Hamilton Pratt

Employed Workers

Finding Workers

In the UK, prospective employees have rights even before they become employees.  When recruiting workers in the UK, legislation protects prospective employees against discrimination on the grounds of gender, race, disability or marital status when advertising or offering employment.  Further, trade union membership and activities may not be used as a reason for refusing to employ a person.  As yet the UK has no legislation to prevent discrimination on the ground of age in the recruitment process.

Worker's Rights

The extent of a worker's rights in a UK business depend on whether he or she is an employee (with a contract of employment); or is self-employed, ie an independent contractor or 'contract worker' (engaged under a contract for services).  Employees enjoy a broad range of statutory rights similar to those elsewhere in Europe.  In most cases, employers can supplement these rights but employees cannot contract out of them.  Contract workers have traditionally enjoyed fewer protections but increasingly protection is provided to the wider category of "workers" (meaning all but the genuinely self-employed).

Businesses in the UK typically issue an employment contract to each of their employees.  In addition to their contractual rights, employees enjoy a range of statutory rights; including:-

  • the right to a written statement setting out certain basic terms and conditions (insofar as not covered in any employment contract);
  • the right to a minimum period of notice;
  • the right not be required to work for more than 48 hours a week on average (although workers may agree to opt out of this protection);
  • the right not to be unfairly dismissed (the maximum compensatory award for unfair dismissal is £55,000);
  • the right to compensation if made redundant (dependent on age and length of service, up to a maximum of £8,100);
  • the right not to be discriminated against on the grounds of sex, race or disability (the award of compensation for discrimination is not subject to any limit);
  • the right to (paid) maternity and (unpaid) parental leave;
  • the right to sick pay;
  • the right to a minimum wage;
  • the right to annual leave:  every worker is entitled to four weeks’ paid annual leave after he or she has been employed for 13 weeks.  (This entitlement is proportional for part-timers.  The leave entitlement includes bank and statutory holidays.  There is no statutory right to take bank holidays off although this is typical); and
  • equal pay to men and women doing similar or comparable work.

If you set up a UK subsidiary which recruits employees to work in the UK, they will enjoy the rights outlined above.  However, if you second employees from outside the UK to work in the UK (whether for a UK subsidiary or for a branch or representative office), various factors will affect whether they should be treated as "ordinarily" employed in the UK and whether they enjoy these rights.  In each case, relevant factors include:-

  • whether the employee's contract is with the UK subsidiary and/or is governed by UK law;
  • where an employee is paid;
  • whether or not national insurance is paid by the employee in the UK;
  • if the intention is that the employee will return to his or her 'home country'; and
  • whether the position filled by the employee has changed from the one which he or she previously had while working in his or her 'home country'.

The Posted Workers Directive provides that individuals from countries within the European Economic Area are entitled to the greater statutory protection of either their own country or the country to which they are posted or seconded.

Other parts of the employment framework within the UK are:-

  • the regulation of health and safety;
  • the PAYE (Pay As You Earn) system (under which an employer must deduct income tax and national insurance from an employee's salary and account for it to the Inland Revenue); and
  • the requirement to carry employer's liability insurance.

Health and Safety

Health and safety at work is another area of law influenced by various EU Directives.  These have led to UK legislation being introduced to protect workers' health (eg to protect against eye strain, hearing damage and repetitive strain injury and overwork).

Workers' Participation

In line with European legislation, English law provides that workers' representatives must be consulted over transfers of the business in which they work and in relation to collective redundancy.

If your company's group as a whole employs more than 1,000 employees in the EEA and of these at least 150 are employed in two EEA states you may be required to set up a European "works council".  Currently, there is no obligation in the UK to set up works councils in any other circumstances.

Transfers of Business

The Acquired Rights Directive provides protection for employees where the business (or part of the business) in which they work is transferred.  The Directive will not apply if you purchase the shares of a business but if you set up a new company in the UK and purchase a business or part of a business the Directive may apply.

Where the Directive applies employees will transfer to your new company on their existing terms and conditions and it will not be possible to change these terms and conditions to the employees' detriment.  If any of the employees are terminated for a reason connected with the transfer of the business, their dismissal will automatically be unfair.