Business Law: Employment Contracts, Terms, and Employee vs Contractor

This essay delves into the intricacies of business law concerning employment contracts. It begins by defining employment contracts and emphasizing their legal enforceability, mirroring ordinary contracts. The essay outlines the five essential elements of a valid employment contract: offer, acceptance, consideration (remuneration), intention to create legal relations, and capacity to contract, supported by relevant case law such as Smith v Hughes, Powell v Lee, Currie v Misa, Rose & Frank Co v JR Crompton & Bros Ltd, and Simpkins v Pays. The essay further details the crucial contents of an employment contract, including the parties' details, job descriptions, place of work, working hours, salary, and other conditions. It distinguishes between conditions and warranties within the contract terms. Finally, the essay clarifies the distinction between employees and contractors, highlighting the threefold test from Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance and referencing recent cases involving Uber drivers and Deliveroo riders to illustrate the application of these principles. The essay concludes by emphasizing the importance of understanding employment law for both employers and employees.

Running head: BUSINESS LAW
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1. Employment needs to be created with an employment contract. An employment
contract depicts a contract that has been formed between the employer and the
employee defining the terms and conditions relating to the employment. An
employment contract has the same consequences as well as legal enforceability as
that of an ordinary contract and the same needs to contain all the essential elements
of a contract. Firstly, the employment contract needs to be initiated by an offer
made by the employer to the employee offering the employed opportunity to
render services against a payment being made to the employee for the same. This
construes the first element of the contract as can be discussed with the case of
Smith v Hughes (1871) LR 6 QB 597. Secondly, the employee needs to accept the
offer for employment as made by the employer agreeing to provide services on the
given terms and conditions of the offer initiated by the employer. This construes
the second element of the contract that can be discussed with the case of Powell v
Lee (1908) 99 L.T. 284. Thirdly, the employment contract needs to specify a
remuneration which the employer is offering to the employee against the services
he has been rendering to the employer as a consideration. This constitutes the third
element of the contract that can be illustrated with the case of Currie v Misa
(1875) LR 10 Ex 893. Fourthly, the employment contract is required to be backed
by an intention of the employee as well as the employer to bind themselves legally
to the employment contract and any breach of the same is intended to result in
legal actions being taken by the aggrieved. This satisfies the fourth element of
contract that can be last fitted with a case of Rose & Frank Co v JR Crompton &
Bros Ltd [1924] UKHL 2. Lastly, the parties to the employment contract need to
have the capacity to enter into a contract. This constitutes the fifth element of the
contract and can be illustrated with the case of Simpkins v Pays [1955] 1 WLR

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975. The employment contract needs to be created in accordance with the laws of
contract and all the essential elements of a contract needs to be present in the
employment contract.
2. There are certain contents that an employment contract needs to contain specifying
the terms, conditions as well as the warranties that forms the subject matter of the
employment contract. The employment contract needs to contain the names of the
parties to the contract. For instance, it needs to contain the full detail of the
organisation of the employer as well as the full name as well as address of the
employee. It also contains the date of joining of the employee. The employment
contract needs to contain all the descriptions as well as the designation that the
employment has been offering towards the employee. There needs to be a
specification regarding the place of work that the employee needs to be provided
with. The employment contract should also mention the hours for which the
employee is supposed to work under the contract of the employment. It also needs
to contain the details regarding the salary, probationary period, assessment,
deductions, expenses, holidays, sick leave and any other conditions relating to the
employment (De Cuyper & Isaksson, 2017). The terms of contract can be
categorised into two kinds of terms namely conditions and warranties. Condition
implies the terms that forms the basis of the contract and the whole contract is in
operable in the absence of such a condition. For instance the consideration that
would be paid to the employee as a remuneration against the services he has been
rendering to the employer will be treated as a condition that is inserted in the
employment contract and forms the basis of the employment. Warranty, on the
other hand, depicts or term of the contract that has been provided as a promise. It
does not form the basis of the contract and the breach of the same will not

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terminate the contract. However, the same has the effect of conferring a right upon
the aggrieved to claim damages for such a breach. For instance, the employer
needs to provide a humane working condition to the employee which is a condition
that will be included in employment contract (Freedland et al. 2016).
3. The employee and the contractors both are required to work for an employer.
However, that two are not to be construed as the same for the purpose of
employment. As both the employee as well as contractors are remunerated for their
work done towards the employer, it is very common to confuse between these two.
However, the distinction of the same is very important for the purpose of
application of the employment laws. The first distinction provided by the between
an employee and contractor was in the case of Ready Mixed Concrete (South
East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497. This
case provides for a threefold test for the purpose of determining a person to be
either an employee or a contractor. Firstly, for the purpose of rendering a person as
an employee it needs to be proved that he has been awarded with the remuneration
for the rendering of his skill and services. However, a contractor may higher other
people to perform the work he has been contacted for. Secondly, it needs to be
establish that the employer is conferred with the sole control over the work
performed by employee. On the other hand, the work performed by the contractor
is not to be controlled by the employer. Thirdly, it needs to be proved that there is a
contract of services, which has been complied with by the employer. Again,
contractors need to comply with the contract that the employer has created to
confer the task. In a recent case, before the London Employment Tribunal,
involving the Uber drivers, it has been decided by the tribunal that, Uber drivers
are to be treated as employees as the sole control over the work of the Uber drivers

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lies with the company and they have been working under the contract of services,
which needs to be agreed to be carried out against the payment of remuneration
(www.bbc.com, 2019). This decision of the London Employment Tribunal has
been followed in the case of the Deliveroo riders (www.bbc.com, 2019).

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Reference
Currie v Misa (1875) LR 10 Ex 893
De Cuyper, N., & Isaksson, K. (2017). Employment contracts and well-being among
European workers. Routledge.
Freedland, M., Bogg, A., Cabrelli, D., Collins, H., Countouris, N., Davies, A. C. L. & Prassl,
J. (Eds.). (2016). The contract of employment. Oxford University Press.
Powell v Lee (1908) 99 L.T. 284
Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance
[1968] 2 QB 497
Rose & Frank Co v JR Crompton & Bros Ltd [1924] UKHL 2
Simpkins v Pays [1955] 1 WLR 975
Smith v Hughes (1871) LR 6 QB 597
www.bbc.com. (2019). Deliveroo riders seek workers' rights. Retrieved 27 July 2019, from
https://www.bbc.com/news/uk-37905425
www.bbc.com. (2019). Drivers battle Uber over worker rights. Retrieved 27 July 2019, from
https://www.bbc.com/news/business-36843386