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 as an employer.

You can face unfair dismissal claims at an employment tribunal on the termination of employment contracts if you poorly drafted them or commit a breach of an 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 as an employer. 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 contract for employment.

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:

1. Name of employer and employee.

2. Start date.

3. Place of work.

4. Details about pay.

5. Holiday entitlement.

6. Pension entitlement.

7. Does an employee have to sign a contract of employment?

As there is no obligation for a written contract to be produced by an employer, 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.

1. It proves you are complying with your legal obligation as an employer to provide an employee with a written statement of particulars.

2. 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 grievance procedures or legal action.

As a rule of thumb, when making changes to contracts, you should always:

1. Consult or negotiate with employees or their representatives (for example, from a trade union or staff association).

2. Explain the reasons for the changes.

3. Listen to alternative ideas from employees.

What should be included in contracts of employment in the UK?

There are certain terms of employment contracts that are present in every contract and statement of employment. Whether they are written or verbal. These are:

1. Basic job information: key information relating to the role, including job title, department, department head, etc.

2. Pay and benefits: In an employee contract, what’s the employee's pay and benefits package? Including annual salary, raises, bonuses, holiday pay, incentives, and any additional benefits.

3. Holiday: How many days is the employee entitled to? Include information on sick pay and leave, family emergencies, unpaid leave, and flexible hours (if applicable).

4. Employment type: What is the employee’s employment status? Define whether they are: an employee, a worker, a contractor, or self-employed.

5. Employment period: Are they permanently employed, or for a set period? Include the number of hours expected to work, working from home, working outside the office, and working weekends/nights.

6. Privacy policy: If your workplace uses email, then it needs a privacy policy. Outline dos and don’ts of social media and email usage in the office.

7. Termination: Finally, what do you (as an employer), and they (as an employee) have to do to end employment? Include how much notice you require and how to serve notice.

Other terms or clauses

1. 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 contracts.

2. 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.

3. 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 a variation in terms. A legitimate reason might be that the business is struggling financially.

4. 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.

5. 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.

6. Layoff clause: employees take a period of leave, sometimes unpaid or on reduced pay. Having a layoff clause means you do not have to negotiate unpaid leave with them.

Different types of employment contracts

The UK Government lists the possible types of standard employment contracts on its website as:

1. Full-time contracts.

2. Part-time contracts.

3. Permanent contracts.

4. Fixed-term contracts.

5. Agency staff.

6. Freelancers, consultants, contractors.

7. Zero-hour contracts.

8. Flexible employment contracts.

9. Temporary employment contract.

10. Apprentice employment contract.

More information on the employment rights act can be found here:

Expert support on contracts and documentation with Croner

You can find a range of other helpful features to assist you with this matter.

Whether you're looking to create your own employment contract or outline your own employment particulars, Croner can support:

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, payslip advice, 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.

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