Every employee you hire requires an employment contract, whether verbal or written. This contract clearly defines critical aspects of the role, including hours, pay, and disciplinary procedures, ensuring both you and the employee understand the expectations.
In this guide, we’ll explore the essential components of an employment contract and provide a template to help you draft your documents effectively.
What Is an Employment Contract?
An employment contract is a legal document that outlines an employee’s duties, responsibilities, benefits, and compensation. It establishes the relationship between the ‘Employer’ and the ‘Employee’ and is crucial for setting conditions that govern their working relationship.
Each employment contract must detail the employment conditions, rights, responsibilities, and duties of both parties. These terms are legally binding; therefore, it’s vital to ensure clarity before presenting the document for signing. Both the employer and employee must adhere to the contract until its expiration or until the terms are amended—notice must be given one month in advance for any changes.
To promote transparency, codes of conduct should be readily accessible to employees through resources such as an employee handbook, intranet, or noticeboard. Additionally, the contract terms should be included in the offer letter to the employee, applicable to all types of employment, including full-time, part-time, and other work patterns.
Collective agreements, often negotiated between trade unions and staff associations, can also dictate terms such as pay and working hours. These agreements can specify how negotiations will occur, the representation of employees, and which terms and conditions will be covered.
It’s important to note that ‘implied terms’ exist as part of the contract, even if they are not explicitly stated. These are usually common-sense expectations, such as prohibiting theft or ensuring a safe work environment.
Why Do You Need an Employment Contract?
An employment contract serves to eliminate ambiguity before employment commences and protects both parties in case of a dispute. It sets professional boundaries and expectations from the outset.
What About Contractors?
In contrast, a one-off job for a contractor is typically referred to as a ‘contract to provide services’ rather than an employment contract. Before proceeding, ensure you are knowledgeable about IR35 (off-payroll) rules.
When drafting a contract for services, be sure to include the following:
- Name and contact details of both parties
- Scope of services expected
- Compensation and expense details
- Dispute resolution procedures
- Termination clauses
Employment Contract Template
Review the PDF template below to understand the structure of an employment contract. Feel free to modify it with specific names, locations, employee benefits, and other pertinent details.
Statement of Particulars
The information provided to an employee, known as the statement of particulars, can be categorized into two parts: the principal statement and the written statement. You must furnish employees with the principal statement upon their start date, resembling the contract template provided above.
The principal statement must include:
- Employer’s name
- Employee’s name, job title or job description, and start date
- Frequency and amount of pay
- Working hours and days, including any potential variations (e.g., weekend or night shifts)
- Holiday entitlement, including public holidays
- Work location and any possible need for relocation
- Details of any additional workplaces, if applicable
- Expected duration of the job (including an end date for fixed-term contracts)
- Details on the probation period and its conditions
- Other employee benefits (e.g., childcare vouchers, meal provisions)
- Obligatory training requirements, including whether they will be funded by the employer
On the first day, you are also responsible for informing the employee about sick pay, other paid leave (like parental leave), and notice periods. This information can be included in the principal statement or a separate, easily accessible document such as an employee handbook or on the intranet.
Additionally, record the start date of any previous employment that contributes to the employee’s continuous service.
What About the Written Statement?
The written statement must cover critical information such as pension schemes, collective agreements, and procedures for disciplinary actions and grievances. If an employee encounters issues receiving their written statement, you will be their first point of contact. If resolution fails, they may pursue grievance procedures or escalate the matter to an employment tribunal.
What happens if your small business is taken to an employment tribunal? – A step-by-step guide for navigating potential employment tribunal proceedings.
What If There’s a Breach of the Employment Contract?
Your contract should address potential breaches and disputes. An employee could resign and claim constructive or unfair dismissal if issues arise. Therefore, it’s advisable to maintain an open-door policy, encouraging employees to discuss problems proactively.
Read More
Important Employment Rights Checklist for Employers – Stay informed about your employees’ rights to avoid legal pitfalls.
The Ten Most Common HR Challenges for Small Businesses – Understanding common HR challenges and strategies to address them.
This revised content maintains the original meaning while enhancing readability and SEO optimization. The text uses active voice, clear headings, and subheadings, ensuring a more engaging flow for readers. Key terms have been incorporated into headers and throughout the content for better search visibility.