Contracts

Contract of Employment

The contract, or the statement of the main terms and conditions of employment, form the cornerstone of the employment relationship. The benefits are considerable:

  1. They clarify what is offered and accepted.
  2. They provide a record of what was agreed for future reference
  3. They define rights and responsibilities on both sides
  4. They make it easier for either party to enforce their rights
  5. They allow for the effective management of the business.

Getting the contract right at the outset saves much time, effort and cost later. It helps resolve issues such as:

  1. Employees not adapting to new work practices
  2. Employees not returning form holiday on time
  3. Employees on long term sick absence
  4. What happens to their holiday entitlement when sick
  5. Employees not attending formal interviews such as absence or disciplinary.
  6. Employees not working effectively
  7. Employees not following company rules such as use of the internet, drugs or alcohol, company property, dress code, discrimination or harassment
  8. Breaches of confidentiality both during and post employment
  9. Problems at termination of employment such over-payments or they have anticipated holiday they have not accrued
  10. Contractual problems over payment in lieu of notice or garden leave

An employee can seek redress for breaches of contract on many matters, which means the employer is exposed to financial risk as well as for raft of employment rights which they could claim in employment tribunal. These statutory clauses only cover the basic points but there are many other terms which are of benefit to the employer.

A contract of employment is a complicated concept and is derived from common law contract principles such as implied terms, statutory provisions and UK and European case law. The decisions of the courts mean that contracts of employment (unlike other types of contract) are subject to change. If you purchase an HR Adviser subscription you will receive updates resulting from these decisions.

For more information or to buy a contract of employment follow this link.

Employee Rights

There is no legal obligation to issue an employee with a written contract of employment, but employers are required by The Employment Rights Act 1996 to issue employees who have worked for at least one month with a statement of their main Terms and Conditions within 2 months of their starting employment.

The statement must include the following key information.

  • The names of the employer and employee.
  • The date when employment began.
  • The date on which the employee’s period of continuous employment began (taking into account any employment with a previous employer that counts).
  • The scale or rate of pay, or the way pay is calculated.
  • The pay intervals (ie whether the employee will be paid hourly, weekly, monthly, etc).
  • Terms and conditions relating to hours of work (including normal working hours, if applicable).
  • Terms and conditions relating to holiday entitlement including public holidays and holiday pay (enough information must be given to enable entitlement to be calculated precisely).
  • Job title or a brief job description.
  • Place of work or, if the employee is required or permitted to work at various places, an indication of that fact and the employer’s address.

The employer must also provide the following written particulars within the two-month period (either in further installments or with the principal statement):

  • Any terms and conditions relating to sickness/injury, including sick pay.
  • Details relating to pensions and pension schemes, including whether or not employment is contracted out of the state pension scheme.
  • Length of notice to be given to terminate the employment contract by both employer and employee.
  • If the contract is temporary, an indication of the expected duration of the contract, or, if the contract is for a fixed term, the date when it is to end.
  • Particulars of any collective agreements that directly affect the terms and conditions of the employment including, where the employer is not a party, the persons by whom they were made.
  • Where the employee is required to work outside the UK for a period of more than one month details of the length of the posting, the currency in which payment will be made, details of any additional benefits arising from the posting and any terms and conditions relating to the employee’s return to the UK.
  • A note on disciplinary and grievance procedures, including:
    • any disciplinary rules applicable
    • the name (or description) of the person to whom an employee can apply if dissatisfied with a disciplinary decision and the manner in which such applications can be made
    • the name or description of the person with whom the employee can raise a grievance and the manner in which such applications should be made
    • an explanation of any additional steps in the disciplinary or grievance procedures.

The written statement can refer employees to another document for particulars on:

  • sickness link to absence procedures/ handbook
  • pensions link to handbook
  • disciplinary rules and the various steps in the disciplinary and grievance procedures. Link to discipline and grievance procedures /handbook

It is often better to have separate documents rather than include these items in the contract itself otherwise changing procedures is very difficult and a failure to follow procedures exactly then becomes a breach of contract.

These are the basic requirements but there are many more clauses which protect the employer.

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