally.
    
This is where Philip sees problems for employers, as some believe that providing the term is not in writing, it isn’t relevant. “However, this isn’t the case and the employer ought to have regard to the terms mentioned.” He adds that implied terms are usually based on the perceived intention of the parties and notions of good practice and reasonable conduct.

Variation
Any variation of a contract must be agreed by both parties in order to be valid. However, as Philip notes, this does not mean that the employer’s hands are tied in varying the contract. “One way in which the employer may be permitted to make changes is if the contract includes a carefully drafted flexibility clause. Employment relationships often naturally develop and evolve over time and such a clause gives the employer capacity to make changes to the employment contract without the need to obtain the employee’s consent.” That said, he says a fundamental point to note with a flexibility clause is that there is an underlying duty for the clause to exercise reasonably: “If the clause is drafted too widely or the employer unreasonably exercises the right to vary the contract then the employee may argue this has broken the mutual trust and confidence in the relationship and could resign, taking legal action against the employer.”

From a practical perspective if the employer is seeking to vary the contract of employment it is also important to discuss the changes with the employee first. Often employees will be in agreement with the changes if they fully understand the reasons behind them.



Related Articles

  • part two: Putting a contract out on your staff  

    Good contracts go to the heart of good business, and employment contracts are part of the story. In the last issue we noted the importance of having a written contract, how they are constructed and varied. But what other practical considerations should employers take notice of?
        
    The first is, according to Philip Richardson, a partner and head of employment at Stephensons Solicitors LLP, to understand what a breach of contract is. “This,” he says, “is where either party breaks an express or implied term of a contract. Examples of an employee’s breach include violence, theft, fraud and gross negligence. If the employer finds this has happened they may be entitled to dismiss the individual immediately.” However, he adds that it is important that the employer has genuine grounds for taking such action otherwise it could face a legal claim from the departing employee for unfair dismissal and breach of contract. He offers examples of an employer’s breach that include demoting an employee or failing to pay them without good reason – “if this happens then it may give the employee the entitlement to bring a claim against the employer in the Employment Tribunal.”
        
    At the outset of the employment relationship, disputes aren’t usually envisaged. However, Philip says “a shrewd employer will often put mechanisms in place in the employment contract to protect its position should a dispute arise.” Common clauses that can offer assistance to the employer include the following:

    Garden leave
    If the employer gives an employee notice of dismissal it may decide to place them on garden leave. Philip says the benefit here is that during this period, the employee is usually prohibited from attending work for the duration of their notice period and prevented from contacting other employees or key clients of the business during the interregnum. “This,” he says, “gives the employer the opportunity to deal with employees whose contract has been terminated in acrimonious circumstances and also allows them to protect confidential information and prevent the employee from using it against the company in the future.”
        
    He warns that if an employer wants to utilise this then it is important to include a clause to this effect in the contract of employment otherwise the employer may have difficulty in exercising it. It is also important to note that employees maintain all their contractual and statutory rights and benefits until the end of the garden leave period.

    Restrictive covenants
    This can be a particularly useful clause to include in the employment contract as it sets down the obligations on the employee after his contract is terminated. Philip says the most common types of restrictive covenant prevents the employee for working for a competitor, usually within six months to one year of leaving the business and “can prove extremely useful to protect confidential information and trade secrets.”
        
    Another common form of a restrictive covenant is a non-poaching clause. This prevents the former employee from enticing the employer’s staff away from the business to join him/her in working for a new employer.
        
    However, Philip says that it can be difficult to enforce a restrictive covenant against a former employee, “especially if the clause is unreasonable and does not protect a legitimate business interest as the court may declare the clause void.” He explains that this is because the courts are reluctant to place too great of a restriction on employees after termination. But in practice Richardson thinks that the mere existence of the clause may make the employee think twice before acting in breach, meaning “that a restrictive covenant can be a valuable contractual clause for an employer despite the concerns about its enforceability.”

    Deductions from salary
    A last, but useful, clause for the employer to include, at least from Philip’s perspective, is one that entitles it to make deductions from the employee’s salary in certain circumstances. He says that the most common types of deduction usually contained in the contract of employment include where the employee has caused financial loss to the employer because of their negligence or misconduct, or where the employee leaves shortly after having incurred substantial training costs. However, he cautions employers to “exercise caution in drafting and exercising this clause as any deduction that is not permitted by the clause could be considered unlawful.”



  • Bullying in the workplace 

    In part one of our look at bullying in the workplace, we looked at how bullying is defined, enabling businesses to understand when what may be construed as bullying is taking place between staff members. The next step is handling the situation.

  • Attitudes to training: Autoinform-ed  

    I have had a few weeks to reflect on an incredible Autoinform Live technical weekend in Cork Ireland. This took place at the premises of J&S Automotive on Saturday 27 and Sunday 28 April. My first thoughts, thanks, and appreciation must go to our hosts, the guest presenters, delegates, and contributing organisations which made this event possible.
    Specifically focusing on our hosts, J&S Automotive were so accommodating, words alone would not do their contribution justice. To dismantle their warehouse, provide catering and the most impressive quality support and welcome was really going above and beyond.

    Sharing knowledge
    Following the two days, I have become reflective about the way technicians approach training worldwide. I have been involved in the motor I industry for well over 50 years, with around 35 years providing training. I have and still travel the globe meeting and sharing knowledge. Please note the sharing expression, as I feel privileged to have met so many dedicated technicians from a variety of backgrounds. I have witnessed over the years great change in attitude and commitment from independent technicians and garage owners.

    I also have noted a big discrepancy in commitment from some UK I dependants which contrast with overseas counterparts.
    There is I believe a complacency in attitude to the future challenges. One recent illustration comes to mind. While in Australia last October, an individual from Perth heard on the kangaroo vine that a series of seminars was taking place in Sydney. So he could attend, he closed his business on Wednesday night with 24 hours notice, booked a eight hour flight and joined the event for the Saturday and Sunday.

    Meanwhile, a little near home, I have had cancellations from delegates unwilling to travel 10-15 miles due to unforeseen last-minute changes. I hope they are reading this!

    Threats and challenges
    So where does this leave our industry and what are the immediate threats and challenges? In my view, these can be summed up as ignorance, arrogance, complacency, and the biggest of all; technical and political evolution.

    I don’t share the euphoria of hybrid, battery, or autonomous vehicles, however I do accept the impact these will have in the short-lived near-future. In my opinion two evolutionary changes will have a long lasting influence. These are hydrogen cell technology, and cradle-to-grave vehicle utilisation. Why own a vehicle when for a relatively small affordable rental you could use and return the vehicle in exchange for a new model after two years. No depreciation, no maintenance, no trade in. As for the other aforementioned technologies, less wear, less maintenance, less reliance on the independent garage sector.

    Back to boots on the ground: The technical evolution has quite literally been breath-taking. This has in the short term presented incredible opportunities for aggressive technical minded business owners and technicians. With opportunity comes challenge, investment and training. Complex vehicle systems require a comprehensive sound knowledge and infrastructure to provide a competitive service against the dealership network. Many garages out there are currently servicing and repairing systems without adequate knowledge or technical hardware to comply with original build spec requirements. Please do not take that comment as a cheap swipe without redress but a genuine helpful comment in realisation by how much this industry has changed. In comparison with other less technical trades, controlled by rigorous legislation we have been left to our own devices so far.

    Confident system diagnosis
    I was among the presenters at Autoinform Live. Obviously what I have just gone through is a very broad analysis, so for my segment I concentrated on more specific area. With this in mind, my presentation at the event focused on using available technology to combat the ever increasing difficulties in confident systems diagnosis. In particular, I focused on engine efficiency, pumping losses, and very accurate assent of valve piston relationship using a pressure transducer while the engine is running. I then expanded on cylinder balance using g vibration analysis.

    Succeeding
    If you are running a business, you will doubtlessly be interested in getting into the next era, but this may require some adaptation on your part. You also need to put yourself in the correct area. Like the dinosaurs before us, there is an extinction zone out there and the asteroid will hit our I industry sooner than you might like or think. If you are in the 10 mile radius training mindset then you really do need to lift you focus on the horizon or possibly to those businesses you resent or admire who are succeeding in your area. If you are one of those success stories then you already know me and are attending Autoinform events or something similar.

  • Perception is everything  

    School leavers are about to become ‘A Thing’ again. In May and June, GCSEs will be sat, and A Levels will be taking place too. There will also be the inevitable angst about how many are going to university, and how many are taking the vocational route.
        
    The automotive sector should be a good place to head instead of academia. It’s technical, it’s getting more technical in fact, and there is definitely a future in it. So, why is there still a dearth of good technicians? The answer possibly goes back decades.
        
    Back when the year 2019 was still seen as being far in the distant future, and we all (well, some of us) expected bio-engineered artificial human replicants to be doing all the heavy lifting by the time we arrived. There was also a push to put more and more young people down the academic career route. Why would anyone want one of those hands-on jobs when you could go off, get a degree, and end up in the big chair, calling the shots? Presumably the replicants would respond well to instruction from people with ‘a good education.’
        
    Well, a few decades later, here we are. Millions of young people heeded the call and trooped into all the universities, which had multiplied as the polytechnics found themselves elevated to a higher status. Can you guess what happens when more and more people acquire what is seen as being the top level of education? Yes that’s right, inflation, and the devaluing of qualifications. With untold numbers of people flooding into the job market clasping a degree, and the memory of the mortar board and gown from graduation still fresh in their minds, those neophytes found that they were not welcomed with open arms. In fact, if everyone has a degree, the competitive advantage it was supposed to give you vanishes. There you are, slogging towards finding a way to be a useful member of society along with everyone else. Of course, prior to the introduction of university tuition fees, it was all part of the learning curve. Then it got expensive. Now it is very expensive, and many young people (and their parents) are going to be looking at the risk-versus-reward equation a lot more closely. Your erstwhile Aftermarket Editor can attest to the fact that it was somewhat deflating to finish a three year degree in 1999, the hardest thing he had done up to that point, only to find his actual course name-checked on an episode of TV’s The Simpsons as a gag. He was lucky though as he was among the last intake to have tuition paid for. Nowadays, you want to make sure your course of study is not a comedy punchline. If not, the cost is high.
        
    If you are going to invest a large chunk of your life to become qualified in something, and you are going to do that thing for the rest of your life, and getting that qualification is going to cost you lots of money, you want to make sure that it is going to work for you.
        
    According to the Universities and Colleges Admissions Service (UCAS), the centralised body through which university applications are made, in 2018 there were 11,000 fewer university applications compared with 2017, an overall decline of 2%. While there were fewer 18-year olds in the population, the number of mature students applying was also down.  

    Rising costs
    Some observers have pointed at the rising cost of tuition fees and attendant long-term debt as the reason university applications have dropped, but perhaps there is more to it than that. Of course, the other assumption is that everyone wants to spend another three years, or perhaps more sitting in classrooms. Admittedly things are a bit more informal, but many people just want to get on with actually doing something.
        
    John Kerr, Operations Director at training provider Develop Training Ltd (DTL) recently observed: “Instead of racking up student debt, apprentices earn while they learn, and apprenticeships provide other ways of learning for those who aren’t suited to academia. Apprenticeships can also generate social mobility, even beyond what might be expected from gaining a practical qualification and a well-paid job.”
        
    This is a good point. Going out and getting a job gets you paid. Upping sticks for university and getting a degree means you have a useful qualification, in theory. Imagine if there was some sort of institution that combined these two things. Hang on…
        
    Apprenticeships offer a real and practical way to work towards a career for young people, one that does not involve huge amounts of debt. It also makes you actually employable. If you put this on a side of a bus, you might even get people to vote for it. Maybe it would help if apprenticeships could be accessed in a similar way to the UCAS model, where one applies for a number of positions at the same time, but that is a topic for another article. After all, in a world of rising university costs, a non-academic route should be an enticing alternative. This is also good for businesses providing the apprenticeships, as they get to hone the raw material that is the young person into something that resembles a useful employee. Also, thanks to the Apprenticeship Levy, there is ample funding available What’s not to like?
        
    Despite this the automotive aftermarket still faces a skills crisis. This is a serious, and large industry with lifelong learning opportunities. So why are there still not enough technicians?
        
    Then we get to the issue of the pitch being made to potential candidates. It’s all about the presentation.
        
    Has the automotive aftermarket presented itself well enough as a career option for young people in the past? Probably not. As an industry, it is somewhat diffuse, with thousands of individual outlets as opposed to large monolithic entities that parents can point at and say “This.”  The structure of the industry also went against it in funding terms, and between the collapse of traditional apprenticeships during the 1970s and moves to rebuild the route in the 1990s and later, getting an apprenticeship could be a dicey business, for employer and employee alike. Things are improving however. In the last few months, as covered in Aftermarket, the aforementioned Apprenticeship Levy has seen some reform that makes it more user-friendly.

    Development  
    Institute of the Motor Industry (IMI) Chief Executive Steve Nash observed: “With a decline of 24% in the number of people starting in-work training, an extra £90 million of government funding has been issued to give businesses the flexibility to take full advantage of the benefits of employing apprentices. The motor industry already recruits 12,500 apprentices each year, and the sector isn’t showing any sign of slowing down. Developments in new technology have meant new opportunities and careers have become available for young people – businesses must adapt to futureproofing their workplace by investing in this.”
        
    Of course, just having the facility to run apprenticeships is not enough. You need to attract young people towards the programme, and bring the parents along for the ride. They pay the bills after all. Careers advice is key in this area, so promoting the ongoing learning opportunities available will certainly help the situation.
        
    “The IMI’s research found careers advice and guidance about vocational learning opportunities is needed more than ever,” said Steve. “Just 5% of those surveyed on behalf of the IMI were aware that you could earn money while you study – a sharp drop compared to 20% in 2014.
        
    “There is also a huge gulf in parents’ perception of the career opportunities offered by the motor industry. Just over a quarter (27%) said they would be happy for their child to become a vehicle mechanic, compared to 59% of parents favouring a career in engineering. And 8% said they would be embarrassed to tell people that their child worked in the motor trade.
        
    “Careers advice in schools is worryingly inconsistent and, in many cases, far from effective, yet that is only part of the challenge.  We mustn't underestimate the importance of ensuring parents are equipped to provide knowledgeable and accurate careers guidance to their children because they are still the greatest influencers on the choices their children make. The excellent opportunities offered by the automotive industry are still very largely misunderstood by anyone who doesn't have direct experience or personal contacts within the business.”

    Opportunities
    It’s not just about apprenticeships though. The long-term journey that a young person will be embarking on needs to be clear, and the opportunities for further self-improvement need to be apparent from the beginning. This is where continuing professional development (CPD) comes into play, and this needs to be promoted as well.
        
    “The IMI is extremely proud to be the End-Point Assessment Organisation for the new Apprenticeship Standards that are being provided to the automotive sector,” commented Steve. “Working alongside manufacturers and employers across the industry, we have been able to create a suite of products that guarantee learners are being offered the very best training. Having a variety of new standards that range from customer service to technicians helps to make sure the sector’s training needs are met and businesses are fully prepared for when the old frameworks are discontinued in 2020.”
        
    In the end, what we need to know is can the sector offer people the chance of a successful career in a way that they will respond to?
        
    Steve thinks the industry is up to the challenge: “The government has made many changes to the apprenticeship system over the last few years, and as the professional body and an awarding organisation for the motor industry we want to ensure that the training for apprentices remains at a high quality. The IMI is continuing to support employers by offering advice and guidance to help them understand how best to use their Levy, whether that’s investing in new staff or upskilling their current workforce.”
        
    If we are talking about skills shortages, Brexit may make the situation even better for those looking for new roles, and a bit more challenging for employers. If EU members of staff decide to head south to the continent – assuming Brexit goes ‘well,’ – the sector will face even sharper skills shortages. It would it need to up its game in retaining and  pursuing talent. Steve mused: “The skills gap in the motor retail sector is already critical. Young blood is, therefore, vital as the rapid development of new technology around electric, autonomous and connected vehicles changes the face of motoring, opening up a world of exciting new career opportunities.”
        
    If the sector wants to attract the best, we need to show that it is a forward-looking industry that offers many potential avenues for ambitious young people. This is clearly the truth, but we need to make sure that message gets through to those who are supposed to be receiving it. That means working with sector bodies like the IMI and others. It also means working with schools and colleges to make sure that they understand what kind of industry it is. More than once in the past we have covered the issue of educational outlets having a view of the automotive sector that is not exactly favourable. We are not alone in this – many of the more practical industries are seen as a route for the less gifted. This is unfair on these industry, and on those who might gain most from them.
        
    GCSEs finish in about three months, and A Levels just before that. Of course, there is not just this year’s crop to think about. There are thousands of potential top-tier techs coming through the system every year. Let’s get the message out there.

  • Autoinform Live heads to Ireland  

    This year, for the first time ever, Autoinform Live will be taking place in Ireland. Held at the J&S Training Centre in Co. Cork, 27-28 April 2019, the event will replicate the same format implemented at the Wolverhampton and Edinburgh shows, dividing the timetable into three modules which provide a mix of practical and theoretical sessions to suit all skill levels.


Search

Sign Up

For the latest news and updates from Aftermarket Magazine.


Poll

Where should the next Automechanika show be held?



Calendar

Click here to submit an event

Facebook


©DFA Media 1999-2019