Key Terms to Include in Your Employment Contract in England and Wales

When you employ staff, you will have some form of employment contract with each employee, whether written or verbal. This employment contract is a legally binding agreement between you and your employee, creating a relationship between you. Importantly, you must legally include key terms in your employee’s contract. There are also key terms that are useful to include but that the law does not require. Ensuring that your employee’s employment contract is clear and contains the key terms can reduce the likelihood of a dispute between you and your employee and avoid you being taken to an employment tribunal.

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 which are found more widely in employment law.

Implied Terms

These are 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;
• 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 which 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.

Written Terms That Are Helpful to Include in an Employment Contract

Whilst 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 which may affect your business. 

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.

If you need help with understanding the key terms to include in your employee’s employment contract 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. So, call us today on 0808 196 8584 or visit our membership page.

Frequently Asked Questions