What is a Contract of Employment?

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A contract of employment binds employer and employee in law.

A contract of employment is a legally binding written agreement between employer and employee. It sets out the terms of employment.

Does a Contract of Employment have to be in writing?

The law requires that all employees be issued with the basic terms that apply to their employment in writing.  But that statement need not include all the terms of employment. You might be issued with a basic document with the basic terms, plus a longer contract or statement of general terms and conditions, or you might be given a single document called a contract of employment. Different employers have different ways of doing this.

Note that “workers” are also entitled to be issued with basic written terms from 6 April 2020.

Does a Contract of Employment have to be signed by both parties?

A contract of employment should be signed by both parties, to prove that they’ve both agreed the terms.  However if it isn’t signed, and the parties have worked under its terms for a while (the employee has done work and the employer has paid them), then it’s unlikely to be an issue that it wasn’t signed.  It’s good practice to sign it though.  The same applies if there isn’t a written contract at all.

Can a Contract of Employment be verbal?

Yes.  Although the law requires a contract of employment to be in writing, just because you haven’t got a written contract doesn’t mean you don’t have one in place. It’s more tricky to confirm the terms of a contract if it isn’t in writing though –  the terms can to an extent be cobbled together by looking at what has been done over time, but it isn’t ideal to do so and that’s why the law requires a contract of employment to be in writing.

When should I be given a Contract of Employment?

You should be given most of the basic terms that will be in your contract of employment by the start of employment. It’s good practice to give an employee the full terms before they start.

Before 6 April 2020, the deadline to give an employee their contract was two months after they started work.

What are Express terms of a Contract of Employment?

Express terms are any terms that are set out in writing in the contract.

What are Implied terms of a Contract of Employment?

There are some terms that are automatically implied into every contract of employment.  These are things like confidentiality (regarding trade secrets, or information that amounts to a trade secret), the implied duty of fidelity to the employer.  They don’t need to be set out in writing because they apply automatically.  However, most employers will include their own (wider) confidentiality provisions and require the employee to devote their full time and attention to the employer’s business. Company directors and some senior employees will owe implied fiduciary duties to the employer.

Your terms and conditions will often be found in an employee handbook.

Is a Contract of Employment one document?

Not necessarily.  Employers differ but you may have a short document with your personal basic terms, with a longer document setting out the terms and conditions that apply to all employees, or you may have a single employment contract.

Sometimes contracts of employment will be executed as a Deed if they contain terms that have to be agreed in a Deed such as intellectual property rights or a power of attorney – this will tend to be for more senior employees/directors.

What is an Office Manual?

Otherwise known as a staff handbook, or employee handbook, this will set out the policies and procedures that are used in the organisation.  It should include disciplinary and grievance procedures, family friendly policies, health related matters, performance, whistleblowing policy, ESG information, equality/EDI policies, communications/internet/email/mobile phone policy and so on.

What terms should I expect in my Contract of Employment?

The basic terms that must be set out in writing are:

  • Name of employer
  • Name of employee/worker
  • Date the employment began and date their continuous service began
  • Rate of pay/method to calculate pay
  • When you’ll be paid (weekly/monthly/other)
  • Normal working hours, normal days of work, whether they may be variable
  • Holiday entitlement and public holiday entitlement
  • Sick leave and pay entitlement
  • Any other leave entitlement and pay
  • Pension entitlement information
  • Entitlement to any other benefits
  • Notice to be given by each party
  • Job title
  • Fixed term (if applicable)
  • Probation period
  • Place of work/details of permitted places employee can work
  • Details of any collective agreements affecting the terms and conditions
  • Whether the employee/worker is required to work outside the UK for more than one month
  • Any training entitlement provided by the employer and details of training the employee must complete, and any other required training which the employer will not pay for
  • Details of disciplinary rules/procedure applicable to the employee/worker
  • Details of who to raise a grievance with

How do you vary a Contract of Employment?

Contracts will often include details of how changes can be made.  Some changes can be notified in writing, others will require consultation before being introduced.  If a significant, negative change is imposed on an employee without consultation (demotion, reduction in pay, removal of duties…) that might lead to a claim for constructive dismissal. Good changes, like a pay increase, need to be confirmed in writing, but are less likely to be objected to.

If you want to change more than 20 employees’ contracts, collective consultation will apply – speak to us for advice on this.

Need more help?

If you need more help with the subjects covered here then do reach out to our expert online employment law solicitors.  You can email us at employment@qlaw.co.uk or call 03300 020 863.

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