Employment law in the UK: an essential guide for employers and HR leaders
Employment law is complex and fast-paced. It covers everything from the minimum wage to maternity leave, and it’s crucial that employers and HR understand the basics (as well as be able to access specialist advice, when needed). This is an at-a-glance overview of employment law, packed with relevant sources, and will quickly get you up to speed.
What is employment law?
At its heart, employment law is the legal framework – a set of laws and considerations – which govern the relationship between employers and their employees. Employment laws set out the legal obligations which employers have towards their employees (a safe workplace, for example) and the rights that employees have (to be paid, for example).
Employment law is a rapidly changing area. This is partly because the laws have developed from different sources. The basis of the legal relationship between employer and employee is the employment contract (and the rights and responsibilities, which come from that). On top of that is domestic legislation passed by successive UK governments, creating ‘statutory rights’, and on top of those rights are laws, which have been introduced through European directives. All of these have come together to give us employment law as we know it.
Here’s an example.
Let’s think about paid holidays.
- The basic European entitlement is 20 days a year (i.e., four weeks), however –
- UK law increases that allowance and gives employees a minimum of 28 days (i.e., 5.6 weeks).
- Many employers offer more holidays, which will be outlined in the employment contract, 25 days, say, and many will throw in the bank holidays too, bringing the total to around 32 days (depending on the year).
So, we have the basic European rights of 20 days, which is topped up by an extra 1.6 weeks by UK domestic law, and then some employers offer more again, as a contractual right.
The difference between labour and employment law
There’s no difference but we tend to use the words employment law in the UK. Labour Law is more commonly used in the US.
Why does employment law exist?
The history of employment law dates way back to the old master servant days. In fact, employment law in the UK has been an ongoing process since the 19th century. Back then, legislation was developing into the Abolition of Slavery Act and the Factory Act 1833 (this made it illegal to employ children under the age of nine).
It exists because the relationship between an employee and employer (like master/servant) is not one which is equal in power. Employment law arose out of a need to protect employer and employee relations, and ensure people are treated reasonably and fairly.
Over the years, the Courts and successive governments have tried to protect employees from unfair and unsafe employment practices. That can be anything from ensuring employers give breaks, and paid time off, to making sure the workplace is safe.
What happens if employers don’t comply with the law?
Most employers are aware of the legal obligation to treat employees fairly and reasonably. But when this doesn’t happen, employment law is enforced through a system which includes employment tribunals. Having a legal process enables employees to enforce their rights and seek compensation (for lost wages, for example). Additionally, government agencies can in some cases take action. For example, the HMRC has the power to take action regarding minimum wage breaches.
What does employment law cover?
Employment law is wide ranging and covers the laws, rights and obligations that relate to the employment relationship, from the recruitment processes to redundancy procedures. It includes:
- Discrimination at work
- Pay and benefits
- Hours of work, rest, and holidays
- Competition and confidentiality
- Notice periods
- Fair reasons to dismiss
- Redundancy procedures
- Sickness pay
- Rights around maternity, paternity and parental leave, and flexible working
- Obligations to employees with disabilities and –
- What happens to employees when a business is sold or transferred.
Employment law and different types of workers
What (if any) employment rights a person has depends on their employment status. There are two categories that have employment rights: employees or workers. If a person is genuinely self-employed, they will not have employment rights. Determining a person’s employment status is often a tricky question. The tribunals and courts are frequently called upon to decide status issues; the Uber and Pimlico Plumbers cases are two recent high-profile examples.
Employees
The line between an employee and a worker is not always clear. Employees have an obligation to do work personally for the employer in exchange for pay. They are not allowed to take a week off without notice (or permission) or send someone else in to do their job.
An employer can make sure employees are under a degree of control in relation to that work, what they do, when they do it and how. In exchange for this, employees have far more employment rights than workers.
For example, only employees have a right not to be unfairly dismissed, a right to statutory minimum notice, and a right to a statutory redundancy payment (subject to minimum service requirements). Example of rights workers have as well as employees are paid holidays, and rest breaks.
Workers
The big difference between a worker and an employee is that a worker is not obliged to accept offers of work and therefore the work is viewed as casual.
Here’s how that difference can play out.
An employee is contracted to be in the office, working five days a week. So, unless they are unwell or have booked annual leave, they must show up. If they don’t, an employer can discipline them or even dismiss them.
However, there’s no such expectation of a casual worker. If an employer offers a worker five days’ work one week, and the worker accepts, the worker will be expected to attend work. But once that ‘assignment ends’ a worker is not expected or required to work the next week. So, if the employer offers work the following week, the worker can turn it down.
Self-employed
If a person is genuinely in business on their own account, they won’t be an employee or a worker. Sometimes it can be hard to decide where the lines are drawn when a person is an individual consultant providing a company with personal services (and is expected to turn up in person, and not turn down work).
General obligations to employees
Employers have a general obligation to stick to their contractual obligations and act within the employment contract. These include:
- A safe working environment, with the correct number of breaks and holidays
- Enough resources and support
- At least the National Minimum Wage or the National Living Wage rates
- A workplace free from discrimination and harassment.
While it’s not a legal obligation, employers should treat employees reasonably.
List of employment laws
There are many different pieces of legislation which touch upon the employment law relationship. But the main ones include the Employment Rights Act 1996; the Equality Act 2010 and the Employment Act 2002. While these Acts date back to the nineties, they are regularly amended and updated to reflect the latest legal framework.
National Minimum Wage
Employers must legally pay at least the National Minimum Wage and/or the National Living Wage depending on the age of the employee, and whether they are an apprentice. The rates change on 1 April every year, and employers must keep to them. Currently, the hourly rates are –
- Age 23 and over: £9.50 (£10.42 in April 2023)
- Age 21-22: £9.18 (£10.18 in April 2023)
- Age 18-20: £6.83 (£7.49 in April 2023)
- Under 18s and apprentices: £4.81 (£5.28 in April 2023)
Contract of employment
An employment contract is a legally binding agreement between an employer and an employee. At its simplest, it’s like any legal contract – it sets out the agreement of what is being exchanged; in this case, work for pay. However, an employment contract will have special features implied in it by law, without needing to be written down. These include trust, confidence, fidelity and good faith. Trust and confidence, for example, are about treating each other reasonably and acting reasonably. It’s about not acting in a way that would have the effect of destroying the relationship. A breach of this term would be serious enough to mean the employer or employee could end the contract immediately (see constructive dismissal).
Flexible working
Since the pandemic, nearly half of employers (49%) expect an increase in staff working from home or remotely all week according to research. Some organisations encourage flexibility. However, an employer doesn’t legally have to offer the arrangement. But it does have to consider flexible working requests if an employee has:
- Worked for the employer for 26 weeks or longer
- They are legally an employee (not a worker)
- They haven’t made other flexible working requests in the last 12 months
While flexible working is typically associated with parents or carers, any employee (subject to the criteria above) can make the request. Employers need to follow the Acas Code of Practice on flexible working requests, consider the request fairly and make a decision within three months. It’s crucial the procedures are followed. In some cases, if the employer refuses, there are potential claims an employee could bring, for example: sex discrimination.
Unfair dismissals
All employees with two or more years’ continuous service have a right not to be unfairly dismissed. This means the employer must follow a fair procedure and have a fair reason to dismiss someone. There are five potentially fair reasons to dismiss:
- Capability or performance
- Conduct
- Redundancy
- Illegality and some other substantial reasons.
The most common reasons will be the first three in this list. These are only potentially fair as an employer must act reasonably in deciding to treat that reason as sufficient to dismiss, taking into account the circumstances.
Constructive dismissal
When an employer commits a serious breach of contract, an employee is entitled to end the contract immediately and walk out of work. This would be treated as a constructive dismissal for the purpose of potentially bringing a claim.
Examples of an employer breaching the express terms of the contract include not paying the employee or asking them to do work that’s not permitted in their employment contract. However, an employer may have breached the implied terms of the contract if an employee is bullied or treated in a humiliating way or placed in an unsafe working environment.
The breach does need to be serious for an employee to succeed with the claim.
Wrongful dismissal
Unlike unfair dismissal, which is a statutory claim, wrongful dismissal is a contractual issue. A wrongful dismissal is when the employee is dismissed without proper notice as stated in the contract.
Take for example, an employee who is entitled to a months’ notice in their contract. If an employer dismisses with no notice or less than a months’ notice, the employee is entitled to bring a breach of contract claim called wrongful dismissal for the unpaid notice.
Employers are, however, legally able to dismiss employees without notice, if an employee is guilty of gross misconduct. Examples include fraud, theft, dishonesty, violent behaviour and serious breaches of company procedures (such as health and safety or data protection breaches).
Disciplinary procedure
Employers should have a disciplinary procedure, which sets out the process they will follow when an employee is called to respond to disciplinary allegations. This is a must-do. Not having a procedure is itself a breach of the Acas Code of Practice.
Typically, a disciplinary procedure involves investigating the concern. Where there is a case to answer, an employer would set out the allegations and evidence in writing and invite the employee to a disciplinary hearing.
Important: legally, the employee has a right to be accompanied by a colleague or trade union representative.
The disciplinary officer (usually a different person from the one who initially investigated the matter) makes a decision, confirms it in writing, along with the employees’ right of appeal. If the employee appeals, an appeal meeting would take place in front of an appeal manager (where possible, this is done by someone in a more senior role, with no prior involvement in the process). The appeal manager hears the appeal and confirms the decision in writing.
Grievance procedure
This is the process to be followed when an employee wants to raise a formal complaint. A grievance procedure typically involves an employee setting out concerns in writing and sending them to the person named in the policy, who will then consider the issue at a grievance meeting and provide a written outcome, with a right of appeal.
Generally, most issues should be resolved informally so grievances are usually serious. They can include bullying, discrimination, and unfair treatment (such as not getting a promotion, or money wrongly being deducted from pay).
Employers are expected to follow the Acas Code of Practices on grievances, and not doing so may result in an uplift of up to 25% of any compensation awarded to an employee. Ignoring or mishandling a grievance can also be a basis for employment claims, such as constructive dismissal.
Working Time Regulations
Working Time Regulations are about legal working hours, including –
- Statutory rights to rest breaks (unpaid)
- How many hours and days an employee works
- Rest breaks (the right to a 20-minute uninterrupted break if an employee over the age of 18 works for six hours)
- At least 11 hours clear break between each working day
- One rest day for each working week (this can be averaged out over a fortnight and mean two days off in two weeks)
- A maximum working week of 48 hours. This is based on an average, over a reference period. So, an employer can ask an employee to work more than 48 hours in a week, but not when it is averaged out over a period. There are exceptions, such as to do with driving roles.
Finally, the regulations set out the right to annual paid leave, which is 5.6 weeks of paid leave each year. For full time that’s 28 days a year but that’s inclusive of any bank holidays.
Discrimination
Employers must ensure the workplace is free from discrimination. The Equality Act 2010 makes it unlawful to discriminate against a person because of a protected characteristic: age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, and sexual orientation.
There are different forms of discrimination in the workplace including direct and indirect discrimination, harassment, and victimisation. An example of direct discrimination is an employee being unfavourably treated because of a protected characteristic, compared to someone who does not have that protected characteristic.
There’s also indirect discrimination. This is where someone with a protected characteristic is at a substantial disadvantage when it comes to a work rule, practice or condition, even though that requirement applies to everyone. If the employer cannot justify the requirement, it will amount to indirect discrimination.
Harassment and victimisation in this case, is where because of a protected characteristic someone is treated in a way that violates their dignity, or creates a hostile, degrading, humiliating or offensive environment.
Whistleblowing
Whistleblowing, or protected disclosures, is when a worker communicates information in the public interest that they reasonably believe shows a breach of a legal obligation or serious wrongdoing. The disclosure needs to be made to the employer but can also be made to a person or body prescribed in the legislation, which will usually be the appropriate regulatory body.
For example, if an employee reports to their employer a concern that the employer is pumping harmful chemicals into a nearby river, that is likely to qualify as a whistleblowing disclosure.
A protected disclosure is a qualifying disclosure that is made by a worker that they reasonably believe shows serious wrongdoing within the workplace. A whistleblower must not suffer a detriment or dismissal because they blew the whistle. The usual requirement for an employee to have two years’ service does not apply to whistleblowing dismissal.
Maternity and family leave
How long does maternity Leave last?
Employees can take maternity leave of 52 weeks. However, the right to maternity pay is subject to the employee having the minimum earnings and reaching up to the 15th week before the due date. It’s usually six weeks at 90% of the normal rate of pay or the lower earnings rate if lower, and the remainder is set at the statutory maternity rate.
Employers and HR also need to be up to speed on – Adoption leave, Shared Parental Leave, Paternity Leave, and Parental Leave. The rights and rates of pay are easily available on government websites. But it’s worth remembering that these are minimum levels of pay and time off. Employers do offer enhanced pay and time, either contractually or on a discretionary basis. This can be brilliant for company culture, recruitment and retention of employees. When enhanced levels of pay are made, often it’s done on the basis that the money can be recouped by an employer unless the employee stays with the company for say, another six or 12 months.
Trade Union membership
Any individual employee has the right to join a union. This means they can access advice and can be accompanied by their representative at a disciplinary meeting, for example, but the employer doesn’t have to negotiate with the union. However, some workplaces – particularly in the public sector or major industries such as the railways – will have collective bargaining agreements with trade unions. This means they will negotiate with unions, which can potentially lead to contracts being changed collectively.
Trade union rights
An individual has the right to join a union, and not to suffer discrimination because they are a trade union representative or be treated unfairly because they take part in trade union activities. Ultimately there is a right – subject to complying with the rules – to take industrial action.
Part-time workers’ rights
Part-time workers are entitled to not be treated less favourably because of their part-time status than their equivalent full-time colleagues. This applies in relation to pay and benefits, training and career development. The general principle is to do things on a pro rata basis. For example, if an employee works three days a week, they would be expected to be paid three fifths of the equivalent full-time worker.
Health and safety
An employer has an implied duty to protect the health and safety of its employees. This is an implied obligation in the employment contract, as well as in employment legislation. There are also a number of legal obligations set out in legislation – see the Health and Safety at Work etc Act 1974.
Data protection
With the introduction of GDPR, the UK law Data Protection Act was updated in 2018 to reflect the latest confidentiality in the workplace laws. Employers are required to comply with the data protection laws regarding their employees. Employers must process employee data lawfully, proportionately, and have a data protection policy and privacy notice for employees. Employees, like customers, have the right as individuals to request information about them held by the employees, by making a subject access request.
Employment law advice
Being a fair and reasonable employer will probably keep you out of trouble – and away from the Employment Tribunal – most of the time. However, even good employers can occasionally be caught by procedural and compliance issues. From time to time, employers end up in a dispute with an employee.
While experienced HR managers can often steer an organization away from any legal wrangles, employment solicitors are there for the complex, riskier issues, and are often required when employers face difficult claims and are faced with cases which may end up in an employment tribunal.