Summary
- Employment contracts are legally binding agreements that set out the rights and obligations of both employers and employees from day one.
- Employers must provide a written statement of employment particulars to all employees and workers who started on or after 6 April 2020, with the principal statement provided on or before the start date and the wider written statement within two months.
- Common drafting errors – such as outdated templates, unenforceable restrictive covenants, and omitting variable pay details – can create legal risk and disputes.
- This article is a plain-English guide to employment contract requirements for business owners operating in England and Wales, produced by LegalVision, a commercial law firm.
- LegalVision specialises in advising clients on employment law, including the drafting and review of employment contracts.
Tips for Businesses
Ensure contracts are issued on or before an employee’s start date. Review templates regularly to reflect current law. Include clear notice periods, variable pay terms, and any probationary conditions. Where roles change, update contracts or issue a side letter promptly. Seek legal input before including restrictive covenants.
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Employment contracts form the foundation of the relationship between you and your staff. Whether written or verbal, these legally binding agreements set out the rights and obligations of both parties and help prevent misunderstandings that could lead to disputes or employment tribunal claims. The law requires employers to provide detailed written information to employees and workers from day one of their employment. Understanding what must be included in your employment contracts- and what should be included as good practice, is essential for compliance and effective workforce management.
This article will explain the key terms in an employment contract and some others you may wish to include.
What Types of Terms Should You Include in an Employment Contract?
Ordinarily, an employment contract consists of the following types of terms.
Express Terms
These are agreed upon in writing and are specific to the employee’s job, such as the pay rate and the working hours.
Statutory Terms
Statutory terms are those that are found more widely in employment law.
Implied Terms
These are generally obvious terms and are not required to be stated in writing, such as being polite to customers. They could also be custom and practice, such as things that tend to be known as good practice within your industry.
Incorporated Terms
These are terms that are placed elsewhere but are part of the employment contract. For example, those in the staff handbook.
Written Terms Which You Must Include in Your Employment Contract
Your employees and any workers who started work on 6 April 2020 or after are legally entitled to written terms.
Written terms are formally called a ‘written statement of employment particulars’. This is not the entire employment contract but just one part of it. These summarise the main terms of the employees’ employment such as their working hours and their pay rate. Everything contained within them must be legally correct.
Several elements make up a written statement of employment particulars.
1. The Principal Statement
The written terms contain a principal statement that should detail:
- your name and address as the employer;
- the name of your employee or worker;
- the start date of their employment, including whether any previous service counts towards this;
- the title of the job or a description of it;
- their place of work. This may be a local area rather than a specific address if you intend your business to grow;
- their pay and working hours;
- the specifics of their holiday leave and pay, as well as how this is worked out in case they leave the job;
- the specifics of sick leave and pay, as well as any other paid leave they are entitled to or where to find this information;
- any additional benefits they are entitled to, including those they are legally entitled to;
- the length of the employment and what the notice period is for both you and your employee;
- the length and conditions of any probationary period;
- any terms applying to any overseas work; and
- any mandatory training.
2. The Wider Written Statement
This contains the terms that you do not need to provide immediately.
You must include these other written terms in your employee’s employment contract. However, you should provide them within two months of the employee starting their employment. These are termed instalments.
Terms that can be provided later but must be included are:
- arrangements about pensions or where to find this information;
- ‘collective arrangements’, which are terms and conditions that apply to other employees as well;
- arrangements about training, which is not mandatory, or where to find this information; and
- disciplinary and grievance procedures, as well as any disciplinary rules.
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Written Terms That Are Helpful to Include in an Employment Contract
While there are written terms that must by law be provided to an employee as part of their employment contract, other pieces of information are helpful to provide in writing. By doing so, you and your employee should be clear about your responsibilities and your rights. These can include:
- what the job offer is;
- the method of paying the employee; and
- what you expect of your employee regarding standards and the consequences of not meeting these.
You may also decide to include restrictive covenants in your employment contract. These restrict your employee when they leave your employment from specific actions that may affect your business.
Learn how to manage employment disputes and protect your business from legal action.
Common Mistakes to Avoid in Employment Contracts
When drafting employment contracts, employers often make mistakes that can lead to legal complications. Common errors include:
- using outdated templates that do not reflect current legal requirements;
- failing to specify the correct notice periods or making them unclear can cause disputes when employment ends;
- including unenforceable restrictive covenants that are too broad or not reasonably necessary to protect legitimate business interests;
- omitting details about variable pay, such as commission, bonuses, or overtime rates;
- not updating contracts (or issuing side letters) when an employee’s role, hours, or pay changes; and
- copying contracts from other jurisdictions, such as Scotland or Northern Ireland, which have different employment laws.
Taking care to avoid these mistakes will help ensure your employment contracts are legally compliant and fit for purpose.
Key Takeaways
Employment contracts are an essential part of employing staff. They make clear what your employees’ roles are, what their responsibilities and rights are, and clarify what is expected of them. There are key terms that are required by law and in writing as part of employment contracts, such as the written particulars of an employment contract. In addition to binding terms being required, there are legal timeframes within which to provide these. You may also decide to include other key terms in an employment contract that are not required by law.
LegalVision provides ongoing legal support for businesses through our fixed-fee legal membership. Our experienced employment lawyers help businesses manage contracts, employment law, disputes, intellectual property, and more, with unlimited access to specialist lawyers for a fixed monthly fee. To learn more about LegalVision’s legal membership, call 0808 196 8584 or visit our membership page.
Frequently Asked Questions
What does the written statement of particulars as part of an employment contract consist of, and when do I have to provide them to my employees?
The written statement of particulars contains a principle statement that must be provided to your employees before or when they start working for you. It also contains a more expansive written statement that needs to be given to your employee within two months of starting work with you.
Is an employment contract always in writing?
An employment contract can be verbal or written. However, part of what constitutes an employment contract is a written statement of particulars that must be provided in writing.
Can an employer change employment contract terms?
Yes, but only with the employee’s agreement. Unilateral changes can constitute a breach of contract.
What are restrictive covenants?
These clauses prevent employees from taking certain actions after leaving, such as poaching clients or joining competitors.
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