China Employment Law Network
Shanghai Business Lawyer
Employment Law in United Kingdom

The UK Employment Law is a unique mixture of statutory codification, common law courts' activism and extensive influence and mandatory adoption of the European Union harmonisation legislation. The UK courts always viewed the employment relationship as a special type of relationship with an inherent imbalance of bargaining powers, where the employer is always in a much stronger position. This led the courts to transform the UK Employment Law into a predominantly employee-centric vehicle. Nevertheless, it has the concepts of party autonomy and the freedom of contract at its heart. This and an inherent flexibility of judge-made law differentiate the UK Employment Law from a more rigid, as all countries with a civil law tradition, and, arguably, employer-centric Chinese Employment Law.

Employment Contract:
In the UK the creation and enforcement of employment contracts is very similar to the US Employment Law. There is no need for a written contract of employment. It can be created orally by a verbal offer of employment and a verbal acceptance of that offer, which means that, irregardless of a written record of employment, both the employer and the employee will be bound by the contract. Moreover, the actual terms of the contract can be express or implied. This means that the terms discussed between the two parties at the time of the contract's creation will form the express terms of the employment contract, whereas the implied terms have not been discussed but will still form part of the employment contract.

Nevertheless, Section 1 of the Employment Rights Act (1996) places a legal obligation on the UK employers to provide some particulars of the terms and conditions of employment to their employees. Employees have the right to receive this statement within 2 months from the commencement of employment. These particulars form the express terms of the employment contract and include such information as the names of the parties, employee's job title, start date, the place of work, duration of the employment, remuneration, working hours, holiday entitlements and benefits, insurance provisions, disciplinary rules, any collective agreements and others.

Therefore, even though in the UK Employment Law there is no mandatory written contract, as opposed to this requirement in the Chinese Employment Law under Article 17 of the PRC Labor Contract Law (2007), the requirement of the most basic particulars has very similar content to a written contract, the provision of which is mandatory under both laws. Thus, there are much more similarities between the UK Employment Law and the Chinese Employment Law, as opposed to the US Law that does not provide a single standard for employment contracts due to its federal legal system.

Social Insurance:
In the UK both the employer and the employees are required to make National Insurance  Contributions (NICs), which amount to 12% of their weekly earnings above £146 and 13.8% of their total weekly cash remuneration above £144. However, it is possible to contract out of these provisions if the employer provides suitable alternative insurance and pension schemes. In these situations the contributions may be lower and may vary considerably. In this regard, the UK Employment Law obliges employers to provide only pension scheme and NICs. Besides these there are no statutory requirements for the provision of non-cash benefits to employees. Nevertheless, in practice many employment contracts provide further benefits, including private medical expenses insurance, long-term disability insurance (i.e. permanent health insurance), death in service benefit, a company car (or a car allowance) and participation in commission, bonus or profit-sharing schemes. Furthermore, there is a raft of health and safety legislation that imposes very strict regimes upon employers to make sure that their employees have safe working environment. All of this is different to the Chinese Employment Law, which imposes legally binding requirements on the employers to provide a number of different insurances for the employees, which is codified under Article 2 of the the PRC Social Insurance Law (2010). However, business practices reinforce the similarities between the two systems even with the lack of express obligatory provisions in the UK Law.

Non-compete clauses:
It is common practice for the employers in the UK to include non-compete clauses or, as they are also called, restrictive covenants in the employment contracts. This is largely a common law creation in the UK Employment Law and does not have an express codification in a statute. However, the UK courts imposed a number of restrictions upon the non-compete clauses to prevent their abuse by the employers. Most importantly, the non-compete clause or any other post-contractual restriction must be reasonable and necessary to protect the legitimate interests of the employer. The courts assess reasonableness of such restrictions by looking at all aspects of the restriction, including its duration, geographical coverage and the precise nature of the prohibited activities. If it is found that any part of the restriction is too wide than the whole non-compete clause will be held void. However, in practice the seniority of the employee will be directly proportionate to the chance of the non-compete clause to be held reasonable and enforceable. But as a general rule any restrictions, such as non-compete clauses, lasting more than 12 months after termination are unlikely to be enforceable and restrictions up to 12 months should only be used for the most senior employees or those who pose the greatest threat to the business up to a maximum of 12 months following termination. Therefore, although the UK Employment Law does not have a codified legal provision for the employer's right to include non-compete clauses, the common law courts developed the concept to a great degree. It is, however, irreplaceable that Article 23(1) of the PRC Labor Contract Law (2007) affords an unquestionable legal right upon the employers in China, which reinforces the degree of certainty required by the employers.

Intellectual Property:
The UK Employment Law embraces the concepts of party autonomy and the freedom of contract. Thus, it is within the ambit of the employer and employee relationship to decide on the protection of intellectual property rights. The protection of intellectual property in the UK, as every area of the law, is greatly influenced by the common law courts, which in many respects create the law outside of statutes. They established that it is within the freedom of contract for the employer to protect the intellectual property rights and any confidential information that the employees may access. It was also established that the employer can codify in the employment contract how and when the intellectual property rights must be assigned by the employees for the employer. However, the Public Interest Disclosure Act (1997) (also known as the “Whistleblowing Act”) restricts the rights of the employer to protect its confidential information if the employee reasonably believes that the employer is involved in a criminal activity, failed to comply with the law, committed miscarriages of justice, breached health and safety regulations or undertook environmental damage. Hence, once again, it is the uncodified common law that defines the protection and assignment of intellectual property rights between the employer and the employee. This is in contrast to Article 23(1) of the PRC Labor Contract Law (2007) and related statutory provisions, which codify the process for the protection of the intellectual property rights. But this lack of codification under the UK Employment Law must not be construed as less stringent protection of intellectual property but as strict, if not even more stringent, than under the Chinese Employment Law. 

copyright@Shanghai Barry Law Firm
Add£ºSuite 701 Huanan Mansion, No.1988 Dongfang Road, Shanghai 200125 Tel£º(86)13917214000 :(86-21)58819909,