Providing your employees with a written statement is a legal requirement. At the point where your business is taking on staff you must therefore ensure that your contract of employment document is robust. As an employer, it is essential that you understand the law around employment contracts. At a basic level, your staff need to.
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Providing your employees with a written statement is a legal requirement. At the point where your business is taking on staff you must therefore ensure that your contract of employment document is robust.
As an employer, it is essential that you understand the law around employment contracts.
At a basic level, your staff need to fully comprehend what you expect from them in their role. This is exactly why contracts of employment exist.
This article explores the importance of employment contracts and comes with a free downloadable template. Managing your business can be a stressful, time-consuming experience without worrying about contract law and other employment law implications.
Avoid litigation and facing claims of unfair dismissal at an employment tribunal by making sure your employment contracts are watertight.
If you need instant, actionable advice on employment contracts and other HR issues, contact Employer Advice on 0800 470 3529.
An employment contract is a type of legal agreement that lays out your rights and responsibilities to the employee.
All employees should have a contract of employment. All of it doesn’t have to be written, but this is best practice. The contract will set out the “terms” of your agreement which include:
It is essential that you set your contracts up correctly because the contract will underpin the dynamics of your working relationship moving forwards.
Employers must ensure that they comply with employment contract law in order to avoid potential litigation. An employment contract doesn’t have to be all in one physical document for it to be recognized as legally valid.
You are, however, legally required to give all your employees with a written statement of main terms (SMT).
In accordance with UK law, a statement of main terms need to incorporate several pieces of key information. These include, but aren’t limited to:
As well as there being a legal obligation for a contract to be produced by employers in writing, there is also no legal requirement for an employee to sign anything. This applies even if you offer your employee a written contract.
Despite employment law on contracts not requiring signatories, you must provide your employees with a statement of main terms needs to be in writing, so it is best practice to have everything in writing.
Ensure your organisation has premium protection from any potential litigation arising from breach of contract scenarios.
To do this, make sure your employee signs and dates a written contract of employment (including the statement of main terms), and have it returned to you. This is for two main reasons:
You need to retain a copy of this document for your HR records and provide the employee with a copy for their own records.
As an employer you need to ensure that you provide your employees with a written statement of the main terms of their employment. Employees should receive this before or on their first day of employment. This includes any workers and agency workers.
The only time you are not required to provide a written statement is if the person is running their own business and you are their client, or if they are genuinely self-employed.
The written statement of main terms might be titled “Employment Contract” but it serves the same purpose.
A written statement should include the following information:
This isn’t an exhaustive list of requirements, get in touch with on of Employer Advice’s experts to learn more on 0800 470 3529.
An employment contract is a legally binding agreement, but that doesn’t mean it is unable to be changed. Employee contracts can be altered or have “variations”, but you cannot do so without the express permission of the employee or contractual right, i.e. mobility clause.
As a general rule, if you would like to make changes to your employment contracts you should consider the following:
Doing so will mean that you have involved your staff in a consultative manner and this will help you avoid grievances or potential legal action.
Employment contracts don’t have to be written, but it’s strongly advised to have them written down, although the statement of main terms needs to be written down. This will help prevent confusion later on down the line. Here’s a few pieces of information that should be included.
Provide your employee with key information relating to their role. This will include things like their job title, a brief description of their role, department, line manager, department head, and hours of work. You may also run a flexible working arrangement which should be detailed.
In an employment contract, your employee should be able to clearly understand their pay and benefits. This includes annual salary, raises, bonuses (i.e. Christmas bonus), holiday pay, incentives, and any additional benefits.
Your pay needs to be legal, so ensure that it meets at least the national minimum wage.
Establish your annual leave policy documents and procedure and make it clear how many days the employee is entitled to, this needs to be at least statutory minimum annual leave entitlement, including public holidays. Include information on sick pay and leave, paid leave, and flexible hours (if applicable).
Your employees rights are linked to their employment status. Your employment contracts should therefore define them as an employee.
A workers and agency workers would have a statement of engagement. And a self-employed individual wouldn’t have a statement of main terms or an employment contract.
Written employment contracts should lay out whether your new starter is permanently employed, or for a fixed term contract?
Include the number of hours they are expected to work, working from home, working outside the office, and working weekends/nights. You should also mention any probationary period or if there isn’t one, this should be stated.
Your contract needs to outline what, as employer and employee, needs to happen to end employment. You should include express terms on how much notice both parties need to give in line with statutory minimum.
As an employer, your workforce is often aligned with the industry in which you operate. For example, it is common in the hospitality and leisure sector to see zero-hours contracts to suit your business needs.
There are many different types of employment contracts.
What an employer chooses to utilise will be down to the industry standard and the needs of your organisation.
More information on the Employment Rights Act 1996 can be found here.
The main addition to an employment contract that you may want to consider is reasonable restrictive covenants.
Implied terms of the employment contract are not set out in writing or verbally but will form part of the legally binding agreement between the employer and employee.
There will always be some implied terms in employment contracts.
A variation clause is a section of an employment contract that allows you to make changes if there is a good reason. Variation would need to be reasonable i.e. mobility clause.
A mobility clause is a contractual provision that allows an employer to require an employee to move their place of work to a different reasonable location.
This move could be on either a temporary or permanent basis, such as moving office.
Maternity and other paid family friendly leave should be covered in your contract of employment.
You should explain their entitlement of 52 weeks they have available to them.
Including a layoff clause clarifies what happens if the business is temporarily unable to provide work, staff can be told not to attend. This does not have to be included but advisable. Statutory Guarantee Pay would be payable for those who are eligible.
If you are a business taking on staff and you’d like a template for your written employment contract, why not check out our free, comprehensive download.
Employer Advice has a team of dedicated HR and employment law experts who only work with employers. With over 80 years of experience in helping employers take the stress of handling their HR and employment law obligations.
Get in touch with one of the Employer Advice experts on 0800 470 3529.
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