Guide to Employment Contracts & Statements of Employment

Introduction

An employment contract is a legal agreement between an employer and a worker (or employee). Put simply, an employee agrees to perform tasks for the employer in return for wages. A contract is formed as soon as the employment offer is accepted. By law, a verbal agreement may be sufficient in creating a contract of employment, however a written agreement is important in that it defines precisely the terms of employment and will minimise any disagreements which may arise in the future.

By law (Employment Rights Act), all employees are entitled to receive a written statement of employment from their employer within two months of starting work. Further details and an interactive tool to create a written statement are available here.

Written Statement of Employment

This statement can either consist of a single document, or can be split into separate sections, as long as all required parts are received by the employee within two months of the work start date.

The "Principal Statement" MUST contain the following details

- Name of the employer (legal name, and trading name if necessary)

- Employee's name

- Date when employment commenced

- Job title

- Address where employee will be working (or multiple addresses if in separate locations)

- Employee's pay rate (salary, how often it is paid, etc.)

- Employee's working hours

- Employee's holiday entitlement

In addition to the Principle Statement, the following details must also be provided (as a separate document, or alongside the Principle Statement information):

- Sickness, Injury and Sick Pay details

- Period of Employment

- Notice Periods

- Details of any overseas employment for a month or more

- Collective Agreements (Trade Unions, etc.)

- Pension details

- Disciplinary and Grievance Procedures (Company rules and who to complain to if necessary).

Implied Terms

In addition to terms you agree with an employee, there may also be some implied terms of employment. Some terms are enforced by law, such as the right to the National Minimum Wage and the right to paid holidays; others may apply due to any customs existing in the industry or within the employer's company. Some examples of implied terms are:

- An employer's duty to provide a safe and secure environment for its employees

- An employee's duty of honesty and care while working for the employer

- For both parties to work together in a trusting relationship

Can an Employment Contract be amended?

Typically, a contract can only be amended with the mutual consent of both parties to the agreement. Changes can be agreed:

- Verbally or in writing (preferable)

- Through collective bargaining arrangements,

- If an employee performs his/her duties in accordance with the new terms without objecting

- If the contract already allows for an employer to change an employee's duties

Termination

Either party may terminate the contract according to the terms contained within it. An employee may make a claim against an employer who fails to give the agreed notice (and vice versa). There are exceptions to the rule, where notice is not required, such as when dismissal is for gross misconduct or where constructive dismissal takes place.

Further Reading...

Business Link - Section on "Employing People", includes a tool to create an employment contract online.

BERR Employment Matters - huge amount of general information on employing staff.

Clickdocs employment contract template.