Why Employment Contracts are so important for farming businesses

The lack of clearly defined employment contracts is a huge issue within the farming industry, especially for long-term workers hired through verbal agreements many years ago. The problem with verbal contracts is that employees are faced with a lack of clarity in terms of their employment status which is likely to cause issues and disagreements with their employer further on down the line.

The Employment Rights Act 1996 requires that employers provide a written statement detailing certain terms of employment no later than two months after the start of their employment. The Ministry of Justice (MOJ) has made it harder than ever for businesses to ignore this rule and conceal a poor employment industry with their easily accessible database. 

Defining employment status

Despite the clear rulings laid out in The Employment Rights Act 1996, many farm businesses still are not complying with employment law. This is likely due to the nature of the industry relying heavily on self-employed staff, casual workers, seasonal staff, contractors and subcontractors.
While casual workers wand self-employed contractors do not enjoy the same rights, benefits and protections of employees, there’s often a fine line to what determines a contractor or an employee. Farmers need to ensure that they are clear about the employment status of all their employees and workers to avoid getting hit by unexpected tax bills and employment related liability cases further down the line.

Many rural workers can be caught out if they are verbally promised certain terms of their employment contract, without them being acknowledged in a legal document. To avoid this, it’s essential that farm businesses are aware of which types of workers count as employees and which do not, in order to define their employment status and subsequent rights.

Change of status

Following the 2017 ruling that Uber drivers are to be classified as workers of Uber and entitled to the benefits thereof, it seems that contractors could increasingly be classified as employees in near future. Could this set a precedent in the future for any company using a temporary workforce, including agriculture? If so, this could have serious implications on farming businesses, with the requirement to draw up contracts and establish their new legal rights as recognised workers. Not only is this necessary from a legal perspective, but it’s also essential for clarity on both sides in order to stay compliant and avoid potential disputes.

Knowing their employees 

Employers are duty-bound to verify the identity of their employees and whether they have the right to live/work in the UK prior to the commencement of employment. As many temporary farm workers in the UK are non-nationals, this pre-screening process is particularly important in the farming industry. Farm employers who fail to do this could face imprisonment for up to 5 years.

Rural Protect claims examples

Claim 1: A claim was pursued against a director of the insured for unfair dismissal, age discrimination, holiday pay and breach of the NMW. The insured’s position was that the claimant was a self-employed contractor and was unable to pursue the claims, in addition to claiming outside of the correct time frame.
Conclusion: The claims were dismissed by the tribunal at a hearing on 1 June 2018. The insured instructed their solicitors to act and rradar acted in a claims handling capacity.

Claim 2: An employee worked on the insured’s farm and handed in his resignation on 15 September 2017 stating that he had not been paid the minimum wage; he was only paid around £80 per week for an 80-hour working week. Additionally, he had never been given any pay for annual leave in the 30 years he had worked for the insured. Lastly, he claimed he was verbally and mentally abused.
Conclusion: The insured is now claiming unlawful deduction of wages and constructive dismissal.

Advice for farmers… 

In order to protect farming businesses and improve their employment practices, ensure they seek professional advice if they are unsure of the employment status of their staff. For employees, every contract should be set out in writing in order to clarify the terms for both parties. Yet, even if a contract is not required, it can be helpful to clarify these in a letter nonetheless. It is also important that business owners pay close attention to related employment issues, including record keeping, holiday and sickness pay and working time regulation (WTR).