It’s essential that your employees fully understand what you expect from them in their role. It’s just as important they understand what you will do for them. This is why contracts of employment exist.
Providing an employment contract is a legal requirement, but not necessarily required in writing, this is a verbal employment contract. This makes the area a bit vague for both employer and employee.
Managing your business is time-consuming enough before you consider the various contracts of employment laws you need to follow.
You can face unfair dismissal claims on the termination of employment contracts if you poorly drafted them or commit a breach of employment contract.
Here, we outline what employees need from a contract of employment so you don’t have to worry in the future.
What is a contract of employment?
It's a type of contract used to assign rights and responsibilities to an employee. This makes it important to set them up correctly for your employees, as it defines your working relationship going forward.
Employment contract law
More complex topics receive coverage to help you understand the likes of fixed-term contracts and what you’ll need to do in the event of a change of employment contract.
You don’t need to present the contents of this contract as a formal written document for it to be considered legally valid.
In terms of physical documentation, employers are legally required to give all of their employees a written ‘statement of main terms’.
By law, the statement of main terms must include the following pieces of information:
- Name of employer and employee.
- Start date.
- Place of work.
- Details about pay.
- Holiday entitlement.
- Pension entitlement.
- Does an employee have to sign a contract of employment?
As there is no obligation for a written contract to be produced by you, there is also no legal requirement for an employee to sign anything. Even if you offer a written contract.
In any case, it is best practice to have the employee sign and date the contract and return it back to you. This is mainly for two main reasons.
- It proves you are complying with your legal obligation to provide an employee with a written statement of particulars.
- Clarifies what terms and conditions were agreed between the parties in case a dispute arises in the future.
You should keep a copy for your records and then provide them with a copy for their own records.
Changing an employment contract
Contracts are not set in stone and you can make changes, or ‘variations.’ However, unless there are clauses in place, you can’t do this without express permission from the employee.
If you don’t get permission, you can force a new contract on employees, although this should be a last resort and could lead to legal action.
As a rule of thumb, when making changes to employment contracts, you should always:
- Consult or negotiate with employees or their representatives (for example, from a trade union or staff association).
- Explain the reasons for changes.
- Listen to alternative ideas from employees.
What should be included in contracts of employment in the UK?
There are certain terms of the employment contracts that are present in every contract and statement of employment. Whether they are written or verbal. These are:
- Basic job information: key information relating to the role, including job title, department, department head, etc.
- Pay and benefits: What’s the employee's pay and benefits package? Including annual salary, raises, bonuses, incentives, and any additional benefits.
- Holiday: How many days is the employee entitled to? Include information on sick leave, family emergencies, unpaid leave, flexible hours (if applicable).
- Employment type: What is the employee’s employment status? Define whether they are: an employee, a worker, a contractor, self-employed.
- Employment period: Are they permanently employed, or for a set period? Include the amount of hours expected to work, working from home, working outside the office, working weekends/nights.
- Termination: Finally, what do you (as an employer), and they (as an employee) have to do to end employment? Include how much notice do you require and how to serve notice.
Other terms or clauses
- Restrictive covenants: a clause in a contract prohibiting an employee from going to work for a competitor in their next role. There are several types of restrictive covenants in employment contracts.
- Implied terms: terms of the employment contract that are not set out in writing or verbally, but will form part of the agreement between the employer and employee. There will always be some implied terms in employment contracts.
- Variation clause: a section of an employment contract that allows you to make changes if there is a good reason. Use this if you foresee variation of employment contracts. A legitimate reason might be that the business is struggling financially.
- Mobility clause: a contractual provision that on the face of it allows an employer to require an employee to move their place of work to a different location on either a temporary or permanent basis, such as moving office.
- Maternity leave clause: in your contract of employment, you should explain how a member of staff can claim the 52 weeks they have available to them.
- Lay off clause: employees take a period of leave, sometimes unpaid or on reduced pay. Having a lay off clause means you do not have to negotiate unpaid leave with them.
Different types of employment contract
The UK Government lists the possible types of standard employment contracts on its website as:
- Full-time contracts.
- Part-time employment contracts.
- Permanent employment contracts.
- Fixed-term contracts.
- Agency staff.
- Freelancers, consultants, contractors.
- Zero hour contracts.
- Flexible employment contracts.
- Temporary employment contract.
- Apprentice employment contract.
Expert support on contracts and documentation with Croner
You can find a range of other helpful features to assist you with this matter:
Our contracts and documentation services are legally binding and help your business get the best from employees.
Some guides we have included a sample contract of employment, general employment contract advice, and a break of an employment contract.
There are also insights into zero-hours contracts in the UK, which have become increasingly widespread.
To find out more about our business documentation services you can call us for immediate guidance on 01455 858 132.