Once the excitement of landing your job wears off, you now have to think clearly about the contract of employment you’ll be offered. Once you accept a job offer, a contract of employment comes into effect. This can be an oral agreement or a written document.
An employment contract is imperative in both a professional capacity but also for legal reasons. Every worker in the UK needs to understand their job role, responsibilities, pay, and hours.
If your employer does not normally issue a formal contract, you are entitled by law to a written statement of your employment within two months of starting work.
What is a Contract of Employment?
A contract of employment can be either written or verbal. It is a legally binding document or agreement between employer and employee, starting on day one of a job.
Sometimes, employers will use a written statement which is still legally binding but less extensive than a full contract. A proper contract will contain all the conditions of employment, such as hours, pay, responsibilities and holiday entitlements. Anything relating to the job and its responsibilities is known as the terms of the contract.
The contract, once agreed to and signed, stays in place until the end of employment. The only time it may become void is if it is updated and terms are changed. The new terms and conditions come into effect from the date a new contract is agreed.
See Also: Job Offer Withdrawn – A look at when a contract of employment is deemed to be formed in UK employment law.
Other Contractual Information – Employee Handbooks
Other information that you should be aware of but which is often not included in a contract of employment is usually contained in your employee handbook.
A contract of employment may refer to additional terms and conditions contained within the employee handbook.
The handbook usually includes:-
- Your employer’s disciplinary, dismissal, and grievance procedures.
- How injury is handled.
- How sick leave and sick pay is handled.
- What pension scheme arrangements may be available.
- Workplace policies and procedures which you must adhere to.
Before you sign your contract of employment, check the handbook to ensure you understand these extra elements of your employment. If you’ve never seen a contract of employment before it’s a good idea to familarise yourself with the usual layout.
You can read an overview of contracts of employment and how they are structured on the ACAS website.
Different Types of Employment Contracts
Employment contracts can vary depending on the age of the employee, the job they are hired for how many hours they will be doing.
It is essential to understand your contract type and to be aware of its implications. Employers need to be clear on what they are offering employees.
Below is a list of the different contract types and what they mean for the employee.
Full and Part Time Contracts.
As an employee who is offered either a full or part time job, then your contract will reflect this. These are permanent contracts of employment.
Your contract will stipulate the terms of your employment. This means details such as hours, holiday and sick pay, breaks, and any expected overtime will be clearly laid out.
Employees must read their contracts carefully before agreeing to the terms.
Fixed Term Contracts
A fixed term contract is in place for an agreed length of time, or until a set task is completed. They are terminated once the task or timeframe has been completed.
All parties will have agreed to this when the contract was signed. Employees under fixed term contracts will have all the same rights and entitlements as permanent staff.
Sometimes, a fixed term contract might be renewed if the job is taking longer than expected.
Agency Staff Contracts
Agency staff contracts are made between an employment agency and employer. It is an arrangement to allow employers to cover short term staffing issues or execute projects requiring specific skillsets.
This type of contract means the employer pays the agency all wages, SSP, and NI Contributions for the staff member.
After 12 weeks, agency staff have all the same entitlements as the permanent staff such as working time, rest periods and annual leave.
Freelance and Contractor Contracts
Freelance workers and contractors are typically either part of another company or self employed. Those in self employment may have different rights than other employees.
An example of this is not being entitled to the minimum wage. Any contract should clearly define the terms so that everyone knows where they stand.
They usually handle their own National Insurance contributions and tax when they complete the annual self assessment.
Zero Hour Contracts
Zero hours contracts are employment agreements where the employee is not guaranteed a minimum number of working hours per week.
Employers sometimes use these when they need extra staff on an as and when basis. However, they are increasingly used as a default by some businesses for long term staff.
Zero hour contract employees have the same statutory employment rights as permanent members of staff. This includes holiday pay, sick pay, and maternity leave.
See Also:Different types of employment contract.
What’s in an Employment Contract?
An employment contract should contain the terms and conditions of the job an employee is being engaged to perform.
What a contract looks like and what is detailed within it can differ from job to job. Those in high end jobs will likely have a comprehensive agreement with a lot of reading to do. Others may have a very concise contract.
Here’s a list of the things you should look for and understand within your contract of employment:-
- Personal details
- Employer details
- Title of contract.
- Job description
- Job Expectations
- Salary details
- Overtime Rules
- Place of work
- Contracted Hours
- Details of Sick pay entitlements.
- Holiday pay and entitlements.
- Expected behaviours in the workplace.
- Details of any company pensions or bonus schemes.
- Details of any restrictive covenants.
- Break entitlements
- Maternity or paternity rights.
- Employer duty of care policy.
- Date employment will begin.
- Agreed notice period.
- Any additional clauses such as accepting client gifts.
- Details of the review date.
Some of this information may need further detail. If you will be working at different offices for instance, ensure this is stated in your contract.
If your employer will allow you to work from home for a percentage of your working week, this should be clearly stated as well.
Read your contract thoroughly before signing. If there’s anything you are unsure or unhappy about, you can negotiate with your employer before signing. Remember, a contract is a two way document and it can be altered to suit both parties.
Employers cannot add any terms or clauses that go against UK employment laws. This includes statutory employment rights like minimum wage, SSP, holiday entitlements, or maternity leave.
Understanding Contract Terms and Conditions
It is common when dealing with contracts for employees to come across some jargon they may not understand.
In the world of employment law, sometimes HR uses language that staff are not too familiar with such as; express terms, implied terms and statutory terms.
Express terms refer to all the specifics included in the contract that the employee should be aware of.
This includes all aspects of salary, how they will be paid and how often and things such as holiday and sickness rights. These will be written down clearly for the employee to read and agree to and should leave no room for interpretation.
There are some things a contract doesn’t need to include as this should already be obvious to all parties.
These are known as implied terms and can encompass things such as standards of behaviour expected in the workplace.
For example, there’s an expectation that no one will steal from the workplace. This is essentially an unwritten rule which if broken would constitute gross misconduct.
Anything that forms part of UK employment laws is referred to as the statutory terms of the contract.
This is where it is essential to check that nothing breaches the law such as pay entitlements and the right to rest breaks.
Workers should ensure that they receive the correct UK minimum wage for their age.
About Custom and Practice
Custom and practice is a term in employment law which refers to long term work arrangements, procedures, or practices which aren’t written in a contract.
Even if they aren’t included in the terms and conditions of an employment contract, they may be legally enforceable.
Examples of contract terms which may be enforceable under custom and practice rules include:-
- Bonus or commission schemes.
- Pay rises based on length of service.
- Paid time off for certain holidays or events.
- Leaving early on a Friday.
If a practice such as leaving early on a Friday was widely understood to be well established arrangement, and an employee was disciplined for doing so, they could be able to argue the right to leave early formed part of their employment contract.
Restrictive Employment Contract Terms
Restrictive employment contract terms are clauses which limit some aspects of an employee’s work related activity. This can mean when the employee is employed with the company and after they leave.
This can be a grey area for both employers and employees. Even when such restrictive covenants are in place. they aren’t always enforceable.
They are normally in place to protect the business and its data, but they cannot unreasonably disadvantage the employee.
A few examples of restrictive covenants include:-
- Once an employee leaves they cannot contact customers for an agreed length of time.
- A clause to stop you from working for a competitor for a set amount of time.
- Being forbidden to poachemployees to start a new business.
When You Don’t Have an Employment Contract
An employment contract can be either written or verbal. Some employers work on the implied terms system where the conditions are obvious.
However, in terms of keeping everyone in the loop, it is far more professional to have a contract. You can approach your employer and ask for one to be drafted.
Instead of a contract, some employers opt for a written statement instead. This will be a shorter document with all the necessary information such as the pay structure. This will be less detailed than a full contract but with enough information to cover the necessary terms and conditions.
Terminating an Employment Contract
A contract is legally binding up until the day employment ends. In some cases, it may go beyond this point if there are restrictive covenants in place.
A contract may be terminated using a few different methods. Either party can terminate a contract as long as the correct notice period is honoured.
An employee may be dismissed by an employer for a variety of reasons. It might be due to poor performance, too many warnings, a change of staff structure or something else.
The contract will detail the procedure needed for giving notice and anything else that is relevant to the dismissal.
There will be a set of procedures to follow in the event of an employee resigning from their job. These should be laid out in the contract or employee handbook.
Someone might resign to take on a promotion, a job with more money or to pursue a new career entirely.
Redundancy occurs when an employer needs to cut back on staff numbers for financial reasons, or due to business restructuring.
There are strict rules around employee rights when redundancies are being considered. This includes a consultation period, a financial settlement package, and paid time off to attend job interviews.
Changing Your Contract of Employment
If your employer wants to change your employment contract and alter the working relationship you have agreed to, they must first obtain written permission from you.
This applies to whatever type of contract you have including written or oral. If you are not consulted before changes are made, you may be able to sue for breach of contract.
Any changes that you agree to must be backed up with a written statement within one month of the changes taking place. You can read more about changing your contract of employment on the ACAS website.
You contract of employment should clearly set out your hours of work. These are governed by the Working Time Regulations.
Your employer has a legal responsibility to ensure that you:
- Don’t work more than 48 hours a week within any 17 week period. Some workers will need to work longer hours. If this applies to you, you must have this agreement in writing with your employer, who must also allow you to bring that agreement to an end if you need or want to.
- Have 11 hours of rest between each working day.
- Are allowed 24 hours rest in any given seven days – usually taken as the weekend.
- Get a break of at least 20 minutes if you work longer than six hours.
- Have four weeks paid leave per year.
- You only work eight hours in 24 if you are a night worker.
Don’t forget that you and your employer can agree that you opt out of weekly working time limits. You both must agree to this.
- More information about the Work Time Regulations is in our specialist guide which will help you understand this legislation.
- Can my employer stop me from having a second job? Our article looks and how and why you might not be able to do that side gig.
It is not a legal requirement to sign a contract of employment. It can be agreed upon verbally or through implied terms. Sometimes, starting the job is enough to show you agree to the terms laid out in the contract or written statement. For clarity reasons though, it should be signed by the employer and employee.
You can request another copy of your contract if your employer has lost the original one. It should then be signed again by all parties.
A contract of employment can be verbal and not written. This isn’t necessarily advisable though as it leaves a lot of things up in the air. It is far more professional to have it written down so that employees can refer to it when required.