Creating strong employment relationship is crucial for any business. The foundation of this relationship lies in mutual trust and a clear understanding of responsibilities between employers and employees. Missteps can lead to costly disputes, but by understanding the fundamentals of employment contracts and obligations, businesses can protect themselves from tribunal claims.
Employment relationships are built on mutual obligations: the employer’s duty to pay for work performed and the employee’s duty to work diligently. Whether written or implied, the employment contract defines these obligations, serving as the backbone of the employment relationship. Key elements include:
- Written and Implied Terms: Every contract carries implied terms, such as trust, care, and fidelity, that require both parties to act in ways that uphold the relationship’s integrity. Violating these terms, for instance, by acting in ways that harm trust, can constitute a breach.
- Choosing Employment Status: When hiring, deciding if someone is an employee, worker, or self-employed is critical. Employment status affects rights, benefits, and even tax treatments, so clarity at this stage is essential.
- Legal Reality Over Contractual Form: Courts look beyond the words in a contract to the actual working relationship to determine employment status. Even a self-employed contractor might be deemed an employee based on day-to-day work arrangements.
Clear and fair contracts, accurate status designation, and adherence to implied terms help to establish trust and legal security. By prioritising these factors, businesses lay the groundwork for a positive employment relationship and minimise the risk of future disputes.
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