Contract Law

GilltownJoe

If an employee has no employment contract but has worked in the same company for many years, is there any default contract that applies, i.e. is there an assumption that the employee has agreed to the contract by continuing to work there without ever signing the contract.

Thanks

hullaballoo

Yes, there are statutory minimum employment contract terms.

These are readily googleable. Occasionally, there may be additional terms that apply for various reasons, such as industry standards or even workplace customs. For example, when working in a bar or restaurant, the way in which tips are divided can become a term of employment even in the absence of a written agreement.

Pro Hoc Vice

GilltownJoe wrote: »

If an employee has no employment contract but has worked in the same company for many years, is there any default contract that applies, i.e. is there an assumption that the employee has agreed to the contract by continuing to work there without ever signing the contract.

Thanks

You are making an error many make about contract law. A contract can exist even if there is no written record. The terms of the contract as another poster has set out can be easy to figure out.

By Turing up for work at certain times and by the boss paying you every week we are obeying the contract. While some contracts must be written down or at least evidenced in writing a contract can be entered into on nothing more than a chat and the nod of a head as long as the required ingredients of a contract exist.

NoQuarter

So what happens if, for commercial/financial reasons, the company tries to reduce the wages/hours of the person on a long-standing verbal contract?

What if they try get them to sign a new contract?

I've never looked at employment law

Carawaystick

The person can agree or disagree to get their wages reduced.

NoQuarter

Carawaystick wrote: »

The person can agree or disagree to get their wages reduced.

Of course, but what if they disagree?

Peregrinus

The point about signing a written contract is to make the terms of the contract clear, and easy to establish.

Where there’s an unwritten contract, the terms may be less clear, and harder to establish. However where the contract is one of employment, and the term in question is the rate of pay, that’s fairly easily established. Have a look at the worker’s last few payslips. What figure is stated there as the worker’s gross pay for the period? There you go.

If the employer now wants to reduce the rate of pay, the position is exactly the same as if there were a written contract. The employer is seeking to vary the contract. Unless the contract already contains terms which allow for unilateral variation (and it’s up to the employer to show that it does) this variation has to be agreed between the employer and the worker. In so far as the absence of a written contract in this case is a factor here, it’s more likely to work against the employer than the worker.

If the worker won’t agree, the employer may fire him, and in that event the worker would have the same recourse as he would have if there were a written contract and he were fired. It may in fact be the case that the employer can make the employee redundant (the financial pressures which lead to the employer suggesting a pay cut may also indicate that the employer is overstaffed in the current economic climate) in which case the employer will have to honour the employee’s redundancy entitlement.

NoQuarter

Peregrinus wrote: »

It may in fact be the case that the employer can make the employee redundant (the financial pressures which lead to the employer suggesting a pay cut may also indicate that the employer is overstaffed in the current economic climate) in which case the employer will have to honour the employee’s redundancy entitlement.

Thanks, that's very clear.

In terms of redundancy, would the signing of a new contract effect the redundancy entitlements at all?

So, to get this straight, if an employer tries to reduce an employees wage through the signing of a new written contract (the employee being on a long term verbal contract) the employee can refuse such is their right. So if they do refuse, they can be made redundant if the employer is in a precarious financial position (although where does the redundancy payment come from? Government or employer?) or if they are not made redundant but are fired instead, is the only recourse through the courts for unfair dismissal?

Peregrinus

NoQuarter wrote: »

In terms of redundancy, would the signing of a new contract effect the redundancy entitlements at all?

Good question.

Not entirely sure about this - employment law is not really my field - but my gut feeling is yes, if the employer and the worker agree (a) to vary the rate of pay and (b) to reduce the terms of the contract to writing, this isn’t a termination of employment - there’s no new contract, just a new document evidencing the revised terms of the existing contract - and so no redundancy. (All this is assuming that the worker is continuing to do the job he has been doing all along.)

NoQuarter wrote: »

So, to get this straight, if an employer tries to reduce an employees wage through the signing of a new written contract (the employee being on a long term verbal contract) the employee can refuse such is their right. So if they do refuse, they can be made redundant if the employer is in a precarious financial position (although where does the redundancy payment come from? Government or employer?) . . .

They can be made redundant if in fact they are redundant - the employer’s business no longer requires a worker to do what this bloke has been doing. If the employer promptly hires someone else to do the same work, that’s not a redundancy. The cost of your redundancy entitlements is borne by your employer.

NoQuarter wrote: »

. . . or if they are not made redundant but are fired instead, is the only recourse through the courts for unfair dismissal?

Not the courts (or, at least, not normally). You bring a claim for unfair dismissal to the Rights Commissioner or, if you or your employer prefers, directly to the Employment Appeals Tribunal. (You can also bring a claim for “wrongful dismissal” in the courts, but that’s much more expensive and uncertain, and most people find the unfair dismissal proceedings more attractive.)

Even if you’re offered redundancy, you can still bring a claim for unfair dismissal arguing, e.g. that this is not a genuine redundancy, or that though the employer may need to make redundancies you have been unfairly selected.

In most cases, the maximum compensation you can get in unfair dismissal cases is two years’ salary. Since this is likely to be more than the redundancy payment offered, people who are offered redundancy will still consider whether they have grounds for an unfair dismissal claim.