Contracting out (Employment) meaning

Contracting-out provisions Most claims pursued in the employment tribunal arise from a jurisdiction conferred by statutory measures. Each such statutory scheme typically includes a clause preventing the parties (or prospective parties) to a tribunal dispute from concluding an arrangement that purports to settle the claim and, by doing so, purports to displace the employment tribunal’s authority to decide the dispute. These clauses are commonly known as 'contracting-out provisions', and they appear, in broadly similar terms, across a wide range of employment legislation, eg the Employment Rights Act 1996 (ERA 1996), the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A 1992) and the Equality Act 2010 (EqA 2010). The aim of these provisions is to protect claimants (or potential claimants) by ensuring they do not sign away the right to commence or continue a claim without appropriate safeguards being observed. The fundamental position is that any agreement reached between persons which purports to stop an individual from making, or proceeding with, a claim to an employment tribunal is void...

Contracting-out provisions Most claims that can be taken to the employment tribunal stem from jurisdiction granted by statutory provisions. Each such statutory scheme contains a term that prevents the parties (or would-be parties) to an employment tribunal claim from entering an agreement that purports to settle the claim and, in doing so, purports to exclude the tribunal's jurisdiction to determine the dispute. These terms are commonly described as 'contracting-out provisions', and they appear in broadly similar form across a wide range of employment legislation, eg the Employment Rights Act 1996 (ERA 1996), Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A 1992) and the Equality Act 2010 (EqA 2010). They are intended to safeguard claimants (and potential claimants) by stopping them from signing away the right to bring or pursue a claim unless appropriate procedural safeguards have been met. The fundamental rule is that any agreement reached between persons that purports to stop a person from making, or continuing with, a claim to an employment tribunal is void to...

In this issue: VAT Companies and corporation tax Stamp and transfer taxes Taxes management and litigation Employment taxes Budget and Finance Bills International Pensions Daily and weekly news alerts New and updated content Dates for your diary Trackers New and updated content Latest Q&As Useful information VAT Supreme Court finds appellant had no reasonable grounds for its claim that the UK breached EU law in withdrawing the low value consignment VAT relief from supplies from the Channel Islands (Jersey Choice Ltd v HM Treasury) As noted below, in Jersey Choice Ltd v HM Treasury [2024] UKSC 5, the Supreme Court examined a Francovich damages action issued by the appellant against HM Treasury, seeking recompense for loss and damage said to stem from the UK’s 2012 abolition of the low value consignment relief for VAT. The claimant maintained that ending the relief amounted to a grave infringement of EU...

Summary The Deputy Pensions Ombudsman upheld a complaint concerning the settlement of an enhanced early retirement pension. Because the member was entitled to take an unreduced pension without consent at age 60, a late‑retirement uplift had to be applied to benefits taken at age 62 in order to satisfy the preservation requirements, and those requirements trumped the Scheme’s rules. The determination serves as a clear reminder that pension preservation legislation is overriding and therefore takes precedence over any conflicting scheme provisions. What were the facts? Professor N was a deferred member of the TPS Benefits Scheme (the Scheme). Having transferred his benefits across from a government scheme, he held special rights within the Scheme and could draw an unreduced pension at 60 without needing consent. Under Rule 6.3, a late retirement uplift was provided where a member had reached the normal retirement date (age 65) whilst remaining in employment and choosing to defer their pension. The Scheme sent Professor N numerous communications stating that he...

Summary The Deputy Pensions Ombudsman dismissed a complaint concerning entitlement to benefits. The Scheme had paid a contributions equivalent premium for one spell of employment, and it was implausible that a refund of the member’s contributions was not processed at the same time. Regarding a different employment period, there was no proof that the complainant was an active participant in the Scheme; this was consistent with him paying standard National Insurance contributions rather than the reduced rate ordinarily associated with membership of a contracted-out arrangement. The decision serves as a reminder that the burden rests with the individual to evidence scheme membership. What were the facts? Mr Y was a member of the NHS Pension Scheme (the Scheme). The Scheme was operated on a contracted-out basis...

This Practice Note considers statutory adoption pay (SAP) and contractual adoption payments. It also examines eligibility criteria, the meaning of employed earner, the duration of entitlement, notice obligations, the evidence required, the length of time SAP is payable, rates of pay, and liability, including where an individual has more than one employer. It addresses outcomes where a child dies or a placement breaks down, circumstances in which SAP is not due, record-keeping duties, and how recoupment operates. Finally, it explores how contractual sick pay interacts with SAP, adoptions from outside the UK, and contracting out. A parent taking adoption leave (see Practice Note: Adoption leave) may qualify for SAP for part of that leave. They may receive payment for time off to attend adoption appointments (see Practice Note: Time off work for adoption appointments). Where a child is placed for adoption, the adopter and a second person—who must be the adopter’s spouse, civil partner, or partner—may, if they choose, share up to 37 of the 39 weeks of pay...

Updated in December 2025 Introduction Canada offers a steady, reliable and broad-based economy. It is the fourteenth-largest globally by total GDP, has a banking sector regarded as among the safest worldwide, and ranks within the top four G20 nations for ease of starting and running a business. Over the past decade, rapid expansion has created a strong operating climate, marked by the G-7’s lowest net debt-to-GDP and its most pro-business tax regime. With advantages including swift, dependable access to the vast North American marketplace via the United States–Mexico–Canada Agreement (CUSMA), modest operating costs and corporation tax, and a highly skilled, well-educated talent pool, Canada’s performance routinely surpasses that of many other industrialised economies. Businesses can be structured in several forms in Canada. This Practice Note sets out key issues a new business should weigh before commencing operations in Canada. It is not comprehensive; bespoke Canadian legal and tax advice should always be obtained before conducting business in Canada. Canada consists of ten provinces and three territories...

Practice Note This Practice Note explores the issues that arise around illegal or unlawful terms in employment contracts, including pay provisions intended to circumvent tax legislation, agreements with individuals who are not lawfully permitted to work in the UK, and arrangements to undertake work that is illegal or contrary to public policy. It also analyses the consequences of illegality, including where only one party is implicated, the absence of any requirement for knowledge of the illegality, and the continued ability to bring discrimination claims. The Note addresses the public interest dimension and the Supreme Court’s ‘trio of considerations’ identified in Patel v Mirza. Confidentiality clauses and the limits of contracting-out are examined as well. An employment contract can be tainted by illegality in the same way as any other agreement. Historically, one of the most significant areas of illegality has been covenants in restraint of trade, which will not be enforceable unless they fall within one of the lawful exceptions recognised under the common law principles on restraint of...

1 Introduction This policy provides a summary of the Company’s measures to help workers remain healthy and safe when carrying out their duties on the Company’s premises throughout the ongoing coronavirus (COVID-19) pandemic. Government advice indicates that COVID-19 will remain part of daily life for the foreseeable future, so we must adapt, live alongside it, and control the risks to ourselves and those around us as far as possible. It adds, but does not supersede, the Company’s health and safety policy. This policy is not incorporated into any employment contract, and Company reserves the right to change it at any time. This policy covers all Company employees, workers and contractors. Coronavirus spreads primarily through droplets and aerosols that reach the eyes, nose or mouth, that are breathed in by another person, or that are transferred via touch and contaminated surfaces from one individual to another easily. Overall, the likelihood of contracting or transmitting COVID-19 is greatest when you are in close physical proximity to...

For further information on this topic in general, see: National minimum wage—Eligibility Employment-related statutory rates and limits table Minimum wage compliance checklist Deductions from wages Some of the statutory exceptions to the right to receive the national minimum wage are outlined below. This response concentrates on the scenarios where the point most commonly arises. Workers only Only ‘workers’ are entitled to be paid the national minimum wage—see our Practice Note: Worker status—Definition of ‘worker’. Agency workers who would otherwise fall outside the definition of a ‘worker’ because they have no contract with either the supplier or the recipient of their services are nevertheless entitled to the national minimum wage. Home workers who might not otherwise be ‘workers’ owing to an absence of any personal obligation in the contract to carry out the work themselves are likewise entitled to be paid the national minimum wage. The genuinely self-employed are not entitled to be paid the national minimum...