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Podcast The Employment Contract

How to Draft an Employment Contract

This episode looks at

  • the express terms that should be in a contract of employment
  • the 4 sources of implied terms in the employment contract.
Categories
Blog Podcast The Employment Contract Unfair Dismissal

An Unfair Dismissal Cock Up That Will Inevitably Cost the Employer

A young man, worried about losing his job, contacted me this week.

unfair dismissal

He only has about 11 months service in the job and was concerned that the employer was getting ready to dismiss him before he had the necessary 12 months service for the protection of unfair dismissal legislation.

Let me explain.

In order to have the statutory protection of the Unfair Dismissals Acts an employee needs to have 12 months continuous service in the job.

This guy has been called to a “meeting” to discuss his performance. There has already been a series of these meetings with heavy hints that these probationary review meetings were leading to one inevitable conclusion~dismissal.

The employer has made it quite clear that any dismissal will be carried out just prior to 12 months service being acquired. And will have the comfort of knowing that the employee is not protected under the Unfair Dismissals Act.

There is only one (major) problem with this~when I looked at the contract of employment it provides for 6 weeks notice of termination of employment.

And most importantly it provides for 1 months notice during the probationary period.

The key point here is that a dismissal does not take place until the end of the notice period, not when notice is given.

So my contact will almost certainly have 12 months service.

And the protection of the Unfair Dismissals Acts.

The employer wouldn’t have had much difficulty here, if his contract of employment provided for, say, one week’s notice during probation. But it doesn’t.

And he inevitably will face either

  1. an unfair dismissal claim or
  2. without prejudice negotiations for a negotiated exit, if he really wants to get rid of the employee.

Anyway, the moral of the story is that little mistakes can cost big money.

And a well drafted contract of employment is worth every penny.

Categories
The Employment Contract Videocast

How to Draft an Employment Contract-Express Terms That Should Be Included in a Contract of Employment

employment-contract-ireland

The employment contract in Irish law is made up of implied terms and express terms. There is nothing you can do about the implied terms.

That’s why great care should be taken about the express terms in the contract, and why corners should not be cut when you as an employer are putting contracts in place.

You don’t want to be staring at the small print later on when facing a claim for breach of contract or unfair dismissal and saying “did I really say that?”.

Implied terms fall into 4 categories:

1. Those implied by statute

2. Terms implied by custom and practice

3. Terms implied by law

4. Terms implied by collective agreements in unionized employment.

There is nothing the employer can do about these implied terms. However, the express terms-agreed between employer and employee-are a matter for negotiation and agreement between the parties.

What express terms should be included in a contract of employment?

1. The Parties

Who the employer is is a vital term and it may not be entirely clear unless set out in the contract.

1.1 Date of Commencement

The date of commencement will be very important to establish various statutory entitlements of the employee eg the protection of unfair dismissals legislation, redundancy entitlements etc.

2. Job Function/Description

The temptation for the employer here is to have as widely drafted a job description as possible.

However, this can cause problems if the need for redundancy arises as the employee may claim that their job description requires them to carry out duties different from those which the employer wishes to make redundant.

3. Hours of Work

The hours of work term of the contract should deal with

• Overtime (paid or not) (There is no statutory obligation on employers to pay  overtime. However, most employers pay higher rates of pay for work done outside normal working hours, for example at a rate of time and a half. This should be stated in your contract of employment).

• Shifts

• Breaks.

The most important piece of legislation in this area is the Organisation of Working Time Act, 1997.

It is advisable for the employer to also provide for the right to lay off or place employees on short time (there is no general right in law to do this).

The Protection of Young Persons (Employment) Act, 1977, the Conditions of Employment Acts 1936-44, and the Shops (Hours of Trading) Act, 1938 should also be considered.

4. Place of Work

It is advisable for employers to have a geographical mobility clause in the contract as an express term. Here is an example:

The company reserves the right when determined by requirements of operational efficiency to transfer employees to alternative work and it is a condition of employment that they are willing to do so when required.

However, the employer must act reasonably and responsibly in this regard.

Interestingly, a reduction in pay as a result of a contractually allowed transfer is not a breach of an implied term that there would be no unilateral reduction in pay.

5. Exclusive Service

Decisions in Irish employment law have held that employees have the right to work for another employer in their spare time. However, this work could not conflict with their duties of confidentiality and loyalty to their employer.

6. Probation

Any probationary clause should not exceed 12 months. It should also provide for an extension of the initial period (say 6 months) and should have a notice period less than outside the probation period.

Reference should also be made to the disciplinary procedures of the company not applying during the probation period. However, if this is the case, then a probationary policy should be drafted by the company setting out what procedure will apply during the probationary period.

Even though an employee is on probation, s/he is still entitled to fair procedures and natural justice when it comes to termination.

The wording of the probationary period is also important. The District Court in Ireland has held that the following clause gave rise to an entitlement to the employee to be paid for the remaining 5 months of a probationary period when he was dismissed after one month:

The first six months of this contract shall be a probationary period.

This one clause is a good example of why you should have a legal professional draft any contract of employment you require.

At common law, it appears that the employer has an implied right to terminate during the probationary period on the giving of specified or reasonable notice. This is why provision should be made in the contract for a shorter notice period during the probationary period.

7. Term or Duration of Contract

The term or duration of the contract is only applicable for a fixed term or specified purpose contract.

8. Salary/Pay

This, clearly, is a very important clause in any contract of employment. Setting out basic salary is straightforward; bonuses and commissions can cause problems if not set out clearly.

The employer will seek to have the payment of a bonus at his/her discretion; employees will be keen to see how they can become entitled to a bonus.

Termination during a bonus period should also be clarified and agreed. (Read the law surrounding the payment of wages also)

9. Holidays/Annual Leave

Minimum holiday entitlements are provided for in the Organisation of Working Time Act, 1997. This act vests in the employer the right to determine when holidays are taken.

However, this clause should also make provision for when holidays can be taken as well as recognising that any extra holidays would be over and above the statutory entitlement to holidays and public holidays.

10. Company Car

The entitlement to a company car should be set out in this clause with clarity as to the make, model, value, etc. allowable.

11. Sick Pay

The sick pay clause will set out whether the employer operates a sick pay scheme or not. There is no general entitlement to sick pay in Ireland.

However, this entitlement may be implied from custom and practice in the workplace.

The employers may operate a sick pay scheme or an income continuance plan or health care insurance entitlements.

This needs to be clear from the outset in the employment contract as sick pay is an area which causes great difficulty for both employer and employee in the absence of clarity.

12. Pension

If a pension is part of the remuneration package, reference should be made to it in the contract and if there is a company pension scheme it is important that an employee is not excluded in such a way as to leave the employer open to a successful claim for direct/indirect discrimination.

13. Retirement Age

There is no statutory retirement age in Ireland (save for in the public service and a small number of industries). For this reason, a retirement age should be spelled out in the contract, if one is desired.

It is worth noting that just because there is a retirement age specified in the pension scheme does not mean that there is an implied retirement age in the contract of employment.

An interesting case dealing with age, retirement age, and fitness to work is the Donegal County Council v Porter [1993], Irish High Court.

14. Grievance Procedure

The method of processing grievances in the employment should be referenced here.

Employees should be bound to exhaust the internal grievance procedure first before resorting to outside bodies.

The statutory code of practice, Industrial Relations Act, 1990 (Code of Practice on Grievance and Disciplinary Procedures) (Declaration) Order, 2000 (Statutory Instrument 146/2000) contains the principles to be applied by the employer in any grievance and disciplinary procedure.

15. Disciplinary Procedure

Employers should have a disciplinary procedure to ensure fair procedures and natural justice where necessary.

SI 146/2000 sets out the basic principles which any disciplinary procedure should follow. These include:

• What will happen to deal with a complaint/allegation

• How many stages will be followed in each event

• The employer’s right to choose which stage to commence the procedure and the penalty to be imposed

• The right of representation of the employee

• Whether there is a right of appeal to any decision taken to impose a penalty.

16. Restrictive Covenant

This clause deals with the right of employees to compete with their former employer once they have left employment with that employer. There are 2 aspects to any ‘non compete’ clause:

• The common law entitlement of the employer to protect trade secrets and confidential information

• The Competition Act 1991.

Regardless of the express term in any contract of employment dealing with this area, the Courts recognise the common law right of the employer to protect confidential information and trade secrets-even when the employment relationship is terminated.

However, there is no common law restriction on an employee competing with a former employer once she leaves employment. This is why a ‘restrictive covenant’ is a good idea in the contract-to protect, for a reasonable time and over a reasonable geographic area, the employer’s legitimate interest.

This is not a restriction on normal trade or general competition post-employment though; it must be a restriction to protect a specific legitimate interest.

However, if the employer breaks or repudiates the contract, he will generally be unable to rely on any restrictive covenant in this connection.

The Courts will also recognise a common law duty of obligation, fidelity, and loyalty in all contracts of employment. This duty has been held to include an obligation not to compete with the employer while in his employment.

There is no common law restriction on former employees canvassing or soliciting business being done by their former employer.

However Courts will recognise the validity of restrictive covenants in contracts of employment provided

  • the employer has a legitimate interest to protect
  • the conduct/activity sought to be restricted must be reasonable
  • the duration of the restriction must be reasonable
  • the geographical extent of the restriction must be reasonable.

It is worth noting that where an employer repudiates the contract or is involved in a fundamental breach he will normally be unable to rely on restrictive covenants in the contract which crystallized as a result of the employer’s action.

Springboard injunctions

An injunction may be granted to an employer where a departing employee seeks to rely on trade secrets or confidential information belonging to the former employer as a springboard to launching a new business.

Competition Act, 1991

The Competition Act, 1991 does have some impact on employment contracts, even though many think that the Act is inappropriate for governing the  employer/employee relationship. The most important case considered by the competition authority was Apex Fire Protection v Murtagh [1993].

17. Termination of Contract

The notice period for termination of employment is a critical clause. If there is none and the contract is silent in this regard, then ‘reasonable’ notice must be given by the employer.

Litigation over what is “reasonable” can be avoided very easily by providing a specified notice period in the contract and will also avoid a legal action for wrongful dismissal provided the notice period is given.

This will vary from contract to contract depending on a number of factors such as job function, length of service, age of employee, custom and practice, etc. In short, what is ‘reasonable notice’ in each case will depend on the facts of the individual case, bearing in mind the factors outlined above.

It is strongly advisable for the employer to specify a notice period in the contract in order to avoid a claim for wrongful dismissal.

Unless it is stated in the contract, notice does not have to be in writing; but it does have to be clear and unequivocal.

Notice given during times of leave or illness is valid, except for during maternity leave which is protected.

The notice period in the contract cannot be less than that provided for in the Minimum Notice and Terms of Employment Act, 1973 (as amended).However, if an employee is dismissed for misconduct s/he loses his/her entitlement to notice.

The employment does not come to an end until the end of the notice period, even where a person is not required to work the notice period and has been ‘paid off’.

Damages that can be awarded to employees for dismissal are generally limited to recoverable losses to which the employee was contractually entitled, but not punitive damages.

18. Search Clause

A search clause is commonly used in many contracts allowing the employer to search the employee’s locker, baggage, vehicle, etc.

Without this search clause, any search, without consent, could be considered to be an assault.

19. Patents, Inventions, and Copyright

Unless there is agreement to the contrary, any copyright in material which is made by the employee in the course of employment is the property of the employer. The same principle applies to research and development work carried out which leads to an invention.

20. Share Options

A share options clause may be necessary. Provision should be made for the employee moving location or changing job function.

21. Bullying and Harassment

An anti-bullying and harassment policy should be appended to the contract of employment as the employer is obliged by law to prevent bullying and harassment occurring in the workplace.

22. Internet and email

Reference should be made to the company’s policy on internet access, email and internet use. A separate policy in this regard should be provided by the company to the employee.

23. Resignation of Office or Directorships

Resignation from offices held, including directorships, should be provided for in the contract of employment.

24. Proper Law

The law governing the contract should be spelled out and is very important where an employee may be required to work abroad.

25. Other

Other clauses which may be included, depending on the specific requirements of the employer, may include

• Wearing of uniforms, dress code

• Punctuality and attendance

• Responsibility for tools, property, uniforms, clothing, boots, etc

• Requirement to hold a driving licence

• Compassionate leave

• Parental leave (subject to statutory entitlements)

• Work standards

• And more.

Work Practice or Contractual Provision?

The difference between a contractual provision and a work practice is very important. Read about the significance here.

If you are an employer and you don’t have existing contracts of employment for your employees, or you are concerned about the contracts you do have, we provide a professional, cost effective contract review and drafting service.

Are you an employer?

Need a quote for a contract of employment? Contact me.

We can supply you with

  1. a template contract which you will complete yourself for each employee. This would involve things like commencement date, job description/role, rate of pay, and any other specific details for the individual employee and/or
  2. individual contracts for each employee-we get all the necessary details from you for each employee and draft the contracts for you.
Categories
Employment Law Procedures and Policies

Do You Make These Mistakes as an Employer in Ireland?

employers-mistakes

Let’s admit it.

Making a costly mistake is easy when it comes to employment law in Ireland.

The scenarios below are quite common in the Irish workplace. Each of them has the potential to be very costly for the employer if he/she acts on the common misconceptions contained in these hypothetical situations.

My employee is 67 and I want him/her to retire-can I just tell him/her that he/she must retire soon?

No, not unless you have stipulated a retirement age in the contract of employment. There is no general statutory fixed retirement age in Ireland. There is a retirement age set in some public sector jobs and in occupations such as Gardai, the fire service, and the Judiciary.

However in the private sector, if it is not in the contract of employment, the employee can continue working.

I never gave my employee a contract. He has worked with me for 7 years but now I want to give him a contract to reflect the changed economic circumstances.

Firstly, just because you failed to give your employee a written contract does not mean he doesn’t have a contract. He does.

And whatever written contract you propose giving him now must reflect the terms and conditions he has enjoyed to date. Any changes to these terms must be with his consent as not to obtain his consent will amount to a unilateral changing of the contract by you as employer.

This is not permissible and will leave you open to a claim for breach of contract and/or constructive dismissal.

I am not happy with my employee’s performance and I want to replace him with someone who will do the job properly.

You cannot do so without going through a procedure which is fair and allows the employee to improve after you have brought to his attention the failings in his work. This will involve in making clear the standards required of your employee and how he is falling short.

You will need to set out the improvements required and give him a reasonable time period within which to come up to the mark. You will also need to give warnings that failure to improve sufficiently may lead to dismissal (ultimately).

My employee has been out on certified sick leave for ages and I have been told I cannot dismiss her while she is on sick leave so I am stuck with her..

This is not the case-you can fairly dismiss in certain circumstances, even when your employee is out sick. However it will depend on the needs of your workplace, the length of service of your employee, whether the sickness is a long term absence or a series of short term illness related absences.

So, while it is not easy to fairly dismiss while your employee is on sick leave, it is possible.

Always consult a solicitor in relation to cases like those outlined above; each case will be hugely influenced by the particular circumstances and making decisions based on misunderstandings can prove very costly.

Readers’ Questions

Can an employer cut my wages without notice?

No, see this article.

Where do I go if my employment rights have been infringed in Ireland?

There is a wide range of options available if your employment rights have been infringed. Click Here.

Who is not covered by unfair dismissal laws?

Read all about unfair dismissals and constructive dismissals here.

Does NERA tell the employer my complaint if I complain?

Read about NERA inspections here.

I am 66 years old-am I entitled to a redundancy payment?

Yes, the law has changed in this area. Check out redundancy in Ireland here.

Is my employer responsible for preventing sexual harassment in the workplace?

Yes. Read about sexual harassment, equality and discrimination in the workplace here.

Can I bring a case for unfair dismissal if I have less than 1 year’s service?

Yes, take a look at dismissal during the probationary period.

What is direct and indirect discrimination on the grounds of disability?

Take a look at equality and discrimination here.

Are you entitled to a written contract?

Yes, or at least you are entitled to a written statement of the terms and conditions of your employment within 2 months of commencing employment.

What are the important changes in parental leave in Ireland?

Take a look at the new parental leave entitlements in Ireland.

What are employees’ rights when a company is taken over?

This situation is covered by the TUPE (transfer of undertakings) regulations.

Can you take a case for unfair dismissal where dismissed on the grounds of age Ireland?

Yes, and you can take a case for discrimination to the equality tribunal under the Employment Equality Acts.

What is a fixed term teaching contract?

Read more about teachers’ fixed term contracts.

What are workers rights in Ireland regarding dismissal?

Read more about workers rights regarding dismissal in Ireland here.

How to calculate annual leave Ireland

 Learn how to calculate annual leave and pay here.

How many sick days are you entitled to in Ireland?

Learn about sick leave and sick pay here.

How much does it cost to bring a case to the employment appeals tribunal?

This will depend on a number of factors including whether you choose to hire a solicitor or rely on a non-solicitor such as a HR person or not. It will also depend on the strength of your case as some solicitors will take on a good case on a “no win, no fee” basis.

Sample employment contract Ireland

Contact us and we will send you a sample employment contract. Drafting your own contract however, even with the benefit of a template, can be problematic as each employment situation is different and unique.

 Are all workplace policies contractual?

No, it depends on whether the staff handbook/workplace policies have been incorporated into the contract of employment.

In most cases, we do not recommend this for two reasons.

1. If an employer fails to follow a policy/procedure (either deliberately or inadvertently) that would give the employee a claim for breach of contract on top of any other claim he/she might have (e.g. unfair dismissal, discrimination, etc.)

2. As businesses evolve, policies and procedures will need to change – if they form part of the employee’s contract of employment, you would need the consent of all the employees to any such changes. Non-contractual policies and procedures can be varied by the employer without needing to obtain the consent of the staff.

What are the basic principles of fair dismissals?

Procedural fairness and substantial grounds are needed to justify dismissal.

What is the pay for a fixed term specified purpose contract for teaching in Ireland?

 See education law in Ireland website for more information.

What are the grounds that the employment equality act 1998-2011 prohibits not to allow discrimination?

 See the 9 grounds here.

What is the average holiday entitlements per month in ireland?

Discover how to calculate holiday entitlements here.

Can employer take wages for mistakes?

It depends on the contract and whether they are fair and reasonable. See payment of wages..

What is constructive dismissal?

Read what is constructive dismissal.

Employment contract for fixed term teacher

 Employment contract for fixed term teacher

 Can an employer reduce wages?

Yes, but it is not entirely straightforward. Learn more here.

What rights does an employee have if not a trade union member in Ireland?

The employee has full employment, contractual, statutory, and constitutional rights in relation to employment, regardless of whether he is a member of a trade union or not.

What are workers right in Ireland regarding dismissal?

 Learn more about unfair dismissal here.

Calculating annual leave entitlement for part time workers

 Learn how to calculate annual leave here.

Sample grievance procedure Ireland?

 Learn more about grievance procedures here.

How to calculate redundancy pay in Ireland

Calculating redundancy entitlements.

How to deal with workplace discrimination

 Learn more about workplace discrimination here.

Define a health and safety statement in the workplace

 Learn more about health and safety statements here.

Can you take a case for constructive dismissal if you have accepted redundancy?

Generally yes.

Retirement age Ireland

 There is no statutory general retirement age in Ireland. However, some jobs do have a mandatory retirement age eg Garda, civil service. In most private sector employment though the contract of employment must provide for a retirement age if one is required.

How to calculate parental leave

 Learn more about parental leave entitlements here.

Do workers who are paid cash have employment rights in Ireland?

Yes,  they still have a contract of employment (even if not in writing).

Can someone claim unfair dismissal even during probabtion?

Yes, but your options are very limited-you can go to the Labour Court under Industrial Relations legislation but the recommendation is not enforceable. You are depending n the moral authority of the Labour Court and the bona fides of the employer.

 If an employee resigns and cites constructive dismissal does this mean he or she going to take the employer to court?

Almost certainly.

Break entitlements for 8 hours work?

Learn more about working time and rest periods here.

How to calculate holiday pay for piece rate workers Ireland

 Learn about holiday entitlements for piece rate workers here.

How long do you need to be working to claim for unfair dismissal?

 12 months.

When does a contract become a contract of indefinite duration?

 Learn about contracts of indefinite duration here.

What can I do if dismissed on capability grounds?

Bring a claim for unfair dismissal.

Grounds for instant dismissal Ireland

 See basic principles of fair dismissal in Ireland.

Penalties associated with tupe Ireland

See tupe Ireland.

Can i get paid for holidays not taken ireland?

See holiday pay and annual leave.

What  are the duties of the employer regarding workplace safety under the safety and health at work act 2005?

See employers’ health and safety obligations.

Going back to work after maternity leave laws

 Learn more about maternity leave in Ireland.

Reckonable service for part time workers for redundancy ireland

 Read about redundancy in Ireland.

Other similar frequently asked questions:

  • No contract signed, no wages
  • Legal definition of redundancy ireland
  • What is a fixed term contract
  • on temporary contracts for over 3 years when do i get permanent
  • what does tupe mean ireland
  • disciplinary procedure example
  • do employees have the right to appeal if dismissed during probation
  • can i take a career break on receiving a cid teacher in ireland
  • what is right procedure of terminating an employees contract.
  • what is a one year fixed term contract
  • termination of employment on grounds of capability
  • are men entitled to maternity leave in ireland
  • unfair dismissal v wrongful dismissal followed
  • can a case of gross misconduct be void if the correct procedures were not followed
  • how to dimiss an employee legally in ireland
  • can u legally cut employees contracted hours in ireland
  • examples of what to include in a fixed term contract of employment in ireland
  • rules of fair procedures and natural justice ireland
  • what is the can teachers take carers leave
  • legal requirement for terminating a contract of employment
  • can lay teacher contracts qualify for cid
  • legal precedent relating to non compete clause in irish employment law
  • teaching contracts ireland right to a written contract
  • part time workers bank holiday entitlement calculator
  • contracts of employment ireland time between finish of one contract and issue of another
  • dismissing an employee for sickness ireland
  • what is a fair dismissal procedure in republic of ireland
  • right to terminate contract of employment without notice
  • is the time i am on maternity leave counted as continious service ireland
  • can you claim holiday pay when off sick
  • when an employee alleges unfair dismissal who needs to prove that the dismissal of an employee indeed has taken place
  • employer responsibilities for bullying
  • payment for annual leave on termination ireland
  • is maternity leave viewed as continuous service in ireland

The answers to most of the questions above can be found on this site-simply use the search box in the right sidebar.

If you need professional advice or assistance in this area, do not hesitate to contact us.

Discover how to reduce the chances of expensive claims by employees.

Categories
Fixed Term Contracts The Employment Contract Videocast

The Employment Contract in Irish Employment Law-The Facts You Should Know

Employment contract
Employment contract

It’s true, you know.

The foundation stone of the employer/employee relationship is the employment contract.

So, it’s critical from day one, and becomes even more important if there is a dispute.

It is vital that it is drafted correctly, especially from the employer’s viewpoint.

Before we go any further, though, you need to know one thing: it is a legal requirement to give an employee a written statement of certain terms and conditions of employment within 2 months of the employee starting the job.

If you are an employer, therefore, you have a legal obligation to give a written contract to your employees. (Learn what must be included in a contract of employment)

This extensive article looks at the contract of employment in Irish law and some of the critical issues which arise in the employment relationship.

It will also look at

  • terms of employment,
  • the express terms you should include
  • who is a “deemed employee” and why it matters
  • changing a contract of employment,
  • termination of the contract,
  • minimum notice periods,
  • the difference between a contract of service and contract for services,
  • issues prior to employing someone
  • and more.

The employment contract is the source of much misunderstanding and strife between employers and employees.

Even though legislation has come to play a huge role in the employment relationship the legal relationship between employer and employee is rooted in the law of contact. There is no requirement in law that the employment contract be in writing.

However, there is an obligation on the employer under the Terms of Employment (Information) act, 1994 to give employees a written statement of certain terms of employment (see below).

This legislation does not apply to employees with less than one months’s service or to employees who are expected to work less than 8 hours per week.

Who is an Employee in Irish Law?  Is an Employment Contract Necessary?

It is vitally important for both employers and employees to understand who is considered to be an employee in Irish law versus the worker being an independent contractor.

Clearly an independent contractor will not enjoy the benefits of Irish employment legislation.

Contract of service or contract for services?

The vital difference is that an employee works under a contract of service while an independent contractor supplies his/her labour and/or services under a contract for services.

The status of the worker, in a dispute situation, will be determined by legal interpretation and some basic rules. Important decided cases in this area include

  • Ready Mixed Concrete v Minister of Pensions and National Insurance[1968] and
  • Henry Denny & Sons (Ireland) limited (t/a Kerry Foods) v Minster for Social Welfare[1998]
  • Minister for Labour v PMPA Insurance Co. Ltd.

It is worth noting that regardless of the label put on the relationship by the parties the Courts will look at the facts of the situation and decide what type of contract exists. In making it’s decision the Court will be influenced by:

  1. Whether there is written evidence of terms
  2. Whether there is control over the worker as to how, what, when, why, and how the worker works
  3. Whether the employee provides his own labour/skill to the “employer” and cannot assign his duties to another.

The key areas therefore which a Court or tribunal will consider will be the aspect of personal service, the degree of control over the worker, and any written terms of the contract.

A Deemed Employee

A deemed employee situation will arise where a person is working for an employer through another agency or body.

That person will be a deemed employee of the person for whom they are doing the work. This situation will commonly arise where employment agencies place people in a work environment.

The employment agency must be one as defined by the Employment Agency Act, 1971 but this act defines an employment agency very widely. It is important to note though that the notion of a deemed employee only applies in relation to the application of specific statutes which provide for protection for a deemed employee.

However it can be a dangerous situation where a business does not know of their potential liability to a deemed employee until a problem occurs and the deemed employer can be held responsible for a dismissal over which he had no control or knowledge.

You might also be interested in the law surrounding temporary agency workers.

 Partnerships

Partners are not employed by or with each other but may, as a partnership, have employees.

Shareholders/Directors

Ownership of a shareholding in a company does not prevent the owner from being an employee of the company. But a controlling shareholder may have difficulty establishing that he was an employee.

Prior to Contract

Before entering into a contract of employment there are three areas that an employer needs to consider carefully.
These areas can be broadly categorized as follows:

  1. Advertising the position
  2. Interviewing for the job
  3. Conditions precedent.

Job Advertising

Advertising the job can be fraught with danger for the employer as it is easy to fall foul of employment equality legislation.

In addition the wording of the advertisement can be held to form part of the subsequent contract of employment.

Interviewing for the job

Employers need to be careful not to ask questions which fall foul of the Employment Equality Acts, 1998-2004 and avoid asking questions that could be considered discriminatory on the grounds of age, marital status, sex, and the other grounds referred to in employment equality legislation.

Keeping note of the interview is a smart practice as what is said at interview (by both parties) can be held to form part of the subsequent contract.

Conditions precedent

The employer should make a job offer conditional on certain conditions being fulfilled, depending on the position.

These conditions may cover Garda vetting, clean driving licence, health to do the job, suitable references, registration with professional bodies, and others-this will depend very much on the nature of the work and position.

The areas of references and medical examinations can cause problems and the key principle always for the employers is that you have the employee’s consent to take up references and medical reports/evidence.

The Data Protection Commissioner has held that you need written consent to take up references. However there is no general requirement in law that an employer furnish a reference.

Medical evidence?

There is no reason why a prospective employee should not be asked to undergo a medical prior to a job offer being made even though it is common for employers to only require a medical examination after the offer has been made and accepted.

Union membership? 

A pre-contractual closed shop is lawful under the Common law and European law.

Terms of Employment

The contract of employment in Ireland is made up of both express terms and implied terms with the Terms of Employment (Information) Act, 1994 stipulating that certain basic information must be given to the employee in writing.

This includes the names and addresses of both employer and employee, the place of work, the title of the job, pay, any terms relating to sick pay, periods of notice and many other basic details.

Implied Terms

In every contract of employment, written or otherwise, there are 4 categories of implied terms which fall under the headings of
a) terms implied by custom/practice (depending on the industry)

b) terms implied by statute (right to redundancy, right not to be unfairly dismissed, right to notice, right not to be discriminated against as per Employment Equality Acts, right to breaks, annual leave, holidays as per Organisation of Working Time Act, 1997, protective leave including maternity leave, payment of wages as per Payment of Wages Act 1991, atypical workers such as part timers and fixed term workers protected by the Protection of Employment Acts, health and safety provisions as per Health and Safety at Work Act 2005)

c) terms implied by law (employers duty of care and employees duty of trust and confidence)

d) collective agreements in unionized employment.

Express Terms of Employment

The express terms of employment are those terms clearly agreed between the employer and employee and can be oral or in writing.

The principal express terms that should be included in any document setting out the terms and conditions of a contract are set out in this article.

employment-contract

Terms of Employment (Information) Acts

The Terms of Employment (Information) Acts 1994-2001 provide that employees must be given a statement, signed by the employer, of certain of their terms and conditions of employment within 2 months of their employment.

What must be included in this statement?

  • The names of the employer and employee
  • The address of the employer
  • The place of work (This can be a thorny issue if you need the employee to move to another location or provide geographical mobility in the course of employment and it has not been provided for in the contract of employment)
  • Hours of work (this needs to be clear about shifts, overtime, work breaks, lay offs, short time, and so forth)
  • The job title or nature of the work for which they are employed (Drafting this too widely can give problems when it comes to redundancy; drafting too narrowly can lead to practical, on the ground difficulties)
  • The date of commencement of employment (when does employment start is an important question as most statutory entitlements will be dependent on the length of service)
  • The duration of the contract and expiry date if the contract is a fixed term/temporary contract
  • The rate of pay or method of calculation (the salary package and the breakdown between basic salary, commission, bonuses, allowances, and so forth should be set out)
  • How often/the intervals at which pay will be paid
  • Terms and conditions re paid leave (what is the position re holidays and is there extra days over and above those set down by statute in the Organization of Working Time Act,1997)
  • Terms and conditions re illness/sickness or injury and pensions (what is the situation re sick pay; there is no general right to be paid while out sick but the contract can provide for it expressly or custom and practice of the industry/job can imply it but this may need to be proven if questioned)
  • The period of notice obliged to be given by both parties
  • If any collective agreement affects the contract
  • Times of breaks/rest periods both daily and weekly
  • The company’s pay reference period.

If the employer fails to provide this statement to the employee a claim can be made to the Rights Commissioner service who may order compensation of up to 4 weeks remuneration and require the employer to give the statement of terms to the employee.

In addition to the above statutory minimum terms and conditions it is prudent and advisable for the employer to include other terms in the contract dealing with

  • Short time/lay offs
  • Illness pay
  • Retirement age
  • Time off work
  • A probationary period (cannot exceed one year)
  • Bullying and harassment procedures
  • Grievance and disciplinary procedures (a specified disciplinary procedure should be in place and a copy of this together with the grievance procedure should be given to the employee along with the contract/letter of offer)
  • Company car
  • Share options
  • Retirement age (should be specified by the employer)
  • Any restrictions re competition and setting up against the employer in the future using trade secrets/contacts. Note that common law implies a duty of loyalty in the employment contract; common law also protects confidential information and trade secrets in the absence of an express or written term in the contract covering this area. However there is no common law barrier to soliciting for business done by the employer once the employee leaves the employment.
  • Email and internet use

In addition to the above, the employer must give new employees, within 28 days of starting employment, a written summary of the procedures to be used should it be necessary to dismiss them.

As an employer you need to be clear what terms and conditions are obligatory in the employment contract as a result of the Terms of Employment (Information) Acts and the additional terms and conditions which might be advisable and prudent for the employer.

Legal advice is recommended as the consequences of a badly drafted contract with an employee will be far more costly than the cost of having a properly drafted contract of employment by a legal professional.

Termination of the Employment Contract and Minimum Notice Periods

Providing for termination of the employment contract is an important term of the contract of employment, one which the employer needs to take care over, particularly the notice period.

There are a number of important considerations to think about such as

  1. The notice period
  2. The reason(s) for termination.

Notice period

An agreed notice period is strongly recommended in all contracts of employment.

If none is specified then the employer is obliged to give “reasonable” notice. Reasonable notice will vary from contract to contract.

Minimum Notice Periods for termination

The statutory minimum notice periods on termination of employment are as set out in the Minimum Notice and Terms of Employment Acts 1973 to 2001 which are based on years of service of the employee.

Service                                        Notice
13 weeks – 2 years                    1 week
2 – 5 years                                   2 weeks
5 – 10 years                                 4 weeks
10 -15 years                                6 weeks
over 15 years                              8 weeks.

Employees are entitled to the above notice periods or pay in lieu except in cases of dismissal for misconduct where the employer is entitled to terminate the employment immediately without notice.

The employer on the other hand is entitled to at least 1 week’s notice from the employee, but this will depend on the contract.

Note: Both the employer and employee have the right to terminate the contract of employment without notice due to the misconduct of the other party.

Any claims in respect of breaches of the Minimum Notice and Terms of Employment Acts go to the Employments Appeal Tribunal which can award compensation to the employee for not receiving proper notice. (Note that if the employee was sick or on strike during the notice period no compensation is payable)

Reason for termination of the employment contract

Both employer and employee have a broadly similar right under common law to terminate the contract of employment. If notice is not provided for in the contract then “reasonable” notice should be given.

“Reasonable notice”, in the absence of a stipulated period of notice, will be decided by

  • Custom and practice
  • Length of service
  • Age and experience of the employee
  • Job role
  • The particular facts of the case.

It is recommended to the employer that a notice period always be stipulated in the contract.

Giving notice of termination of employment contract

Some important points concerning notice:

  1. Notice can be given at any time including during leave or illness leave but not during maternity leave;
  2. It must be clear and unambiguous
  3. It can be in writing or orally (unless it is specified in the contract that it be in writing)
  4. The Minimum Notice and Terms of Employment Act, 1973 sets out minimum notice periods depending on the length of service
  5. The minimum period of notice in all cases is one week
  6. If an employee is dismissed for misconduct he loses his entitlement to notice under the Minimum Notice and Terms of Employment Act, 1973.

Damages following dismissal

In general punitive damages allowed following a dismissal will be restricted to remuneration to which the employee was entitled and not for any distress caused by the manner in which the dismissal has occurred.

Changing a Contract of Employment

Changing or varying the terms and conditions of a contract of employment can only be done with the agreement of the parties. It cannot be unilateral.

An employer is leaving him/herself open to a successful claim if he imposes changes to a contractual entitlement unilaterally. It is worth noting that agreement can be express, implied, or by acquiescence.

However an important distinction should be made between a work practice and a contractual provision or term of the contract.

Variation by the parties

Sometimes variation by one of the parties becomes necessary to give the contract commercial efficacy. If a term is so obvious that common sense would dictate that it must be included in the contract the Courts will imply it into the contract.

hanging-contract-of-employment

Variation by Trade Unions or a 3rd Party

What about variation of the terms of employment through the trade union negotiating on behalf of the employee? Generally employees will accept changes negotiated on their behalf by their trade union.

However a trade union cannot bind those members who have made it clear that they will not be bound by the changes-see Goulding Chemicals Ltd v Bolger [1977], Irish Supreme Court.

Take a more detailed look at the legality of trade union negotiated variations of contracts.

Custom and Practice

Some contracts of employment will have terms of employment implied into them by custom and practice of the employment or industry.

For this to happen the custom must be

“so notorious, well known and acquiesced in that the absence of agreement in writing it is to be taken as one of the terms of the contract between the parties” O’Reilly v Irish Press [1937]

Contractual Right to Vary

Many employment contracts will contain a term reserving the right to the employer to vary or alter the terms and/or conditions of the contract.

However this does not give the employer the right to make unreasonable changes and courts and tribunals will always look to see if the change was necessary and reasonable.

It is important to note that if an employee does not object to a change and works away under the changed terms he/she may be held to have implicitly agreed to the changed terms and conditions.

On the other hand an employee could argue that he/she was simply being co-operative and this did not imply approval of the change. The best way for an employer to counter this is to bring any proposed change to the attention of the employee; if he/she does not he cannot slip changes in “under the radar” and claim acquiescence by the employee.

It is worth noting also that where an employer is entitled in law to make changes to contracts of employment employees are still entitled to engage in trade disputes to attempt to bring about change. This is the case even in companies where unions are not recognised as the Labour Court can be asked by the union to investigate the dispute.

 Co-Operation and not variation

A distinction must be drawn between an employee co-operating in a change and acquiescing to a contractual variation. Courts will not allow employers to slip in changes unknown to an employee.

Trade Disputes

Even where the employer is legally entitled to take certain action employees may engage in a trade dispute and seek to persuade to bring about the changes they require.

Even in a “non union” employment the Labour Court can investigate a trade dispute where it is not the practice of the employer to negotiate with a trade union.

Collection agreements and contracts of employment? Read about the legality of collective agreements and the tests applied.

Amending the Terms of Employment in Ireland-historically

Terms and conditions of employment-are employers entitled to unilaterally vary such terms and conditions?

In short, the answer is no.

Where an employment contract does not expressly enable the employer to vary the terms of employment, employers may either:

1. Obtain the employee’s express agreement to the change (recommended);
2. Terminate the employee’s employment on due notice and offer re-engagement on new terms (not recommended); or
3. Attempt to impose the change unilaterally (not recommended).

Options 2 and 3 above are not recommended and leave the employer at significant risk to a successful claim for unfair/constructive dismissal/non payment of wages claims.

Unilateral variation of an employee’s terms and conditions of employment to the employee’s detriment may give rise to:

1. A claim of constructive dismissal under the Unfair Dismissal Acts 1977-2007 or at common law;
2. A claim for damages for breach of contract;
3. A claim in respect of an unlawful deduction under the Payment of Wages Act 1991;
4. A “trade dispute” under the Industrial Relations Acts 1946-2004,
5. Industrial relations issues, and
6. Injunctive proceedings to prevent the unilateral variation.

What is contractual, and not merely a work practice, may not be varied unilaterally.

Such variation must be agreed between the parties regardless of whether the term is express or implied.

In practice, whether or not an employee benefit constitutes a term or condition of employment may be somewhat academic if changing it is likely to give rise to industrial relations issues and human resources problems.

In Neville v Waters Munster Glass Ltd RP558/2003, the claimant, having refused to accept a reduction in salary and to work a reduced three day week, was consequently made redundant. Although the claimant argued that he had been unfairly dismissed, the tribunal held that a genuine redundancy situation existed.

It is clear from a UK case, GAP Personnel Franchises Ltd v Robinson UK EAT/0342/07, that where employees do not accept a unilateral variation by the employer, especially one that has an immediate impact (e.g. the reduction in pay or benefits), they should make it clear, preferably in writing, that they do not accept the change and are working under protest. Otherwise the employee may eventually be held to have implicitly accepted the change.

Amending terms of employment in Practice

In the course of varying terms and conditions employers should:
1. Maintain clear communication with employees;
2. Provide employees with reasonable notice of any variation to terms and conditions;
3. Be able to explain why the change is necessary and inform the employees of the alternative (i.e. a more formal re-structuring and ultimately possible job losses);
4. Consider whether the new terms can be imposed in stages as opposed to implementing all variations at once. This may help to ease the transition and allow employees to plan for the change; and
5. Consider whether an incentive can be suggested to assist employees in accepting the change. This does not necessarily have to be a financial benefit.

Collective agreements and contracts of employment-what is the legal position?

Employers’ Obligations and Contracts

Employers need to ensure that they have robust, legally sound contracts of employment in place for all of their staff.

There are 4 main reasons for doing so:
1. it is a legal obligation
2. you will need them for a NERA inspection
3. a well drafted contract will minimize the opportunities open to employees to bring costly and damaging claims against you as an employer
4. it makes good business sense to have clarity between both employer and employee as to their obligations and responsibilities.

We specialize in drafting employment contracts for employers in Ireland.

No matter how small or big your business or school is, we can draft contracts for your particular circumstances.

And we can review and advise on your existing contracts and ensure that you will have nothing to worry about should you be chosen for a NERA inspection.

Our contracts typically include the following terms:

  • date of employment
  • appointment and duties
  • job specification
  • location
  • probationary period
  • hours of work
  • breaks
  • wages
  • annual leave
  • pension
  • retirement
  • absence
  • illness/sick leave
  • maternity, paternity, force majeure leave
  • confidentiality
  • grievance, bullying, harassment, dignity at work, disciplinary
  • internet and email
  • data protection
  • termination-notice and pay on termination
  • health and safety
  • short time and layoffs
  • changes to the terms of employment.

However each employer’s situation is different and each employee is different.

So every contract we draft is an individual contract as opposed to a one size fits all affair.

Learn more about how we help employers here.