Summary
- An employment contract is a legal agreement that sets out the rights, responsibilities and obligations between you and your employee.
- Clear and well-drafted contracts help prevent disputes by defining key terms such as pay, duties, and working conditions.
- Contracts should include essential terms and be kept up to date to reflect changes in roles or law.
- This guide explains employment contracts for UK business owners, including what they are and what they should contain in practice.
- It is prepared by LegalVision’s business lawyers, a commercial law firm that specialises in advising clients on employment contracts.
Tips for Businesses
Ensure your employment contracts clearly set out key terms such as role, pay and responsibilities. Provide written terms at the start of employment and review contracts regularly. Keep them updated to reflect changes in the law or the employee’s role to reduce the risk of disputes.
An employment contract is a legally binding agreement between you and your employee that sets out each party’s rights, duties, and responsibilities in the workplace. It forms the foundation of the employment relationship by clearly defining expectations, working arrangements, and key terms such as pay, role, and hours, helping to prevent misunderstandings and disputes. This article explains what employment contracts are, why they matter, and what key information they should include.
What are Employment Contracts?
An employment contract is a legal agreement between you and your employee. It outlines you and your employee’s rights and obligations in the workplace.
An employment contract is different from a written statement of particulars. A written statement of particulars is a legally required written document that you provide to your employee or worker. It details the main points of information about their employment with you, like their job title and description. On the other hand, the employment contract between you and your employees is broader than the written statement of particulars. It generally contains information relating to the legal obligations between you and your workers, like:
- conditions of employment;
- employment rights; and
- employment duties.
Why You Should Have Employment Contracts?
While it is a legal requirement for you to provide your employees and workers with a written statement of particulars, this only details the minimum information about their employment with you. Therefore, a statement of particulars alone may not provide you with the protection you need as an employer.
An employment contract can contain:
- express terms which are specific to the job, such as pay rates;
- statutory terms, which are terms that employment law requires;
- implied terms, which are obvious points that may not require restating; and
- incorporated terms that reference other employment documents, such as your staff handbook.
You may also want to consider clauses relating to transferring employees across jurisdictions.
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Main Points to Include in Employment Contracts
You can find some key terms to include in your employment contracts below. This is not an exhaustive list, but it will give you some pointers.
1. Parties to the Employment Contract
Your employment contract must contain both your business name and address for clarity. Additionally, your employment contract should include relevant details about your employee.
2. Start Date of Employment
The start date of the employment contract between you and your employee is significant. It is the day your employee begins to work for you, even if you do not yet have a written employment contract.
The start date is also important since it marks the day your employee will begin to accrue certain employment rights. For this reason, it is also worth including a statement to clarify that rights accrued with previous employers do not count in their new employment with you.
3. Job Role
An employment contract should contain the details of your employees’ job roles. This includes:
- their role title; and
- any details about what you require of them.
Additionally, you should transfer the details in your offer letter into the employment contract as the offer letter is part of the employment contract. In saying that, you have greater flexibility when drafting the employment contract and outlining your employee’s job role. You may find that you prefer only to detail the job title rather than a detailed description of the role, as this can allow you to give your employees additional tasks during their employment with you.
4. Place and Time of Work
You should detail where your employee should work and what hours of work you require of them. You may want to specify what hours and days your employee works or simply state the total hours per week. This can provide greater flexibility about when you want your employee to work.
At this point in the employment contract, you can also provide greater detail about varying places of work in the future and whenever you may require extra hours or varying work times for your employee.
5. Salary Details
An essential part of an employment contract is to include details about your employee’s pay. This consists of the amount you pay them and when you will pay them. You should also clarify whether the salary rate applies, for example, per hour, day, or week.
6. Notice Period
Should you or your employee wish to end the employment contract, your employment contract should contain a notice period. A notice period indicates how much notice you or your employee must give before you can terminate the employment agreement.
It is worth including key information from your grievance and disciplinary policy that states whether you can dismiss an employee without notice. For example, you may dismiss an employee without notice if they commit gross misconduct. In this instance, you may want to give examples of what actions are gross misconduct.
Key Takeaways
Your employment contracts with your employees are the basis of your employment relationship with them. As such, it is important that you understand what you should include in the employment contract. Whilst employment contracts do not have to be in writing, it is best practice to ensure that you provide written contracts to your employees to clarify your expectations in the workplace.
If you need help understanding employment contracts in England and Wales, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
An employment contract is a verbal or written binding agreement between you and your employee. The employment contract establishes both your and your employee’s rights and obligations in the employment relationship.
Some of the main points you should include in your employment contract are details about your employee’s wage, names of you and your employee, and information about notice periods.
A contract should include details such as job role, start date, working hours, place of work, salary and notice period to clearly define how the employment will operate.
They help manage staff relationships, clarify expectations and reduce the risk of disputes by setting out clear obligations and protections for both the employer and employee.
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