Cameron Miranda
In the UK, a contract is formed when there is an offer, acceptance, consideration, intention, and capacity. While most contracts don't need to be in writing to be enforceable, some do. Contracts can be oral or formed by the conduct of the parties. In the context of employment, employees have both statutory and contractual rights. Statutory rights are set out by Parliament and include rights such as minimum notice periods, protection against discrimination, and rights related to working time and minimum wage. Contractual rights, on the other hand, are set out in the employment contract and can include express rights such as salary, holiday entitlement, and notice of termination. While there may be overlap between statutory and contractual rights, a contract generally cannot override statutory rights. However, in certain situations, such as in the case of bailed goods, a contract may potentially override the position at common law.
| Characteristics | Values |
|---|---|
| Formation of a contract | An offer, acceptance, consideration, intention and capacity |
| Types of contracts | Written, oral, or by conduct |
| Types of terms | Express, implied, or by custom and practice |
| Statutory rights | Set by Parliament and include minimum notice period, protection against discrimination, right to be a member of a trade union, and rights under working time and minimum wage legislation |
| Contractual rights | Include payment of salary, holiday entitlement, notice of termination of employment, and right to be treated with mutual trust and confidence |
| Overriding statutory rights | Employment contracts usually cannot override statutory rights |
| Common law | A contract may override the position at common law in certain cases, such as in the case of bailment |
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What You'll Learn
Employment contracts and statutory rights
In the UK, an employment contract is an agreement that outlines the terms of the working relationship between an employer and an employee. It includes details such as pay, working hours, and other clauses like confidentiality agreements. These contracts can be formed through written agreements, oral agreements, or even through conduct—where actions indicate an agreement, even without verbal or written confirmation.
While employment contracts are essential in establishing a healthy working relationship and outlining expectations, they do not override an employee's statutory rights. These rights are protected by law and include:
- Minimum period of notice before termination.
- Protection against discrimination.
- The right to join or refrain from joining a trade union.
- Rights under working time and minimum wage legislation.
- Right to time off in various circumstances.
- Right to protection when whistleblowing.
It is important to note that some of these rights may only apply after a certain period of employment, and employers should be aware of their obligations to avoid legal repercussions.
Additionally, while not explicitly mentioned as a statutory right, compensation for unfair dismissal is another area where employees are protected. In such cases, the Employment Tribunal may award compensation that is 'just and equitable', even if the employee has found alternative employment during the notice period.
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Legally binding contracts
In the UK, a legally binding contract is formed when five elements are satisfied: an offer, acceptance, consideration, intention, and capacity. An offer is made by an "offeror" to an "offeree", and it must be “capable of acceptance”, meaning that the offer is clear and specific. Consideration refers to the exchange of something of value between the parties, which need not be monetary. Both parties must also have the intention to be legally bound by the agreement, and they must have the contractual capacity to do so—this means that they are legal entities recognised by law, such as companies or individuals over the age of 18.
It is important to note that contractual rights and statutory rights are different. Contractual rights are set out in the employment contract and can include express rights, such as salary, holiday entitlement, and notice of termination, as well as implied rights, such as the right to be treated with mutual trust and confidence. On the other hand, statutory rights are set out by Parliament and exist "by statute", meaning that employees are legally entitled to these rights regardless of what their contract says. Examples of statutory rights include the right to a minimum period of notice, protection against discrimination, and rights under working time and minimum wage legislation.
While contractual rights are typically outlined in the contract, there may be instances where a contract attempts to override statutory rights. However, this is generally not permissible. For example, in the context of employment law, an employment contract cannot usually override an employee's statutory rights. Nevertheless, there may be exceptions or complexities, as seen in the case of discretionary benefits, where courts have sometimes interpreted discretionary benefits as contractual entitlements.
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Contractual and statutory rights
In the UK, statutory rights are set out by Parliament, while contractual rights are outlined in an employment contract. These rights can sometimes overlap, and they may be written down or exist in statute, meaning an individual is legally entitled to them regardless of what their contract says.
Contractual rights typically include express rights, such as the right to salary payments, holiday entitlement, and notice of termination of employment. They can also include implied rights, such as the right to be treated with mutual trust and confidence. These rights may be outlined in a written contract, but they can also be agreed through conduct, or be part of a collective agreement negotiated between employers and trade unions or staff associations.
Statutory rights include protection against discrimination, the right to a minimum period of notice, the right to be a member of a trade union, and rights under working time and minimum wage legislation. These rights are set out by law and cannot usually be overridden by an employment contract. For example, employees have a statutory right to a minimum redundancy payment if they are made redundant, calculated using a statutory formula. However, some employees may be entitled to a more generous contractual redundancy payment.
In some cases, contractual rights may arise from 'custom and practice'. For example, if a workplace has finished half an hour early on Fridays for many years, it could be argued that this now forms part of employees' terms and conditions. Employers have a duty of care to their employees, and a breach of this duty can result in legal claims under the law of negligence.
While contracts can be legally binding, they must not conflict with existing laws or legal principles.
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Common law and bailment
In the UK, bailment refers to a legal relationship in common law, where the owner of personal property (or "chattel") transfers physical possession of that property to another party, who holds the property for a certain purpose, but the owner retains legal ownership. The owner who surrenders custody of the property is called the "bailor", and the individual who accepts the property is called the "bailee". The bailee must intend to and actually physically possess the property.
Bailment comes into effect when someone entrusts an asset to someone else for safekeeping. The bailor is the owner of the asset and temporarily relinquishes it to the bailee. Although the bailor gives possession to the bailee, the bailor retains legal ownership of the asset. Bailments only start once the property is in the hands of the bailee. The bailor is generally not entitled to use the property while the bailee holds it. Leaving your car with a valet is a common form of bailment, while parking in an unattended garage is a lease or the license of a parking space, as the garage cannot show intent to possess the car. Bailment is distinct from leasing, where ownership remains with the lessor but the lessee is allowed to use the property. Bailments are legal courses of action independent of contract or tort.
There are three types of bailment, based on the purpose of the relationship: the first is a bailment for the mutual benefit of both parties, which involves an exchange of performances between the parties, such as repairing an item for the owner who pays for the service. The second type is a bailment that solely benefits the bailor, where the bailee acts gratuitously (for free). An example is a free valet service, where the bailee does not receive compensation for parking a car. The third type is a bailment that solely benefits the bailee.
In all cases of bailment, the bailee must treat the bailor's property with a reasonable amount of care. The bailee is bound to take as much care of the goods bailed to them as a person of ordinary prudence would, under similar circumstances, take of their own goods of the same bulk, quality, and value as the goods bailed. The bailee, in the absence of any special contract, is generally not responsible for the loss, destruction, or deterioration of the goods, if they have taken the amount of care described above. However, the bailee can face liability for damaging the bailed items if they are grossly negligent or act in bad faith while safeguarding the asset.
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Consumer protection legislation
In the UK, the law protects consumer rights when purchasing goods or services. The Consumer Rights Act 2015 outlines the basic rules that govern how consumers buy and businesses sell to them. It covers how services should match what has been agreed upon and what should happen when they do not or when they are not provided with reasonable care and skill. The Act also introduced, for the first time, rights regarding digital content, giving consumers the right to repair or replacement of faulty digital content.
The Consumer Rights Act 2015 amended several existing laws, including the Consumer Protection Act 1987, the Consumer Credit Act 1974, the Estate Agents Act 1979, the Video Recordings Act 1984, the Supply of Goods and Services Act 1982, the Sale and Supply of Goods to Consumers Regulations 2002, the Regulatory Enforcement and Sanctions Act 2008, the Misrepresentation Act 1967, and the Unfair Contract Terms Act 1977.
Alternative Dispute Resolution (ADR) is now available to all businesses to help resolve disputes with consumers that cannot be settled directly. Previously, this service was only available in certain sectors. If a business is involved in a dispute, it must inform the consumer about a relevant certified ADR provider and whether it is prepared to use the ADR process to resolve the dispute. However, businesses are not obligated to use ADR unless it is mandatory in their sector, such as in financial services.
In the context of employment contracts, employees in the UK have statutory rights, such as the right to a minimum period of notice, protection against discrimination, the right to join a trade union, and rights under working time and minimum wage legislation. Employment contracts typically cannot override these statutory rights. However, it is important to note that certain benefits, even if described as 'discretionary', may be considered contractual entitlements by courts.
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Frequently asked questions
No, a contract is a legally binding agreement between two parties, and it cannot override the law. However, there are instances where a contract may include terms that are not expressly written in the law.
Statutory rights are set out by Parliament, while contractual rights are outlined in an employment contract. These rights may overlap, and employees may have certain statutory rights that are not explicitly mentioned in their contract.
No, an employment contract typically cannot override an employee's statutory rights, such as the right to a minimum period of notice, protection against discrimination, and rights related to working time and minimum wage legislation.
Contractual rights include express rights, such as the right to payment of salary, holiday entitlement, and notice of termination of employment. They may also include implied rights, such as the right to be treated with mutual trust and confidence.
Yes, a contract can be legally binding even if it is not in writing. Oral contracts and those formed by the conduct of the parties can also be legally enforceable. However, certain contracts, such as those involving the sale of goods, must be in writing to be valid.
