Why is it imperative employers issue their workers a contract starting on day one?

The importance of issuing written terms at the start of any engagement – be it for an employee, worker, or self-employed person.

There has been so much interest and hype in respect of employment status lately, yet so many businesses still forget to issue written terms when engaging someone to carry out work. Working relationships can come to an end abruptly and disputes in respect of status and unpaid wages often arise.

Danielle Wright, Associate Solicitor looks at a recent Tribunal claim concerning this very issue.

The Case

Mr T (the Claimant) responded to a job advert. He received a phone call from the MD of the company (the Respondent) and was offered immediate work. There was reference to work on the project lasting 5 years and the Claimant queried the amount of pay and whether there was a probation period, and he was told there wasn’t one.

On his first day, no contract was issued but the Claimant was given a new starter form to sign. Included on the form was an option to circle employee or subcontractor which the Claimant did not complete.

The Claimant fulfilled his role on the project and after two weeks went by, he was expecting to be paid. He was not. The Respondent tried to argue that it was because he had not given his bank details correctly. The Claimant commenced ACAS Early Conciliation for an unlawful deduction of wages.  The Respondent stated it would pay the Claimant his wages but did not. The Claimant therefore presented a claim to the Employment Tribunal.

The Respondent argued that the Claimant was self-employed, and his work was of poor quality. They asked for the case to be struck out as they believed he did not have the jurisdiction for the tribunal to hear the claim.

It should be noted that Mr T had a CSCS card and had worked on many occasions as a self-employed sub-contractor before. He had no objection to working on a self-employed basis and would have done so had this been expressly explained to him at the outset. However, on this occasion he considered the arrangement to be that of employment. (1) because he responded to a job advert, (2) because of what he was told in his call with the MD and (3) because he was not asked to submit invoices but fill out a timesheet.

The case was listed for a hearing.

The Outcome

 The hearing was conducted by video conference and the Tribunal found in his favour.

In its decision the Tribunal concluded:

1. There was a contract between the Respondent and the Claimant, the terms of which were set out in the job advertisement and during the conversation between the Claimant and the MD prior to commencing work. The contract contained a number of express terms, including those relating to:-
   1. Hours of work;
   2. Rate of pay;
   3. Place of work; and
   4. Job title.
2. In essence, the Claimant agreed that, in return for £130 a day, he would work as a joiner five days a week at the agreed location and at the instruction of the Respondent.
3. There was no evidence to suggest that the claimant could send a substitute to work. On the contrary, the expectation was that the Claimant would provide his services personally.
4. There was, therefore, a mutuality of obligation between the Claimant and the Respondent, in that the Claimant was required to turn up to work, and the Respondent to provide work.
5. It could not be said that the Claimant was in business on his own account. He did not submit invoices for the work he carried out, nor could it be said, in the Tribunal’s view, that the Respondent was a client of his.
6. There was no evidence of the Claimant being required to take out his own insurance or taking any financial risk in relation to the work he carried out.
7. The Claimant was required to work the hours specified by the Respondent, at the location specified by the Respondent.
8. Whilst on site he was subject to the direction and control of the Respondent’s client. He was provided with an induction when he started work and worked at a set location, doing the same job over and over again.
9. The Tribunal found that the Claimant worked for the respondent for ten working days, over a two-week period, and that he was entitled to be paid £130 for each of those days, giving a total of £1,300. By failing to pay the Claimant the sum of £1,300 the Respondent made an unlawful deduction from the Claimant’s wages.
10. The Respondent failed to provide the Claimant with a written statement of employment particulars, contrary to section 1 of the Employment Rights Act 1996. As such, an award was made under section 38 of the Employment Act 2002. Given that the Claimant only worked for the Respondent for two weeks, he was awarded two of the maximum four weeks than he could have received.

Lessons Learned

This is a classic case of not being clear at the outset in respect for the working arrangement and issuing written terms of this effect. In this case the Claimant would have worked on a self-employed basis, but this is not how the role was explained to him. All he wanted was to be paid for the work he had carried. He wasn’t expecting to get anything more, but he did – a further award for not being issued a contract of employment. His compensation therefore doubled!

This claim could have been avoided. Tribunals are stressful and costly. As an employer it pays to get your ducks in a row and always give a contract of employment on the first day of starting work.

What the Client had to say

“I am pleased to let you know that I have won. I appreciate all the support that you have provided. Thank you very much.”

Tribunal Assistance

Hopkins can help you with any Tribunal claim at any stage of the process.

We understand legal costs can be too much sometimes. Maybe you just need some support with key documents or the hearing itself. Whatever it is, Hopkins can provide guidance and advice where needed. We believe transparency is key so we can offer fixed fees for set pieces of work.

HopkinsHR is an employment support package designed to give you certainty and peace of mind that your legal costs will never exceed an agreed annual fee. This will help you plan your HR budget accurately and significantly reduce your risk of unexpected expensive legal costs.

We also offer single fixed fee advice appointments.

 Contact us today on 01623 468 468 or 0115 910 5555 or use the enquiry form below.