0264 · 2.1.2Employment contracts and legal controls over employment issues

Employment contracts and their contents

0:00Cedar Café sells drinks and light meals. Its new employee expects regular hours, while the manager needs reliable help during busy periods. Clear agreement about the job helps both sides plan. By the end of this video, you will understand how employment contracts and legal controls protect employees and affect business decisions. An employer is a person or organisation that hires someone to work for them, while an employee works for an employer in return for payment.

0:23Their relationship involves responsibilities on both sides. The business needs agreed work completed, while the person doing it needs clear conditions and fair treatment. An employment contract is a legal agreement between an employer and an employee that lists their rights and responsibilities. It provides a shared reference point throughout the job. The agreement explains what each side can expect. Employment laws also establish protections that employers must follow, whatever their contracts say.

0:49The main contents include duties and responsibilities, working hours, holiday entitlement, and sick pay. Each part answers a practical question about the employment relationship. Other details may include pay, the start date and the notice period. The café shows why each main content matters. Duties and responsibilities specify the tasks an employee must perform and the obligations attached to the job. At the café, these could include preparing drinks, taking payments and cleaning the counter.

1:16Clear expectations help the manager check whether agreed work is completed. The employee also understands which tasks belong to the role. Working hours set out when and for how long an employee is expected to work. The café might specify particular shifts and explain arrangements for additional hours. This helps its manager ensure enough employees are available during busy periods. For the employee, predictable arrangements make personal commitments easier to organise.

1:40Holiday entitlement is the number of paid days off work an employee may take each year. The café contract might give fifteen days and ask for two weeks of warning, so the manager can plan cover. Sick pay is money paid to an employee who is absent from work because of illness. If the employee catches flu, the contract shows how much pay continues, so they know what financial support to expect.

2:00For employers, clear duties provide a basis for setting expectations and checking performance. A breach occurs when someone fails to meet an obligation under the agreement. The employer can refer to the contract when taking lawful action over a breach. Written terms also reduce disputes because both sides can check what was agreed. Employees gain security because agreed terms provide a reliable basis for their working relationship. Knowing their pay and conditions helps them plan spending and time away from work.

2:25Legal protection means they can take action if the employer breaks the contract. For example, a café employee refused the agreed sick pay can use the written terms to claim it.

Dismissal, discrimination and workplace safety

2:35An individual contract operates within a wider legal framework. Legal controls over employment issues are rules governing how employers treat employees. We will consider unfair dismissal, discrimination, health and safety, and the legal minimum wage. Exact requirements vary between countries, so our examples illustrate general principles. Unfair dismissal is ending an employee’s job without a fair reason or without following the required procedure. The law makes unfair dismissal illegal. Employers therefore need valid reasons and appropriate procedures when ending employment.

3:06Keeping relevant records helps a business demonstrate that its actions were fair. Fair reasons can include serious misconduct or poor performance after warnings and an opportunity to improve. Redundancy is when an employee loses their job because the job is no longer needed, through no fault of their own. It is also a fair reason, provided the business follows the required procedures. Employees gain protection against arbitrary decisions, while employers face administrative costs and possible legal claims.

3:32Discrimination is treating someone less favourably because of characteristics such as gender, race, religion, age or disability. The law makes this illegal in recruitment, pay, training and promotion. Job-related criteria give applicants and employees a fair basis for decisions. For employers, fair treatment can widen the range of suitable applicants and strengthen their reputation. Willow Hotel provides rooms and meals for guests. Its manager is choosing an employee for promotion.

3:58Comparing relevant experience and performance gives candidates a fair opportunity. The gender, age or religion of each candidate plays no part in the choice. Checking decisions and keeping records takes time, but fair procedures help the business retain capable employees. Health and safety concerns protecting employees from injury and illness at work. Employers must take appropriate steps to provide safe working conditions. Relevant measures include safe machinery, protective equipment, training, hygienic conditions and suitable breaks.

4:26Each measure addresses a practical source of harm. Forge Components makes metal parts using cutting machines. Its machine guards prevent contact with dangerous moving sections. Protective equipment reduces exposure to hazards, while training explains safe operation. Hygienic conditions reduce illness risks, and breaks help employees maintain attention. The business pays for these measures, but fewer accidents can reduce disruption and injury-related absence.

Minimum wage effects

4:51The legal minimum wage is the lowest wage per hour that an employer can legally pay. It establishes a wage floor for employees covered by the law. Those previously earning below a new minimum receive higher hourly pay. Employers must raise those wages, so their wage costs increase. Harbour Shop sells household goods and employs someone for twenty hours each week. Assume their hourly wage rises from eight dollars to a new legal minimum of ten dollars.

5:14Hours remain unchanged, and we consider wages alone. Weekly wages equal the hourly wage multiplied by weekly hours, because each hour earns the stated amount. Before the change, eight dollars multiplied by twenty gives weekly wages of one hundred and sixty dollars. After it, the employee earns two hundred dollars, because ten dollars multiplied by twenty is two hundred. Two hundred dollars minus one hundred and sixty dollars gives an increase of forty dollars per week.

5:39The employee gains that additional amount before deductions, while the business pays the same extra wage cost. The wider effect depends on how an employer responds. A business facing higher costs might raise prices, accept lower profit or recruit fewer employees. Fewer available jobs are therefore a possible consequence for people seeking work. Labour turnover is the rate at which employees leave a business and have to be replaced. Higher pay can encourage existing employees to stay, so labour turnover falls and recruitment costs drop.

6:09Across these controls, employees gain fairer treatment, safer conditions and a protected hourly income. Employers face expenditure on equipment, training, wages and administrative procedures. Breaking the law can lead to fines or other penalties, depending on the rule involved. Following the law can improve reputation and motivate employees, so labour turnover and recruitment costs both fall.

Exam skills and recap

6:30Keep the separate purposes of contracts and legal controls clear. A contract records individual rights and responsibilities, while employment law establishes rules the employer must obey. A fair dismissal needs an acceptable reason and the required procedure. When considering minimum wages, explain the direct increase in covered hourly pay separately from possible changes in recruitment. Questions on this topic can appear in both Paper One and Paper Two, each built on business information.

6:56An exam-style question could ask you to explain one benefit and one cost of health and safety controls for Forge Components. Explain means set out purposes or reasons, say why and how, supported with relevant evidence. Your answer should use the cutting machinery from the case. Machine guards reduce the risk of injuries from the cutting machinery. Fewer injuries can reduce employee absence, so production faces fewer interruptions. However, the business must pay to buy and maintain those guards.

7:23Its costs rise, so its profit falls if revenue stays the same. An employment contract is a legal agreement between an employer and an employee that lists their rights and responsibilities. Its main contents make tasks, hours, holidays and illness arrangements clear. Legal controls add protections concerning dismissal, discrimination, workplace safety and minimum pay. The legal minimum wage remains the lowest wage per hour that an employer can legally pay.

7:46Understanding the effects means tracing each rule through to employee welfare, business costs and possible benefits.