Managing Contracts of Employment - Introduction and Overview

Written by Andrew Johnson, Founder and CEO HRGuide - Sat 1st Jun 2024

Introduction

A contract of employment is a legally binding agreement between employer and employee which is formed when an employee agrees to work for an employer in return for pay. You are required by law to give a written statement detailing employees’ particulars of employment within two months of their employment.

The moment an applicant unconditionally accepts your offer of a job, a contract of employment comes into existence. The terms of the contract can be oral, written, implied or a mixture of all three. Even if you do not issue a written contract, you are under a legal duty to provide most employees with a written statement of main employment particulars within two months of the start of their employment with you. The written statement is not itself the contract but it can provide evidence of the terms and conditions of employment between you and the employee if there is a dispute later on.

Implied terms of an employment contract

As well as the terms you actually agree with your employee, an employment contract can include implied terms.

Implied terms include:

  • the duty of the employer to provide a secure, safe and healthy environment for employees
  • the employee’s duty of honesty and loyal service
  • an implied duty of mutual trust and confidence between you and your employees that
  • neither side will act in such a way as to breach that trust
  • a term too obvious to need stating, eg that your employee will not steal from you
  • any terms that are necessary to make the contract workable, eg that someone employed
  • as a driver will have a valid driving licence

Some terms and conditions, e.g. entitlement to enhanced redundancy pay, may become part of the contract through established custom and practice.

The law also imposes some terms automatically, such as the right to paid holidays and the right to receive the National Minimum Wage.

Best Practice

When compiling a contract of employment for the business there are a number of “best practice” principles to follow. These are:

  • Keep it simple – do not over complicate your contracts so that all parties understand what they are signing up to.
  • Write straightforward English and don’t use jargon or legalistic language.
  • Tailor it to your own needs – a Contract of Employment whilst protecting the rights of employees also goes along way to protecting the needs of the business.

Types of Contracts and their use

There are a variety of Contracts you can use. We have detailed them below and their uses.

  • Junior and Admin Staff Employment Contract - This contract is for full-time junior staff, including clerical, manual, secretarial and administrative staff.
  • Senior Staff Employment Contract - This contract is for professional, middle and senior management staff.
  • Director's Service Agreement - This detailed contract covers all the required areas of an employment contract for a key board member. The contract also recognises that directors will have access to important commercial information and imposes further responsibilities on them to prevent a conflict of interest.
  • Fixed-Term Employment Contract - This is a fixed-term employment contract for employers who wish to employ a person for a stated fixed contract period, rather than giving that person a permanent position.
  • Part-Time & Flexible Hours Employment Contract - This contract of employment is for employers who wish to specify the exact working times of the employee and so is ideal for part-time workers, workers on flexihours or those on shift work.
  • Zero Hours Contract - This contract can be used to employ workers on a casual basis, so that the employer can request the employee work as and when required. However, it is important to remember that the employee does not have to be available and can decline work.
  • Term Time Employment Contract - This contract can be used to employ workers to work only during set and agreed times, in this case only during academic term times.

Download draft template contracts for each of these contract types to adjust and amend for your business at www.hrguide.co.uk

Commonly asked Questions

Can I make changes to an employee’s written statement?

Changing a contract can have complex legal implications if not handled properly. These are some key points to remember. In common law a contract can be changed only by mutual consent. Terms in individual employment contracts can be changed validly in the following ways:

  • the employer and employee may agree on the change
  • the contract may provide for changes. For example, a contractual mobility clause will allow an employer to move an employee from one workplace to another as long as the employer acts reasonably in doing so
  • individual contracts may be varied by a union agreement which is binding on individual employees
  • the employer may, by giving the proper period of notice, terminate the existing contract and substitute a new one. However, the employer should be aware that the employee could make a claim of unfair dismissal.

If you are preparing written statements for existing employees, you are not entitled to change the present terms. These may have arisen from appointment letters, old statements, custom or practice and the new written statement should incorporate these. If there are any agreed alterations to an employee’s terms and conditions after the statement has been issued, you must give the employee a written notification giving details of the changes as soon as possible and in any event within one month of the changes taking place. Written notification must be issued on every occasion there is a change in terms and conditions.

What happens if I do not issue a written statement to my employee within 2 months of appointment?

If your employee wins a tribunal complaint about one of a number of issues such as unfair dismissal (not about the written statement itself), you may be ordered to pay an additional two or four weeks’ pay if the tribunal finds that you did not issue a written statement, or that it was wrong or incomplete.

Get expert advice on Contracts of Employment from HRGuide

It's important to have a well-crafted Contract of Employment which protects the business from lack of clarity and misinterpretation of the terms of work. It provides the foundation for effectively engaging your workforce .

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