Employee Guide to Employment Contracts

27 March 2018

An employment contract is an agreement that has been made between an employer and an employee. This contract forms the basis of the employment relationship, setting out what the employer expects of the employee during their employment, and what the employee can expect from the employer in return.

The terms of employment contracts are often set out in writing, but they do not need to be put into writing in order to be legally binding. An employment contract can simply be an offer of employment that has been made by an employer and accepted by an employee.

What Should be Included in an Employment Contract?

An employment contract should set out the conditions of the employment, the rights of the employee and the employee’s duties and responsibilities.

The legal details contained within the contract are known as the contract terms. As soon as an employee begins working for an employer, they have accepted the terms of the contract, so it’s important for an employee to be clear on these terms before commencing the employment. The employer can provide these terms of contract either verbally or written in an offer letter, a statement, a written contract or an employee handbook.

Some contract terms may be required by law, such as the legal requirement for employers to pay employees the National Minimum Wage.

Implied Terms

There may be some terms that are not specifically included in the employment contract, but these may still be implied. Examples of implied terms include the implication that a driving licence will be required for a driving job, or the implication that the employee should not steal from their employer.

Written Statement of Employment

An employer must give the employee a ‘written statement of employment particulars’. While this isn’t an employment contract, it will set out the main conditions of the employment. The written statement needs to be given to the employee within 2 months of the employment starting.

The written statement can comprise more than one document, and these documents can be given to the employee at different times. In these circumstances, one of the documents (the ‘principle statement’) must include the following information as a minimum:

  • The name of the employer
  • The employee’s name, their job title / job description and their employment start date (if a previous job counts towards continuous employment, then the start date of this also needs to be included)
  • How much the employee will be paid and when this will be paid to them
  • Hours of work and details of whether the employee will be expected to work nights, Sundays or overtime
  • The employee’s holiday entitlement, with clarification as to whether this includes bank holidays
  • The location that the employee will be working in, and details of whether they may be required to relocate (if an employee works across different locations, details of these locations should be included as well as the employer’s address).

In addition to the contents of the principle statement, the complete written statement must also provide details of:

  • Notice periods
  • Rules relating to sickness or injury and sick pay
  • Pensions
  • If the employment is temporary, how long the employment is expected to last
  • If the employee is employed on a fixed-term contract, the end date of that contract
  • Any collective agreements which directly affect the employment.

In England and Wales, the written statement of employment does not need to provide details of grievance, disciplinary and dismissal procedures. However, it does need to include details of who to speak to about a grievance, how to complain about how a grievance has been dealt with, and how to make a complaint about disciplinary action or a decision that has been made regarding dismissal.

Can the Terms of an Employment Contract Be Changed?

The terms of your employment can only be changed with mutual agreement. This can either be agreed between you and your employer directly or by collective agreement, such as a negotiation between your employer and a trade union, acting on behalf of employees.

Reasons for the terms of your employment changing might include your employer wanting to change your working hours or your location, or employees negotiating better pay.

If any terms are changing that have been set out in your written statement of employment, the statement must be updated by your employer and given to you within a month of the changes being made.

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