Tagged: contract

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Which part of ‘contract’ do they not understand?

This is a short post about the substantive law, for once – which is not really what this blog is about. But I’m going to write about it anyway, because it bugs me.

A contract is a legally binding agreement. Agreement. The subtle clue is in the ‘agree’ part. Two parties make promises to each other.

A contract of employment is just a contract in a particular context: the employee promises to do work, and the employer promises to pay for it. And they agree whatever other terms they may choose, subject to various specific limitations imposed by statute: the pay agreed has to be at least the minimum wage; they can’t validly agree that the employee won’t have the right not to suffer discrimination or be unfairly dismissed. But basically it’s still just an agreement between two parties.

It’s surprising how often employers forget this, and write letters saying things like, ‘This is to give you notice that as from 21 July 2012 your contract will be changed…’ Unless your contract says in so many words that your employer can change your terms of employment by giving you notice, this just doesn’t work. (And even if your contract does say they can change things without your consent, it doesn’t necessarily work – this is a relatively complex area of law.)

If you wrote to them to say ‘This is to give you notice of a 30% increase in my pay as from 21 July 2012,’ they’d laugh. But it’s just the same: they can’t change your terms of employment without your agreement any more than you can award yourself a pay rise without theirs.

The balance of power may be such that they can get your agreement quite easily – by threatening to dismiss you if you don’t agree. But that’s quite drastic, and may expose them to the risk of an unfair dismissal claim.

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When can an employer make a counterclaim?

A counterclaim is a case brought by a Respondent as part of their reply to a claim.

So, for example, A sues B for unfair dismissal. B replies, denying the unfair dismissal, but also suing B for breach of contract. B’s breach of contract claim is a counterclaim.

Counterclaims are rare in employment tribunals, because the tribunal has a very limited jurisdiction to deal with them. The only type of counterclaim an employer can bring is a breach of contract claim (see s3 Employment Tribunals Act 1996 and reg4 Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994).

In addition, the employer can only bring a counterclaim if the employee has already brought a claim for breach of contract under the Extension of Jurisdiction Order (reg 4(d)).

This sometimes causes confusion, because there is a difference between bringing a breach of contract claim and relying on a breach of contract as part of the factual basis of another type of claim. For example, an unfair dismissal claim that rests on constructive dismissal will inevitably involve an allegation that the employer has committed a repudiatory breach of contract. But that does not make it a breach of contract claim — it remains an unfair dismissal claim (technically a statutory tort).

Similarly, most unlawful deduction of wages claims rely on proving that the employer breached a contractual term about pay, but they are not breach of contract claims (again, they are statutory torts).

This means that, if you suspect that your employer might present a counterclaim, you should think carefully about whether to bring your own breach of contract claim. In practice, the most common breach of contract claim is a wrongful dismissal claim for notice pay. Sometimes it will be well worth bringing such a claim, despite the counterclaim risk — either because the contract claim is valuable or because the risk of counterclaim is low. But it is worth thinking about the risk — and the extent to which the contract claim adds anything significant to any other claims you are bringing.

Unfortunately, once you’ve brought a breach of contract claim, the tribunal has jurisdiction to consider a counterclaim, even if your claim is dismissed or withdrawn. So you cannot counter a counterclaim with a canny withdrawal.

It’s also important to note that employers can sue their employees in the civil courts in the normal way. So avoiding a counterclaim doesn’t mean you avoid any risk of a claim against you. A separate claim, in a different jurisdiction, however, is far more labour intensive (and expensive) than a counterclaim. Many employers will not bother.

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More on references

The previous post about references focused on what you could do about a bad reference.

Another question that arises is whether you can make a reluctant employer or former employer give you a meaningful reference at all – what can you do if they just say ‘It’s not our policy to give references’ or ‘It’s our policy only to give a factual reference confirming job title and dates of employment’?

Unfortunately, the answer to this will almost always be ‘nothing.’ For some employees at certain points in their careers, at least as much of the value of a particular job will lie in the experience gained as in the money earned. The value of the experience is significantly diminished if your former employer refuses to back you up with confirmation that your responsibilities were what you say they were and you discharged them satisfactorily. Nevertheless, although you have a clear contractual right to your pay, whether or not there was ever a contract in writing, you will only have a contractual right to a fair reference if you had the foresight – and the bargaining power – to write it into your contract when you started.

If you are about to start a new job, and you do feel confident enough to rewrite your contract of employment, you might try inserting something like this:

The Employer will promptly on request by any potential future employer of the employee provide a reference for the Employee confirming the duties undertaken by the Employee, commenting fairly on her performance of those duties, her attendance and her character, and referring as appropriate to her significant achievements in the post. The Employer will give the Employee the opportunity to read and comment on a draft of the reference before it is sent. This clause survives the termination of the employment relationship.

You can tackle this kind of negotiation head on by asking for a meeting and/ or sending a draft amended contract to your new employer with an invitation to them to produce a final draft for your signature. Alternatively, you could try and take advantage of the kind of inertia that employers more often benefit from. Make your changes in manuscript on the contract you have been given to sign, sign it and send it back with a covering letter (keeping a copy of both, of course) saying something like ‘I enclose a signed copy of my contract, with certain amendments which I hope will be acceptable.’

The purpose of the covering letter is to make sure they can’t say later that they didn’t realise you’d made any changes: but if you’re lucky, the HR officer who receives your letter may just file your amended contract and leave it at that. If so, you can take it that your amendments are agreed.

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Copyright in an employee’s work

This is a post about avoiding a certain kind of dispute with your employer, rather than winning it.

Section 11(2) of the Copyrights Designs and Patents Act 1998 reads:

Where a literary, dramatic, musical or artistic work is made by an employee in the course of his employment, his employer is the first owner of any copyright in the work subject to any agreement to the contrary.

Employees often learn from their employment, and may produce work – articles, books, computer programmes – that draws on their working experience and makes use of it. Section 11(2) means that if your employment contract is silent on the subject of intellectual property, your employer may own the copyright in material of this kind that you produce during working time.

That much will often be fair enough. If you want to ensure that intellectual property in any particular material or kind of material remains with you, one possibility is to make sure that you create it in your own time, and (to avoid any room for dispute) away from your workplace. If you create something in your own time that you want to use for the purposes of your employment, make it clear at the time, preferably in writing, that it is work created in your own time that you are prepared to use for your employer’s benefit.

Alternatively, you may want to negotiate for a specific agreement in your contract contrary to section 11(2) that makes it clear that all intellectual property generated by you is yours unless it is created at your employer’s behest and for the purposes of your employer’s business.

Unfortunately, some employers try to include in employment contracts much more comprehensive terms that purport to grab the intellectual property in any work of any conceivable use to the employer that the employee may create during the life of the employment contract, whether or not during working time or using the employer’s equipment, and whether or not it is any part of the purpose of the employment to create intellectual property for the employer.

Clauses of this kind are objectionable. Employment does not give the employer the rights of an owner: that is something different, known as slavery. An employee should be entitled to learn from his experience and develop his skills, and put his skills and experience to use for his own benefit in his own time.

If you see a clause of this nature in your draft contract of employment then, unless you are sure you won’t be creating any intellectual property anyway, you should challenge it. (You should probably challenge it anyway, because letting your new employer get away with nonsense is liable to set the employment relationship off on the wrong footing.) Most employers won’t mean it in fact: if it is there, it is probably because someone working for their lawyers years ago thought it was a hard-nosed kind of clause to include in a precedent, and no-one has given it any thought since. Once you point out what it means, most employers will have the grace to blush and withdraw it.