Regulating the employment relationship

The status of employee, or employer, is one that almost all of us will hold at some point in our lives. The most recent employment statistics state that the national UK employment rate is 75.5%, with 29.7 million employees on payroll working a collective 1,045 million hours a week.

With so many of us spending the majority of our weekly lives engaged in work, employment is a critical area for all those associated with the labour market. After all, issues of conduct, benefits and rights at work can, despite best efforts on all sides, be contentious.

What can employers expect from employees, and vice versa? What are the legal requirements of employees in the workplace? What rights do employees have?

What is the employment relationship?

Employment law – also known as employment legislation – regulates the relationship, and the legal entitlements that exist, between employers and employees. Understanding this employment relationship is key to understanding the duties and obligations expected of both employers and employers.

For example, a difference in status – i.e. employee, worker or self-employed individual – can have a significant impact on the legal duties and obligations attributed to both sides. The specifics of a given employment relationship are based on the terms and conditions of employment; legally, there is no requirement for this to exist in writing – it can be written, oral, or a combination of the two. The employment relationship goes beyond individual workplace rights to encompass the collective, such as union and non-union employee representatives.

The employment relationship is multi-faceted, for both parties. It can span a wide range of employment issues, such as:

• checks and processes involved in recruitment – including fair recruitment and selection, the right to work in the UK, criminal record checks, and legal obligations
• terms and conditions of employment – including types of employment contract, written statement of particulars, notice periods, and zero-hours contracts
• data protection – which governs the safeguarding, proper usage and legal obligations associated with sensitive and important information
• holidays, working hours and pay – including national minimum wage, pensions, equal pay, minimum statutory requirements – in the United Kingdom, this is 28 days or 5.6 weeks for a full-time employee, and the same on a pro-rata basis for part-time employees – regular overtime, and commission payments
• health and safety regulations – including obligations to employee health, welfare and stress
• maternity, paternity and parental rights – including maternity, paternity and shared parental leave and pay, adoption leave and pay, and family-friendly policies
• discrimination and protected characteristics – including age, sex, race, disability, religion or belief, and sexual orientation
• discipline, grievance and dismissal – including the ACAS Code of Practice, policies and procedures, conflict resolution and unfair dismissal
• whistleblowing – including ‘protected disclosure’ and the Public Interest Disclosure Act 1998
• employment tribunals – including tribunal procedures and hearings, claims, appeals procedures and compensation
• transfer of undertakings (TUPE) – which focuses on what happens to employees when a business is transferred from one owner to another
• redundancy – including termination of employment, voluntary redundancy, redundancy pay, and redeployment.
• Regulation of the labour relationship is a vast and highly active area of law. To highlight how vital it is to get the employment relationship right – and what happens when it breaks down – government statistics from June 2022 indicate that there were 19,000 employment tribunal receipts and 487,000 outstanding cases.

What statutory regulations affect working relationships?

While employers, at a minimum, must abide by certain codes of practice, there can exist a variety of differences and discrepancies between individual employer handbooks and policies. While some statutes and acts are enshrined in law, other aspects of the relationship are based on guidance and best practice only.

The following statutory regulations are designed to govern certain aspects of employee rights and labour law for all:

•       Equality Act 2010
•       Employment Rights Act 1996
•       Health and Safety at Work Act 1974
•       Data Protection Act 1998
•       Working Times Regulation (1998) and the Working Time Amendment (Regulations) 2007
•       Transfer of Undertakings (Protection of Employment) Regulations 2006.

While these are a handful of the most common statutes, plenty of others exist to regulate different aspects of the employment relationship.

Employer and employee duties

No doubt we’ve all heard anecdotes, and possibly had our own experiences, of employers and employees failing to act as expected. As part of the employment relationship, employers and employees both have a range of duties to fulfil in order to uphold their part of the agreement – whether a formal contract exists or not.

Employers must:

•       comply with the obligation to pay an employee
•       indemnify the employee in respect of expenses and liabilities incurred by the employee in the course of their duties
•       take reasonable care of the employee’s health and safety and working conditions
•       ensure that the relationship of trust and confidence between the employer and employee is not destroyed
•       ensure employees have the appropriate skills and training to perform their responsibilities adequately
•       take reasonable care in giving references.

Employees must:

•       give personal service
•       obey lawful and reasonable orders from the employer
•       exercise reasonable skill and care in the performance of their duties
•       treat the employer with fidelity and act in good faith.

Consequences of failing to meet legal employment requirements

From unfair treatment, harassment and workload-induced stress, to poor communication, ineffective management and ill-defined job roles, disputes can be numerous, complex and distressing to resolve. While the benefits of cultivating and maintaining positive, effective employment relationships are numerous – happier, more engaged workers, better productivity, attraction of top talent and boosted brand image, to name a few – the consequences of not fulfilling obligations can be highly detrimental.

Some employers may find themselves taken to court or an employment tribunal to account for misconduct. As well as the time and costly legal fees associated with this, further fines and compensation may follow if employment laws are judged to be broken. Some employees may also engage in industrial action to make their case heard, joining trade unions in an attempt to reach collective agreements concerning labour relations. In extreme cases, business may be forced to stop trading and other punishments and sentences handed out. Aside from the practical elements of breaking the law, brand reputation may be affected – both by word of mouth and poor publicity – leading to profit, reputation and workforce losses. Additionally, business partnerships may be negatively impacted, as stakeholders, suppliers and partners break ties of association.

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