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Guide to Employment Contracts and the Law for Employers

An employment contract is an agreement between an employer and an employee which sets out the terms of their employment.

As soon as an employee accepts an offer of employment, there is a contract between them and the employer, whether one is provided in writing or not.

Written statement

Although nothing needs to be provided in writing for the contract to be formed at the outset, you will need to provide your employee with what is known as a written statement of employment particulars within two months of the start of the employment. This will embody the main conditions of employment. If this is made up of more than one document, one of the documents, the ‘principal statement,’ should include:

  • The name of the employer and the employee
  • The job title or a description of the work
  • Start date
  • Date on which the period of continuous employment started, if a previous job counted towards this
  • How much and how often the employee will be paid
  • Working hours
  • Holiday entitlement
  • The place where the employee will be working

You must also provide information on:

  • How long a temporary job is expected to last, or the end date of a fixed-term contract
  • Notice periods
  • Collective agreements
  • Pensions
  • How to raise a grievance
  • How to complain about the handling of a grievance or disciplinary action

In the case of sick pay and procedures, disciplinary and dismissal procedures and grievance procedures, these do not need to be included in the written statement, but the employer must be told where to find them, e.g. a staff handbook or staff intranet site.

Contract terms

A contract contains terms which govern the working relationship between you and your employee. Some terms are implied, however, and so do not have to be written into the contract to apply. It is important to note that even if your employee has a written contract, they could be bound by terms that are not included in it.

The other terms include terms which are:

  • Statutory, i.e. required by law
  • Agreed elsewhere either verbally or in writing, for example in a letter or in an employee’s handbook
  • Implied – these could be terms that are too obvious to include, such as that your employee shouldn’t steal from you, conditions that are which are necessary, such as having a driver’s licence for a position which requires a lot of driving, or things which have become customary over time within your business.
  • Part of collective agreements – these are agreements between you and trade unions or staff associations which allow for negotiation of terms and conditions.
  • Confidentiality clauses
  • Non-compete clause

Changing a contract

In order for a contract of employment to be changed, both parties must give their consent. When an employment contract is changed, the employer should give the employee written notification of the change within one month of it coming into effect.

Termination of a contract

You may terminate an employee’s contract, so long as you adhere to the notice period stated in their employment contract. Likewise, an employee can terminate their contract, but must continue to work for the notice period indicated.

For more information on dismissing staff, see our dismissing staff and redundancies page.