An employment contract is the legal form of the relationship between employee and employer. There is no strict requirement that the contract should be in writing, and it does not have to take the form of a long, complicated legal document.
However, in the UK, it is required for employers to provide a written statement of employment within the first two months, summarising the main terms of their employment, such as pay and working hours.
This document is often referred to as the ’employment contract’. But by law, the employment contract is broader than just these written terms. An employment contract is made up of:
- specific terms agreed in writing (‘express terms’), such as the employee’s pay and working hours
- terms that are part of employment law (‘statutory terms’)
- terms too obvious to be written (‘implied terms’) – it can still be a good idea to put these in writing, so everyone’s clear about their rights and responsibilities terms put into the contract from other sources (‘incorporated terms’) such as a staff handbook or an agreement affecting many employees
The Basics of an Employment Contract
Every contract should strive to be as bespoke as possible and will depend on the nature of the business and the role in question. Ensuring clarity and a high degree of satisfaction for employees and employers alike is the key to long-term stability in an employment relationship.
There are four key areas that an employment contract should cover: conditions of employment, rights, responsibilities and duties.
These areas, as well as any additional clauses in the contract that serves as the basis for employment, are called “terms” and must be followed by the relevant party. Failure to respect contract terms can lead to a breach of contract.
CONTRACT TERMS
By law, an employment contract must contain the following ‘express terms’:
- Name and address of employer and employee
- Start date
- Job title or description of work
- Pay – how much and how often
- Hours of work
- Holiday entitlement
- Place of work
- Working abroad requirement (if applicable)
- When the contract is expected to end
- Probation period (if applicable)
- Notice period
- Obligatory training
- Sickness pay and procedures
- Other paid leave (for example, maternity leave and paternity leave)
- Pension arrangements
- Disciplinary and grievance procedures
- Collective Agreements
Beyond these general definitions of duties and responsibilities, there are many contract terms that are often included despite not being strictly necessary.
Some examples are confidentiality and intellectual property protection clauses, compliance with remote working policy, flexibility, monitoring or dismissal without notice.
IMPLIED TERMS
Implied terms are the terms that are deemed to be in the contract between employer and employee whether written down or not.
Common examples include the right to a safe and secure working environment, the right to paid holiday, the prohibition of revealing trade secrets, and the probation of stealing from the employer. Terms can also be implied from company practice, like in the case of seasonal bonuses.
The best way to prevent implied terms from operating in an unexpected way to your detriment is to ensure the contract is drafted clearly and covers as much ground as is necessary.
How can we help?
Employment contracts are vital to have motivated and productive employees, to protect your business from the inside and ultimately for the growth and development of your company as they outline the relationships within your business.
We advise our clients on the best legal structure and terms for each working relationship, whether for interns and volunteers, independent contractors and consultants, part-time and full-time employees, or directors and advisors. If you need legal advice or need a hand with your employment contracts, book a call with our legal team here.
Our legal commentary is not intended to be a comprehensive review of all developments in the law and practice. Please seek legal advice before applying it to specific issues or transactions.
