Employment contracts are an integral part of the relationship between employer and employee. They set out the terms and conditions of employment, clearly defining expectations, obligations, and responsibilities for each party.
In principle, employment contracts can be written or verbal; whatever form they take, they are legally binding agreements. Accordingly, it is always recommended that such agreements take written, signed form, so as to limit the possibility of a dispute at a later date.
Types of Employment Contract
There are a wide variety of employment contracts depending on the nature of the business and relationship being established between the parties. Below are some examples:
- Permanent, full time, contacts. Such contracts are ongoing until termination provisions are triggered.
- Fixed term contracts. Such contracts are intended to exist for a prescribed period.
- Part time contracts. As with permanent contracts, these may be ongoing with no predetermined end date, but the hours an employee works will be less than a ‘full time’ employee.
- Casual employee contract. These contracts may be more suited to situations where no prescribed hours are being offered and instead will depend on business requirement.
Legal Requirements
Whilst there is technically no legal requirement for written employment contracts to be provided, there is an obligation to provide employees with certain basic information. This set out in the Employment Rights Act 1996, Section 1.
The information required is commonly referred to as a “Section 1 Statement” or “Written Statement of Employment Particulars” and must be provided at the outset of the employment relationship.
The information which must be provided to an employee at the outset of employment includes:
a: Party names
Employer and employee.
b: Job title, place of work and hours of work
Including information regarding working abroad if relevant.
c: Start date and duration (if it is not a permanent role)
This should include the date continuous employment began and whether any probationary period applies.
d: Salary details
Including how it is calculated and when it will be paid
e: Holiday entitlements
f: Sick leave and pay entitlements
Although reference can be made to a separate reasonably accessible document.
g: Terms and conditions relating to any other paid leave.
Reference can be made to a separate reasonably accessible document.
h: Pension information.
Reference can be made to a separate reasonably accessible document.
i: Terms and conditions relation to any other benefits provided by the employer.
j: Notice periods which apply to termination of the relationship.
Reference can be made to legislation.
k: Whether any collective agreements apply.
l: Training opportunities.
Reference can be made to a separate reasonably accessible document, but required training must be noted.
m: Information regarding disciplinary and grievance procedures.
Certain information must be included, but otherwise, reference can be made to the relevant policies.
Unless otherwise noted, the above information must be included in the Section 1 Statement. It must also be provided to a new employee on commencement of their employment.
Where an Employment Contract is subsequently issued, the Employment Contract will take precedence.
As can be seen, the Section 1 Statement does not cover all possible issues which may arise in an employment relationship, and does not detail all of the obligations and responsibilities which may be intended to apply. Therefore, it is recommended that comprehensive Employment Contracts be issued to employees in an effort to limit future misunderstandings or disputes.
Enforcement and remedies
An employee or worker may make a complaint to an Employment Tribunal where an employer:
- Fails to provide a Section 1 Statement.
- Provides an inaccurate or incomplete statement.
The Tribunal will then determine what particulars ought to have been included or referred to in the statement so as to be compliant with the statutory requirements.
Where an employee or worker also has a successful substantive claim (such as an unfair dismissal complaint), they may also claim compensation.
Time limits apply to such action.
If you have any questions about employment contracts, we are always happy to help. Contact us here.
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