Legal Practice Notes

This Practice Note explores when a person is treated as an employee and the consequences that flow from that employment status. Key concepts For employment law purposes, someone supplying work or services to another may fall into one of the following: a worker (see Practice Note: Worker status), in which case they will enjoy certain rights under employment law an employee, which attracts additional employment law rights (eg unfair dismissal, maternity leave and redundancy rights) neither a worker nor an employee (ie the person is self-employed, or an independent contractor), in which case they will have no rights under employment law Anyone who holds employee status also meets the statutory definition of a ‘worker’, for the purposes of the statutory protections extended to that broader class of working individuals. However, not every worker will satisfy the definition of ‘employee’. Consequently, even where a person does not meet the test for...

Under the Companies Act 2006 ( CA 2006), company directors owe their company a set of general duties, which include the obligation to further the company’s overall success. For an introduction to the general duties, please see the Practice Note: Directors' duties—fundamentals......

Directors are the agents of a company who manage its day-to-day business and owe a number of duties to it The Companies Act 2006 ( CA 2006) for the first time put into statute a range of common law and equitable duties that had evolved through court decisions over hundreds of years, and it also altered company law in specific respects. Sections 171 to 177 CA 2006 set out the statutory general duties owed by a director to their company: act in line with the company’s constitution and exercise powers only for the purposes for which they were given act, in good faith, in the way the director believes would most likely promote the company’s success for the benefit of its members as a whole, while having regard to various matters (the duty to promote the success of the...

This Practice Note considers when an employment tribunal may order a party to pay a deposit as a condition of continuing in proceedings Where any part of a claim, response, or reply (including one answering an employer’s counterclaim) lacks a reasonable chance of success, the suitable step can be to strike it out: for more detail, see Practice Note: Striking out and unless orders in employment tribunal proceedings— Striking out where there is no reasonable prospect of success. That said, showing that a claim, response, or reply, in whole or in part, has no reasonable prospect is a demanding standard; the test is not met if the prospects are only questionable or poor where there remains a realistic, albeit slight, likelihood that the party concerned could prevail on the issue(s). If the strike‑out bar is not met, yet some or all of the claim,...

This Practice Note explains in detail the requirements and rules governing the delivery and service of documents throughout the course of employment tribunal proceedings. Documents may need to be sent or served: to the tribunal: see Sending to the tribunal, below to the parties to the proceedings: see Sending to parties, below to others who are not parties to the proceedings: see Sending to non-parties and other special addressees, below In each situation there are rules setting out the permitted method and place of delivery. At times the address specified by the rules cannot be ascertained, or is known but presents practical difficulties; in such circumstances an order may permit service by another means or method: see Problems with regular address—substituted service, below. The date on which a document is delivered is often particularly critical in assessing compliance with procedural requirements....

Practice Note This Practice Note outlines practical measures for managing persistent, sporadic, short-duration absences, as well as recurrent sickness absence or sick days. It addresses matters to be tackled at the start, such as whether an accurate attendance record exists, whether the absence is bona fide, underlying long-term health conditions, disability and the obligation to make reasonable adjustments, the employer’s absence/sickness rules, securing medical evidence, data protection considerations under Assimilated Regulation ( EU) 2016/679, UK General Data Protection Regulation ( UK GDPR) and commercial factors. It also reviews the relevance of the Acas Code of Practice and associated guidance, and sets out steps to take once an issue is apparent, including seeking the employee’s account for each absence, issuing a series of warnings, recognising improvement, using a flexible approach to address the issue, and handling medical reports. It lists...

This Practice Note This Practice Note offers a toolkit to help employers and advisers manage long‑term ill health or persistent sickness absence. Handling an employee absent for multiple extended spells, or a single prolonged, continuous absence, can be intricate and often demands a particularly careful, staged process, which the employer must document thoroughly and consistently. Extra caution is needed to minimise exposure to disability discrimination claims where the individual has a long‑term condition that meets the statutory definition of disability under the Equality Act 2010 ( Eq A 2010)—see Practice Note: Disability. Any permanent health insurance ( PHI) arrangement or pension scheme offering ill‑health retirement benefits will also be pertinent and should be taken into account. Securing a fair dismissal on grounds of long‑term ill health may take considerable time. The procedure must be conducted in line with statutory and case law...

This Practice Note summarises the range of costs orders available in the employment tribunal, including those dealing with representation and with expenses or allowances payable to an assessor or expert. It also reviews preparation time orders, wasted costs orders and pro bono costs orders. It clarifies when an order must or may be made, how a prior deposit order can affect the outcome, the levels that can be awarded, and the significance of a party’s ability to pay. The Practice Note further addresses costs warnings from the employment tribunal and between the parties, cites the Presidential Guidance, and specifies the time limit for complying with a costs order... Types of order relating to costs Employment tribunals may make the following types of order in relation to costs: Costs orders relating to representation: a direction that one party pays another for costs (fees, charges,...

The Insolvency Act 1986, s A1 ( IA 1986) The Insolvency Act 1986, s A1 ( IA 1986) sets out a mechanism allowing directors of insolvent companies, or those likely to become insolvent, to secure a moratorium. The initial period is a 20 business day period, with scope for extension in defined circumstances. The regime is underpinned by the Insolvency ( England and Wales) Rules 2016 ( IR 2016), SI 2016/1024, r 1A.1. Its purpose is to give otherwise viable businesses breathing space to reorganise or attract fresh investment without the pressure of creditor enforcement. The statutory architecture for this moratorium was added to IA 1986 by the Corporate Insolvency and Governance Act 2020 ( CIGA 2020), expedited in response to the coronavirus pandemic. An insolvency practitioner acts as ‘monitor’, supervising compliance, while the directors continue to manage day-to-day operations, albeit within...

This Practice Note This Practice Note outlines the key legal issues an employer should weigh up where an employee, engaged by and working for the benefit of a UK entity, performs their role remotely from outside the UK. Requests to work from home are increasing; however, asking to work remotely from a different country carries additional considerations. This Practice Note addresses some employment and tax matters that may arise from such a request, over and above any practical challenges linked to operating across multiple time zones. For employers to evaluate these points, they must be aware of any such arrangements, so the first step is to make it clear to employees that these working patterns require prior approval. Employers should consider introducing a policy that sets out when approval is needed and the process for seeking it. Various factors can influence the...

This Practice Note This Practice Note outlines the core requirements of a fair procedure (fair process or system) in the setting of an unfair dismissal claim, to assess whether a dismissal is unfair. In addressing procedural unfairness, it considers: the Acas Code of Practice on Disciplinary and Grievance Procedures (‘the Acas Code of Practice’) what amounts to disciplinary situations and grievances whether an employer is fixed with knowledge of matters unknown to the decision-taker the circumstances in which procedural defects can be cured on appeal whether re-opening a concluded disciplinary process may still be procedurally fair It also directs readers to other Practice Notes that examine the fairness of dismissal for each of the statutory reasons. Even where an employer establishes a potentially fair reason for dismissal, the outcome may still be unfair if a fair procedure has not been followed. The Acas Code of Practice will likewise apply, save for...

This Practice Note This Practice Note answers common queries on how paid annual leave interacts with sickness absence, covering accrual, taking leave during sickness, cancelling pre-booked leave when unwell, treatment of bank holidays during sickness, carry-over because of illness, payments in lieu, and methods of calculating holiday pay. It contains: brief replies to the FAQs; and signposts to fuller guidance within our core paid holiday materials, which comprise these Practice Notes: Statutory paid holiday—the right Statutory paid holiday—calculating holiday pay Statutory paid holiday—carry-over Statutory paid holiday—payment on termination Statutory paid holiday—enforcement and claims Paid holiday—contractual issues The FAQs set out the position for: all workers for holiday years starting on or before 31 March 2024 workers, other than irregular hours or part-year workers (as defined by WTR 1998, SI 1998/1833, reg 15F), for holiday years starting on or after 1...

This Practice Note Examines the provisions of the UK Corporate Governance Code ( UKCG Code) concerning the governance function of the boards of companies with equity shares listed in the commercial companies category, and outlines the separate roles and accountabilities of the chair, the senior independent director ( SID) and non‑executive directors ( NEDs). It further addresses the UKCG Code’s expectations on board composition, including the notion of independence under the Code. A non‑executive director ( NED) is not a statutory creation or requirement, yet the position is central to achieving sound corporate governance. The Companies Act 2006 ( CA 2006) draws no legal distinction between executive and non‑executive directors. NEDs therefore carry the same duties, responsibilities and potential liabilities at law as executive directors. For guidance on these legal obligations and liabilities, and the benchmarks to which all directors are held equally, see:...

General role and responsibility of a non-executive director ( NED) For a comprehensive overview of the duties and accountability of NEDs, consult Practice Note: Non-executive directors and the listed company board—corporate governance roles and responsibilities. Guidance on the rules, expectations and remit of NEDs is likewise set out in the UK Corporate Governance Code ( UKCG Code) and in the FRC Guidance on Board Effectiveness, both published by the Financial Reporting Council ( FRC). For further details on the Code itself, see Practice Note: The UK Corporate Governance Code. NEDs who perform SMFs under the SM& CR With effect from 7 March 2016, the Senior Managers and Certification Regime ( SM& CR) applied to UK banks, building societies, credit unions and Prudential Regulation Authority ( PRA)-designated investment firms. The regime then covered all dual-regulated insurers on 10 December 2018, and from 9 December 2019 it was...

The use of malus and clawback The concept that performance-based cash or share awards for executives and senior employees can be reduced (malus) or recovered (clawback) when a material adverse event occurs or later comes to light is now widely accepted and embedded in market practice. Although rooted in the financial services industry, malus and clawback are now standard elements of incentive plans operated by companies listed in the equity shares (commercial companies) category in the UK. This development flows directly from the Financial Reporting Council’s ( FRC) 2014 revisions to the UK Corporate Governance Code in response to the global financial crisis, together with the subsequent expectations of the UK’s major institutional shareholders. The Department for Business, Energy & Industrial Strategy’s ( BEIS) March 2021 consultation on modernising the UK’s audit and corporate governance regime further reinforces that deploying malus and clawback within...

For various reasons, a claimant or respondent may want or need to: amend the contents of their ET1 claim form, ET3 response form or a reply (to an employer’s counterclaim) after the original has been lodged with the tribunal; and/or add information to that already in the claim, response or reply (each commonly called a ‘pleading’) to elaborate on the pleading (often termed ‘further and better particulars’) In broad terms, when an employment tribunal decides whether to permit an amendment to a pleading, it should: identify, in writing, the amendment or amendments sought; and expressly balance the injustice and/or hardship of allowing or refusing the amendment(s), taking into account all relevant factors, including, as appropriate, those mentioned in the case of Selkent (as described in detail below) The current Employment Tribunal Procedure Rules 2024 ( ET Rules 2024), SI...

When evaluating a general damages claim, the practitioner ought initially to refer to the Judicial College Guidelines ( JCG)...

The statutory burden of proof test Eq A 2010 This Practice Note examines the two-step statutory test on the burden of proof that covers all unlawful conduct (ie discrimination) and equality of terms (ie equal pay) claims brought under the Equality Act 2010 ( Eq A 2010), but excludes criminal offences. Under Eq A 2010, the burden of proof regime establishes a two-stage framework for addressing proof. It applies to all proceedings concerning a contravention of Eq A 2010, encompassing any infringement of an equality clause or rule. The framework is not engaged in relation to proceedings for any criminal offence created by Eq A 2010. The burden of proof is likewise not engaged when deciding whether an exercise satisfies the statutory criteria for a job evaluation study for the purposes of an equal pay claim, since the burden only operates once a prima facie case on...

Where a business or asset acquisition constitutes a relevant transfer under the Transfer of Undertakings ( Protection of Employment) Regulations 2006, SI 2006/246 ( TUPE 2006), the purchaser effectively ‘stands in the seller’s place’ and inherits all rights and liabilities in respect of employees assigned to the business being transferred—see: Effect of TUPE 2006 below. As with share purchases, the default position on acquiring the business and assets of a company (an asset purchase) is the maxim caveat emptor (let the buyer beware). In the event of a relevant transfer under TUPE 2006, the seller is obliged to provide specified employee liability information ( ELI) to the buyer (see: Employee liability information ( ELI), below). Apart from that obligation, the seller owes no duty to disclose to the buyer any faults, issues or liabilities affecting the undertaking. The buyer must therefore always carry out its own...

When choosing whom to engage, employers and recruitment agencies commonly request references or conduct other screening—see Practice Note: Pre-employment checks. Such steps are generally entirely lawful. Blacklisting, however, entails deliberately compiling information about trade unionists with the aim of discriminating against them because of their union membership or activities. That form of blacklisting is unlawful under the Employment Relations Act 1999 ( Blacklists) Regulations 2010 ( Blacklisting Regulations 2010), SI 2010/493. Meaning of 'prohibited list' The statutory scheme uses the term ‘prohibited list’, and in various circumstances it is unlawful to compile, use, sell or supply one. A ‘prohibited list’ is a list that: contains details of people who: are or have been members of trade unions, or are taking part in or have taken part in trade union...