Employment Contracts Glossary
Adoption leave
Employees who adopt a child are entitled to ordinary adoption leave (up of 26 weeks) and additional adoption leave (up of 26 weeks) but they must meet certain conditions (see Employment Law Made Easy for more information). Adoption leave isn't available if the child is already known to the adopters (e.g. in step-family adoptions or adoptions by existing foster carers). If a couple are jointly adopting a child, only one partner will be able to take adoption leave.
Adoption rights
The statutory rights that apply to employees (male or female) who adopt a child are (1) the right to take adoption leave (and return to work); (2) protection from dismissal and detrimental treatment; and (3) statutory adoption pay.
Advisory Conciliation and Arbitration Service (ACAS)
Advisory Conciliation and Arbitration Service (ACAS) provides advice to employers, employers’ associations, workers or trade unions on any matters concerned with the wide range of industrial relations services, including conciliation, arbitration, mediation, and general and specific advice on industrial relations matters. ACAS also produces codes of practice and guidance on matters of industrial relations practice. Employment tribunals may take account of the provisions of such codes of practice when determining the fairness of a dismissal.
Age discrimination
It's unlawful for employers to advertise vacancies, select interview candidates or offer employment in any way that discriminates on the grounds of age. Note that all age groups are protected, both young and old.
Barrister
A lawyer who has been called to the Bar and has the right to represent clients in court. As a general rule, barristers cannot take instructions direct from the public who must first instruct a solicitor. The full title is barrister-at-law, commonly referred to as Counsel.
Basic award
Compensation awarded to an employee where an employment tribunal finds them to have been unfairly dismissed usually comprises of a basic award and compensatory award. The basic award is calculated by considering the employee’s age, length of continuous service and gross average weekly wage.
Collective agreement
An agreement reached as a result of negotiations between an employer and a trade union.
Compensatory award
Compensation awarded to an employee where an employment tribunal finds them to have been unfairly dismissed usually comprises of a basic award and compensatory award. The compensatory award is an amount the employment tribunal considers just and equitable in all the circumstances relating to the loss sustained by the employee, as a result of the unfair dismissal and is calculated on the net value of wages, and other benefits and expenses reasonably incurred by the employee as a result of the unfair dismissal.
Compromise agreement
A legal agreement used to compromise particular complaints an employee has regarding their employment or the termination of their employment contract and ensure a 'clean break' for both employer and employee. Normally the employer gives the employee a lump sum payment (often tax free) and an agreed reference in return for the employee signing the compromise agreement.
Constructive dismissal
Very often constructive dismissal occurs as a result of a breach of the implied terms of trust and confidence in the employment contract (i.e. a breakdown in the employment relationship). This can be caused by a single action by the employer (such as verbal abuse) or by a series of less serious actions which together amount to a breach of the terms. If an employer makes a statement of clear intention to breach an essential term of the employment contract, the employee can leave work and claim constructive dismissal based on an anticipatory breach of the employment contract.
Covenant
An agreement, usually under seal, by which someone undertakes to do, or not to do, some specified thing. Examples occur in leases; in conveyances, where the seller covenants that they have good title and the purchaser may covenant not to build, etc.; and in employment agreements where an employee may covenant not to compete.
Damages
A sum of money claimed or awarded as compensation by a court or tribunal.
Defence
The legal case put forward by a defendant in answer to a claim.
Defendant
A person against whom a claim is made.
Dependant leave
All employees (regardless of service) are entitled to take a reasonable amount of unpaid leave to deal with incidents involving a dependant. Dependants are defined as the employee’s parent, wife, husband or partner, child or someone who lives as part of the family.
Disability discrimination
Under the Disability Discrimination Act 1995 (DDA), it's unlawful for an employer to discriminate against a disabled person – or someone who has been disabled in the past – in recruitment, terms and conditions of employment, promotion, training (or other benefits), dismissal or by subjecting them to any disadvantage. This Act also applies to the self-employed and those engaged under a service contract or apprenticeship.
Discrimination
Treating members of a group unfairly compared to the treatment of other people who are not members of that group. It's unlawful for employers to discriminate on the following grounds:
1. Sex or marital status, gender, etc
2. Race, colour, nationality, ethnic or national origins
3. Gender reassignment
4. Religion or belief
5. Sexual orientation
6. Disability
7. Age
1. Sex or marital status, gender, etc
2. Race, colour, nationality, ethnic or national origins
3. Gender reassignment
4. Religion or belief
5. Sexual orientation
6. Disability
7. Age
Dismissal
When terminating employment, 'dismissal' occurs in the following situations:
1.The employee’s employment contract is terminated by the employer with or without notice.
2. The employee works under a fixed-term contract and the term expires without renewal under the same employment contract.
3. The employee terminates their own employment contract, with or without notice, in circumstances such that they are entitled to by reason of the employer’s conduct. This is known as ‘constructive dismissal’.
1.The employee’s employment contract is terminated by the employer with or without notice.
2. The employee works under a fixed-term contract and the term expires without renewal under the same employment contract.
3. The employee terminates their own employment contract, with or without notice, in circumstances such that they are entitled to by reason of the employer’s conduct. This is known as ‘constructive dismissal’.
Employee
Someone who has entered into or works, under an employment contract. An employment contract means a contract of service, whether express or implied, oral or in writing.
Employment Appeal Tribunal (EAT)
The Employment Appeal Tribunal (EAT) is a division of the High Court, presided over by a High Court judge. It hears appeals from the decisions of the employment tribunals on questions of employment law. Appeals from the EAT are to the Court of Appeal (or the Court of Session in Scotland) and from there to the Supreme Court.
Employment contract
An employment contract is generally governed by the same legal principles as other contracts in that there must be:
· An offer
· An acceptance
· Valuable consideration
· Reasonable certainty in the terms; and
· An intention to create legal relations
· An offer
· An acceptance
· Valuable consideration
· Reasonable certainty in the terms; and
· An intention to create legal relations
Employment tribunal
Employment tribunals determine applications relating to employment rights, the most important of which are the rights not to be unfairly dismissed; the right to a redundancy payment; the right not to be unlawfully discriminated against on the grounds of sex, race or disability in relation to employment; and rights in relation to breaches of contract. The procedure is less formal than that of a court. Cases heard in employment tribunals may result in awards of compensation, reinstatement or re-engagement.
Equal pay
The Equal Pay Act 1970 (EPA) provides that discrimination between the sexes in the terms of their employment contracts is unlawful. This typically occurs in matters such as salary, bonus payments and benefits.
Equality clause
If an employee can establish that their employment contract contains terms less beneficial than those enjoyed by someone of the opposite sex in the same employment, or which omits a beneficial term enjoyed by that same employee, they can apply to an employment tribunal to have an equality clause implied into their employment contract. An equality clause modifies the individual’s contract so that it's equivalent to the another similar employee’s contract.
Fixed term contract
A fixed-term contract is one that has a termination date. The duration of the fixed-term contract may be for any period. Fixed-term contracts may provide that the notice to terminate can be given before the termination date. If there is no notice provision, employment is guaranteed for the full period. A fixed-term contract will automatically expire at the end of its term. Failure to renew a fixed-term contract upon termination may lead to a valid claim for unfair dismissal or redundancy pay.
Frustration of a contract
‘Frustration’ of an employment contract occurs when some outside event happens that is not the fault of either party to the employment contract. Examples of frustration occurring are when an employee suffers an illness and, as a result, can never work again. Frustration may also occur if the employee is sentenced to prison. If frustration occurs, the employment contract is terminated automatically without any need for either party to give notice.
Garden leave
A ‘garden leave’ clause can be included in an employment contract. Garden leave describes the situation where an employee serving their termination notice is required to remain at home, although they continue to be paid. The aim behind this practice is to prevent the employee from leaving to work for a competitor while not having that employee around at work where they may obtain confidential information.
Golden handshake
Term given to a lump sum payment made by an employer to an employee on the cessation of their employment. This can usually attract favourable tax treatment.
Grievance
A complaint by an employee about action an employer has taken or is proposing to take. A grievance must be in writing and an employee must follow a statutory grievance procedure before bringing a subsequent employment tribunal claim.
Gross misconduct
Unacceptable behaviour in the workplace. Examples of gross misconduct are theft, damage to the employer’s property, incapacity for work due to being under the influence of alcohol or illegal drugs, physical assault and gross insubordination.
Guarantee payments
‘Guarantee’ payments must be made to employees with at least one month’s service, when they could normally expect to work but no work is available. Periods when employees are laid off because there is no work available must be agreed in advance to avoid the employer being in breach of contract.
Harassment
Harassment is unlawful where on the grounds of sex, race, disability, sexual orientation, religion or belief, or age, an employer engages in unwanted conduct which has the purpose or effect of violating an individual’s dignity or creating an interrogating, hostile, degrading, humiliating or offensive environment for the individual. The term 'harassment' includes physical, verbal and non-verbal conduct. The conduct must also be unwanted by the recipient, but it's irrelevant whether the harasser has a motive or intention of harassing.
Holiday
All employees have the right to a minimum of 5.6 weeks’ (or 28 days if they work full-time) paid holiday per year. Paid public holidays (of which there are eight in the UK) can be counted as part of the statutory holiday entitlement. Part-time workers are entitled to the same holidays as full-time workers, calculated on a pro rata basis.
Indirect discrimination
Indirect discrimination takes place where:
· An employer imposes a condition or practice which is to the individual’s detriment;
· The condition or practice can be shown to have a disproportionate impact in excluding others of the individual’s sex or marital status; and
· The condition or practice cannot be justified, irrespective of the individual’s sex or marital status.
· An employer imposes a condition or practice which is to the individual’s detriment;
· The condition or practice can be shown to have a disproportionate impact in excluding others of the individual’s sex or marital status; and
· The condition or practice cannot be justified, irrespective of the individual’s sex or marital status.
Limitation, limitation period
The limitation period is the time window in which claimants can bring a claim In employment matters the limitation periods to bring a claim to an employment tribunal are far shorter than the County Court and other types of civil claims.
Maternity leave
All employees who are expecting a baby have the right to take both six months’ ordinary maternity leave and six months’ additional maternity leave (i.e. 12 months’ in total) regardless of their length of service. Employees who have taken ordinary maternity leave or additional maternity leave normally have the right to return to the same job. These rights to ordinary maternity leave and additional maternity leave apply where a woman gives birth to a living child or has a stillbirth after 24 weeks of pregnancy.
Maternity rights
The main statutory rights that a female employee who is expecting a baby has are as follows:
·Time off for antenatal care
·Protection from dismissal and detrimental treatment
·Suspension from work on maternity grounds
·The right to take maternity leave and return to work
·Statutory maternity pay
·Time off for antenatal care
·Protection from dismissal and detrimental treatment
·Suspension from work on maternity grounds
·The right to take maternity leave and return to work
·Statutory maternity pay
Mitigation
A claimant has a duty to limit their loss or injury, where reasonably possible. Thus an employee who is wrongfully dismissed must seek alternative employment and, if they find it, the earnings from their new employment will be offset against their damages. But they are not obliged to accept an offer of employment that is unsuited to their skills or experience.
Mutual agreement
The employer and employee may mutually agree to terminate the employment contract at any time. But if it's clear that the employee was forced to agree to the termination with the threat of dismissal, they will be held to have been unfairly dismissed. But financial inducements to agree to terminate the employment are fully acceptable.
National minimum wage (NMW)
An employee’s rate of pay must not be below the national minimum wage (NMW). From 1 April 2020 the hourly rate for the national minimum wage is:
21-24 £8.20
18-20 £6.45
Under 18 £4.55
Apprentice £4.15
The National Living Wage is higher than the National Minimum Wage - workers get it if they're over 25.
21-24 £8.20
18-20 £6.45
Under 18 £4.55
Apprentice £4.15
The National Living Wage is higher than the National Minimum Wage - workers get it if they're over 25.
Notice period
Statute lays down minimum notice periods for termination of employment as follows:
By the employer:
Length of service of less than 1 month - No minimum notice period
Length of service of 1 month to 2 years - 1 week notice period
Length of service of 2–3 years - 2 week notice period
Plus an additional week for each year of continuous employment to a maximum of 12 weeks.
By the employee: one week.
By the employer:
Length of service of less than 1 month - No minimum notice period
Length of service of 1 month to 2 years - 1 week notice period
Length of service of 2–3 years - 2 week notice period
Plus an additional week for each year of continuous employment to a maximum of 12 weeks.
By the employee: one week.
Parental leave
Employees have a right to take 13 weeks’ unpaid leave for the purpose of caring for a child subject to satisfying certain qualified conditions (see our legal guide Employment Law Made Easy for more information). Parents of disabled children have a right to take 18 weeks’ unpaid leave. Parental leave may be taken not just in connection with caring for a child’s health; for example, it can be used for the purposes of settling the child into a playgroup, taking a child on holiday or simply staying at home with the child.
Part-time workers
Part-time workers have the right not to be treated less favourably by their employers than a full-time co-worker with broadly similar qualifications, skills and experience, who is engaged in the same or broadly similar work. Part-time workers may complain to an employment tribunal about any objectively unjustifiable less favourable treatment accorded to them by their employer and compared to that accorded to a relevant full-time worker on the ground of their part-time status. Part-time workers also have anti-victimisation rights.
Paternity leave
Fathers-to-be, or those employees responsible with the mother for bringing up a child, have the right to two weeks' off work after the birth of a child. Many people think that paternity leave is only available for men, but, in the case of same-sex partners, paternity leave may be available to a female employee who has an enduring relationship with the child’s mother.
Period of incapacity for work (PIW)
Four or more consecutive days when the employee is too ill to work.
Race discrimination
The Race Relations Act 1976 (RRA) forbids less favourable treatment of individuals on racial grounds at every stage of employment. Racial grounds include colour, race, nationality or ethnic or national origins.
Redundancy
A redundancy situation exists where an employee’s dismissal was attributable wholly or mainly to the fact that:
·the employer has ceased, or intends to cease, to carry on the business for which the employee was employed or has ceased, or intends to cease, to carry it on at a place where the employee was employed (i.e. relocation); or
·the business’s need for work for which the employee was taken on has ceased or diminished, or is expected to (i.e. a reduction in the number of employees is required).
·the employer has ceased, or intends to cease, to carry on the business for which the employee was employed or has ceased, or intends to cease, to carry it on at a place where the employee was employed (i.e. relocation); or
·the business’s need for work for which the employee was taken on has ceased or diminished, or is expected to (i.e. a reduction in the number of employees is required).
Redundancy pay
Employees in a redundancy situation are entitled to a statutory redundancy payment if they have at least two years’ service. The entitlement is calculated by considering the employee’s age, length of continuous service and gross average weekly wage.
Religious discrimination
The Employment Equality (Religion or Belief) Regulations 2003 forbids religious discrimination at every stage of employment (i.e. advertising vacancies, engagement of employees, promotion, training and other opportunities, and dismissal). Under employment law, religion or belief is defined as meaning ‘any religion, religious belief or similar philosophical belief ’. It's clear that people who belong to established religious traditions, such as Muslims, Jews and Catholics, are protected by this law, but it's not clear whether non-conventional faiths or beliefs are covered, such as humanists, atheists or Rastafarians.
Retirement
Employers who wish to retire their employees are obliged to notify them of the date of intended retirement and of their right to request to work beyond retirement. The notification must be given 6 to 12 months before the intended retirement.
Service contract
Contracts of employment for more senior employees. Service contracts may be fixed-term contracts renewable on a regular basis or they may be ‘rolling’ service contracts in which the service contract continues after the expiry of a fixed period and then can only be terminated by not less than, say, one year’s notice.
Settlement
An agreement reached between the parties when there has been a dispute.
Sex discrimination
The Sex Discrimination Act 1975 (SDP) bans discrimination based on gender or marital status at every stage of employment (i.e. advertising vacancies, engagement of employees, promotion, training and other opportunities, and dismissal).
Sexual orientation discrimination
The Employment Equality (Sexual Orientation) Regulations 2003 forbids discrimination based on sexual orientation at every stage of employment (i.e. in advertising vacancies, engagement of employees, promotion, training and other opportunities, and dismissal). In employment law, sexual orientation is defined as meaning ‘a sexual orientation towards persons of the same sex, persons of the opposite sex, or persons of the same sex and of the opposite sex’. Employment law doesn't protect individuals against discrimination relating to particular sexual practices or fetishes.
Short-term contracts
Short-term contracts can be used where the work to be done can be completed within a short period of time. Where the employment contract is for less than three months the employee isn't entitled to statutory sick pay or medical suspension pay. But if a second such employment contract is entered into with the same employer and it's continuous with the first, then the employer becomes liable to pay statutory sick pay or medical suspension pay.
Staff Handbook
A document issued to all employees at the commencement of their employment which outlines the company's practices and procedures that the employer wants its employees to follow. Employees should be asked to confirm that they have read and understood the Staff Handbook. Get our Staff Handbook download for a comprehensive Staff Handbook for your company.
Statutory adoption pay (SAP)
An employer must pay statutory adoption pay (SAP) to any employee who is eligible. An employee who matches the government's criteria will receive money after adopting a child.
Statutory maternity pay (SMP)
Statutory maternity pay (SMP) is a payment that employers are required to make to employees who are having a baby, even if the employee doesn't intend to return to work after the child is born.
Statutory paternity pay (SPP)
An employer must pay statutory paternity pay (SPP) when eligible employees are on paternity leave after the birth of a child.
Statutory sick pay (SSP)
Subject to satisfying certain conditions, all employees are entitled to receive statutory sick pay (SSP) from their employers when they are absent from work for four or more consecutive days up to a limit of 28 weeks in a three-year period. See our legal guide Employment Law Made Easy for more information.
Unfair dismissal
Dismissal of an employee without good reason, or without following a fair procedure, is likely to be unfair and liable to an unfair dismissal claim in an employment tribunal. The right not to be unfairly dismissed is a statutory right effective when the employment contract is entered into, but is subject to certain qualifying conditions. See our legal guide Employment Law Made Easy for more information.
Vicarious liability
Liability of an employer for the wrongful acts of their employee that have been committed in the course of their employment. Examples may include, negligent driving which causes injury, injuries caused by one employee to another, and theft by an employee from a client.
Working Time Regulations
The Working Time Regulations provide for an average 48-hour working week, in-work rest breaks and 11 consecutive hours’ rest in any 24-hour period, 24 days’ paid holiday and an average eight hours’ work in 24 hours for night workers. This means that employees are prevented from working any overtime which would result in their average working week exceeding 48 hours. But the Working Time Regulations enable individual employees to ‘opt out’ and work in excess of this 48- hour limit. Any agreement to opt out of this 48-hour limit must be in writing. See our Working Time Regulations Opt-Out Agreement download.
Wrongful dismissal
Wrongful dismissal occurs when an employer terminates an employee’s employment contract in a way that breaches it or the employer’s conduct is such that it entitles the employee to resign (i.e. constructive dismissal). In these circumstances, the employee may take proceedings against the employer in an employment tribunal or in the civil courts (County court or the High Court in England & Wales and the Sheriff Court or Court of Session in Scotland) for wrongful dismissal, claiming damages for breach of contract. There is no requirement for the employee to have a qualifying period of continuous employment in order to make a wrongful dismissal claim.
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