Contracts of employment

We are often asked what the legal requirements for a contract of employment are.

The employment relationship is a contractual relationship. As soon as you hire an employee, you enter into a contract with them even if that contract is not put in writing.

Not putting a contract in writing is a recipe for disputes. It puts the employer in a vulnerable positon because it leads to uncertainty over what has been agreed.

So what does an employer need to do?

The basic legal requirement is to put in writing the main terms and conditions of employment. This is known as a “Statement of Main Terms and Conditions of Employment”. As its name suggests it is intended to put in writing the most important terms and conditions including information about the following:

• Names of the employer and employee
• The date when the employment began
• The date on which the employee’s period of continuous employment began
• Pay - amount
• Pay - frequency and method of payment
• Hours of work (including normal working hours)
• Entitlement to holidays
• Holiday pay
• Incapacity for work due to sickness or injury, including any provision for sick pay
• Pensions and pension schemes
• Notice periods
• Job title/job description
• Temporary/fixed term or permanent
• Place(s) of work
• Collective agreements
• Requirement to work abroad
• Disciplinaries
• Grievances

Such a written statement can be in a letter or a separate document. It must be issued to the employee within two months of their employment beginning (although best practice is to draw this up at the stage when the job offer is made).

Although an employer will comply with the law by issuing a Statement of Main Terms and Conditions of Employment, it is not the best way to protect your position as an employer. A full contract of employment can cover all the essentials set out above and include many additional terms to protect the employer’s position including:

• Giving the employer the right to make deductions from pay in certain circumstances
• Setting a probation period to manage an employee’s expectations and to make it easier to terminate the employment of an employee who does not perform as hoped
• Protect confidential information
• Give the employer the flexibility to alter the job role and to require the employee to move their place of work if required
• Restrict the employee from working elsewhere
• Introduce vital post termination restrictions to protect the employer’s business if the employee leaves

Many employers see the Statement of Main Terms and Conditions as the bare essential and prefer to enhance their legal position with a more comprehensive contract of employment.

If you require any employment law advice, employment specialist Andrew Spencer can be contacted by phone on: 01603 724671 or by email at: ajspencer@cozens-hardy.com.