The different types of employment contracts in the UK cater to a variety of business needs and working relationships.
Depending on the nature of the work contract, there will be different terms and conditions to understand. Understanding the rights and legal protections of different work contract types is vital to help make informed career decisions
Our guide takes a look at the different types of employment contract along with their advantages and disadvantages.
What’s an Employment Contract?
An employment contract is a legally binding document signed between employer and employee, and remains in place until changes are agreed or the employee leaves.
A proper contract of employment allows employees to understand their rights and all the employer’s expectations of them during work time. It relates to their role, hours, pay, responsibilities, and anything else necessary for a legal working relationship.
Contracts can also be verbal, however a written contract is advisable to avoid misunderstandings or legal disputes.
The Different Types of Employment Contracts
There are many different types of work contracts used within the UK employment market. They vary depending on the nature of your job and the role you are required to undertake.
A contract type will depend on things such as the hours you will be employed for and the type of employment. We take a look at the different employment contracts below.
Full Time Contracts
Full time employment contracts are used for employees who are classed as full time workers. There’s no legal definition of full time hours, but this is typically 35 or more hours per week.
This type of employment contract is the most common. It is offered to those in a permanent position and will contain income details, contracted hours and other relevant information. The contracts offer sick pay rights, holiday entitlements and other enhanced benefits.
Full time contracts offer employees a predictable income, but there can be drawbacks with inflexibility around working hours.
The main disadvantage for employers have with this type of contract is having to pay the same salary during quiet periods.
Part Time Contracts
There’s no legal definition of the numer of hours involved in a part time work contract. Anything less than 35 hours per week may be defined as such by employers.
Employees on this type of contract usually still have a permanent position within their place of work. Part time workers rights mean they must be treated on an equal basis to their full time colleagues.
Part time contracts hold many advantages for both employer and employee. For employers, it can often be more economical to fill positions with part time staff. It proves less of a headache with holidays and sickness. For the employee, it allows more flexibility and better work and life balance.
See Also: How many hours are full time & part time work contracts?
Self Employment Contract
Some staff might be hired but are classed as self employed in which case they need a contract that reflects this. A self employment contract is set aside for contractors and freelancers.
Workers on this type of contract look after their own national insurance and tax when they complete their online assessment. This type of contract will outline how your role there will work such as pay, period of employment and other relevant information.
This can be of benefit to the employer as there is generally less admin work and red tape. For the employee, it gives them flexibility and they work on their terms to a large extent.
Fixed Term Contracts
Fixed term workers will be given the job for a limited time which is agreed upon in advance. Sometimes this might be extended if more work becomes available or the specific job isn’t finished.
This type of contract is flexible and might be adjusted as and when necessary. Sometimes this type of contract can lead to a more permanent position with the company.
Anyone on a fixed term contract will have the same rights as the other employees. The holiday entitlements will vary depending on the length of the contract.
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Temporary Contracts
Temporary contracts are used in similar situations to fixed term contracts. The main difference is that fixed term contracts usually have a specific timescale in mind.
Temporary work contracts are more flexible and might be used when the timeframe isn’t known.
These are used when the staff who are hired are not expected to become a permanent part of the team. They might be used in the instance of staff illness or bereavement leave. Employers like this type of contract as it offers a great deal of flexibility.
Individuals who take up this type of work might be studying alongside or have family commitments.
Zero Hour Contracts
A zero hours contract is sometimes referred to as a casual contract. This type has no set hours per week and workers are called in as and when they are needed.
When someone is issued with a zero hours contract, they can decline the work when they are contacted. Likewise, employers do not need to find work to do unless they have a reason to. Employers still must pay them at least the minimum wage for their age and provide them with annual leave.
Workers on zero hour contracts can work for more than one employer which gives them more flexibility. Employers must allow this which can be tricky at times when workers are in high demand.
See Also
Apprentice Agreements
When young workers begin apprenticeships, they will be issued an apprenticeship agreement. This might be in addition or instead of a contract.
This holds all the information they need to be working for the employer. It will contain details on their pay, hours, rest breaks and any important regulations to be aware of. This should be signed by both employer and apprentice.
This agreement should also state which qualification the individual is working towards and details of the employer. It should specify the start and end dates and also any training the employer will be providing.
See Also: Apprentice rights and entitlements.
Is it Illegal to Work Without a Contract?
There is no legal requirement for employers to issue a contract of employment. However, this makes can be problematic and can even void business insurance in some cases.
A contract does not need to be written to become legally binding. Often a verbal contract is enough to make things legal. When an employee accepts a job, they are agreeing to the terms of the job.
In the case of there being no written contract, employees should ensure from day one they receive a Statement of Main Terms (SMT). This form is a requirement and can replace the need for a contract as it contains much of the same information.
Any business which wishes to maintain its professional status should provide written contracts to its employees. It makes good business sense and leads no room for misunderstandings.
Commencing & Terminating Contracts of Employment
Once you have attended your job interview(s), it is usually a case of hanging tight and waiting to hear. You will usually be given an indication of time during your interview.
When you get the good news that you have been offered the job, there will usually be some formalities to handle. You may have a current job and need to hand in your notice. You will also be asked to sign a contract with your new employer. It’s best not to be rushed into this and you should be allowed to read it thoroughly first.
Once signed by both parties, it becomes legally binding. A contract may be reviewed and changed along the way but you should always be made aware of this. Should you decide to terminate the contract at some point, you should follow the company policy.
This usually requires giving a set amount of time as your notice period. A contract can also be terminated by the employer through actions such as being dismissed or being made redundant.
FAQ
Ideally, a contract should be issued before employment commences. Even those on a trial period should sign a contract.
A fixed term contract is for a specified timescale and is not permanent in the interim. However, it could lead to a permanent postion.
