Employment Contracts - The Essentials

Employment contracts are agreements between an employer and an employee which sets out their employment rights, responsibilities and duties.

As an employer, well drafted documentation can assist you in managing your workforce and afford invaluable protection for your business, by reducing the likelihood of disputes arising out of uncertainty in the employment relationship.

By law, a written statement of employment terms must be provided to an employee within two months of commencing employment. An updated written statement of terms must also be issued to reflect any subsequent change to an employee's terms and conditions within a month of any such change coming into effect.

If an employee has no written statements of terms, in the event that they bring an Employment Tribunal claim, they can make a claim for 2 or 4 weeks' gross pay for failure to provide a written contract. This is not a stand alone claim - it can only "piggy back" on another claim - but nevertheless, it is a liability which can easily be avoided.

In order to be legally compliant, the following information must be included within a written statement of employment terms:

  • Names of employer and employee
  • Job title or job description
  • Date when employment began (including date that continues employment began)
  • If the employment is not permanent, how long this is expected to continue
  • Rate of pay and when this will be paid
  • Hours of work
  • Holiday entitlement (must be at least 5.6 working weeks)
  • Place of work
  • Sick pay arrangements
  • Notice period (minimum of 1 week's notice for each full year worked, subject to a maximum of 12 weeks for 12 complete years' service)
  • Information about disciplinary and grievance procedures
  • Any collective agreements (with trade unions) that affect the employees employment terms or conditions
  • Pensions and pension scheme

It is also sensible to include further information in the employment contract to protect the interests of the business; for example, a confidentiality clause, pay in lieu of notice clause, layoff provisions, post-termination restrictions and a deduction from remuneration clause. These are particularly relevant in the current economic climate.

A number of important legislative changes have taken place over the last few years, including the introduction of the Equality Act 2010 and changes to the law on retirement. This means that even if you do have employment contracts in place, they may be in need of update.

Our team of employment solicitors would be happy to conduct an initial review of your existing documentation free of charge, and provide details of any amendments that you may wish to consider. Please contact one of our Employment Lawyers or call Forbes Solicitors on freephone 0800 689 0831 or contact us by email for further information.

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