Employment contracts

Overview

All employees have an employment contract with their employer. A contract is an agreement that sets out an employee’s:

• employment conditions
• rights
• responsibilities
• duties

These are called the ‘terms’ of the contract.

Employees and employers must stick to a contract until it ends (eg by an employer or employee giving notice or an employee being dismissed) or until the terms are changed (usually by agreement between the employee and employer).

Accepting a contract

As soon as someone accepts a job offer they have a contract with their employer. An employment contract doesn’t have to be written down.

Contract terms

The legal parts of a contract are known as ‘terms’. An employer should make clear which parts of a contract are legally binding.

Contract terms could be:

• in a written contract, or similar document like a written statement of employment
• verbally agreed
• in an employee handbook or on a company notice board
• in an offer letter from the employer
• required by law (eg an employer must pay employees at least the National Minimum Wage)
• in collective agreements - negotiated agreements between employers and trade unions or staff associations
• implied terms - automatically part of a contract even if they’re not written down

Implied terms

If there’s nothing clearly agreed between you and your employer about a particular issue, it may be covered by an implied term - for example:

• employees not stealing from their employer
• your employer providing a safe and secure working environment
• a legal requirement like the right to a minimum of 5.6 weeks’ paid holidays
• something necessary to do the job like a driver having a valid licence
• something that’s been done regularly in a company over a long time like paying a Christmas bonus

Collective agreements

An employer may have an agreement with employees’ representatives (from trade unions or staff associations) that allows negotiations of terms and conditions like pay or working hours. This is called a collective agreement.

The terms of the agreement could include:

• how negotiations will be organised
• who will represent employees
• which employees are covered by the agreement
• which terms and conditions the agreement will cover

Written statement of employment particulars

An employer must give employees a ‘written statement of employment particulars’ if their employment contract lasts at least a month or more. This isn’t an employment contract but will include the main conditions of employment.

The employer must provide the written statement within 2 months of the start of employment.

If an employee works abroad for more than a month during their first 2 months’ employment, the employer must give them the written statement before they leave.

What a written statement must include

A written statement can be made up of more than one document (if the employer gives employees different sections of their statement at different times). If this does happen, one of the documents (called the ‘principal statement’) must include at least:

• the business’s name
• the employee’s name, job title or a description of work and start date
• if a previous job counts towards a period of continuous employment, the date the period started
• how much and how often an employee will get paid
• hours of work (and if employees will have to work Sundays, nights or overtime
• holiday entitlement (and if that includes public holidays)
• where an employee will be working and whether they might have to relocate
• if an employee works in different places, where these will be and what the employer’s address is

As well as the principal statement, a written statement must also contain information about:

• how long a temporary job is expected to last
• the end date of a fixed-term contract
• notice periods
• collective agreements
• pensions
• who to go to with a grievance
• how to complain about how a grievance is handled
• how to complain about a disciplinary or dismissal decision

What a written statement doesn’t need to include

The written statement doesn’t need to cover the following (but it must say where the information can be found):

• sick pay and procedures
• disciplinary and dismissal procedures
• grievance procedures

Employers can download a template of a written statement of particulars to fill out.

Working abroad

If an employee has to work abroad for more than a month, their employer must state:

• how long they’ll be abroad
• what currency they’ll be paid in
• what additional pay or benefits they’ll get
• terms relating to their return to the UK

This information can be given to the employee in a separate document.

An employer may send an employee to another country in the European Economic Area (EEA). In this situation employees must get the terms and conditions that are the legal minimum in that country for:

• working hours and rest breaks
• holiday entitlement
• minimum pay (including overtime)

Problems with a written statement

If an employee has a problem receiving their written statement, they could:

1. Try to solve the problem with their employer informally.

2. If this doesn’t work, take out a grievance against their employer (employers can also get advice about handling grievances).

3. Take a case to an employment tribunal as a last resort. In Northern Ireland, a case would be taken to an industrial tribunal.

The tribunal will decide what the employment particulars in the statement should have been.

Compensation

If an employee wins a case about another issue (eg unfair dismissal), the tribunal may award compensation if there’s been a problem with their written statement as well.

Compensation can be 2 or 4 week’s pay although there’s a limit on how much a tribunal will award for a week’s pay.