Difference between an Executive Service Agreement" and an "Employment Contract"

[sarasorrento]

I would really appreciate your help. I have been offered the position of Managing Director with a company, and they have provided me with an "Executive Service Agreement". In all my previous executive positions I have been asked to sign an "Employment Contract".

Is there anything legally different between the two? I have been told by one person that a dispute based upon a "Service Agreement" can only be held in a County Court, and that I would have few rights (no redundancy, no claim for unfair dismissal etc). Whereas a dispute based on an "Employment Contract" is heard in an employment tribunal. These differences are alarming if true!!

I must say though, when I read through the "Service Agreement", it looks very much like an "Employment Contract" to me.

Am I worrying about nothing?

Sara

 

[YourLaw.co]

The question can be a difficult one and may depend on far more detail than you have given but;

The real question is 'will you be working for the company?"

As far as the Employment Tribunal is concerned there are now three kins of people - Employees - workers - and (for want of a better name) contractors.

Q1 is it a contract for service or a contract for services;
An employee is under a contract for service
The guy who cleans your windows when he decides to get round to it is contracting for services

Q2 is there a master servant relationship;
If you are required to do what they say when they say then the chances are you are an employee
If you can do what you want when you want then you could well be a contractor or consultant

 

[sarasorrento]

Yes, I would be be working for the company.

Q1: I would be an employee

Q2: Somewhere between the two - I would be MD, having strategic and operational control over the company, but responsible to shareholders.

Does this help?

Anyone else have any comments?

Sara

 

[YourLaw.co]

Given what you have said it seems clear to me that you are an employee, at least from the point of view of the Employment Tribunal.

Francis

 

[sarasorrento]

Does this mean I should be signing an executive Service Agreement or an Employment Contact.

Or doen't it matter what it is called as long as the content is correct?

Sara

 

[kulture]

To be honest, if you are to become the managing director, you should be negotiating the contract. It should not matter of it or is not an employment contract. If you want rights, redundancy or severance pay or whatever, then put them in the contract.

 

[Chris Ashdown]

I would imagine a executive service agreement would mean they can get rid of you without risk of a tribunal if you don't bring in the goods

Most directors except those promoted from within can be got rid off as and when required

May well be wrong but that's how I see it, prove you can do the job and your safe, fail and your out, focuses the mind somewhat

 

[YourLaw.co]

The short answer, based on what you have said, is that you are (or will be) an employee.

It is posible that there may be a factor that you haven't mentioned that could mean that you are a contractor but I don't think so. In particular you say that the document that you have been asked to sign looks like an employment contract. It makes no difference wether you are an MD or a floor sweeper, you are still employed and have all of the protections that any other employee has.

It makes no difference what they call the document it is a contract of employment.

 

[Chris Ashdown]

Thinking about it I guess many directors are just on a short term contract of 2-3 years which is renewed if still ok in their job, so company is only liable for the remaining part of the contract

 

[YourLaw.co]

Any ending of a contract is a dismissal, even a fixed term contract. If the dismissal is within one year then the employee can't go to the ET unless they are saying that the dismissal was for one of a number of specific reasons i.e. discrimination or pregnancy. Unless the dismissal is for a 'fair' reason, which does not include the ending of a fixed term contract, it is an unfair dismissal.

 

[YourLaw.co]

My post above is not quite right, a resignation is not a dismissal unless it is a constructive dismissal!