A contract of employment is a legally-binding agreement between an employer and employee. The term is defined by the Employment Rights Act 1996 as a contract of service or apprenticeship. Employment contracts consist of a mixture of express and implied terms.

Express terms

Express terms are those which are actually stated in writing or given verbally. Written express terms are not restricted to written employment contracts but can include a number of other documents, such as a staff handbook.

The terms must meet any minimum legal standards such as the right to paid holidays and the right to daily and weekly rest breaks.

Any employee who has been employed for one month or more has the statutory right to a written statement of particulars of employment. This is covered in more detail below.
[hr height=”30″ style=”default” line=”default” themecolor=”1″]

Implied terms

Other terms are implied into contracts. This may happen because the term is:

  • incorporated by collective agreements (agreements with trade unions recognised by the employer)
  • incorporated by workforce agreements (for example, agreements with the whole workforce covering breaks)
  • incorporated by statute
  • incorporated into individual contracts by custom over a period of time
  • so obvious that the term is assumed to have been impliedly agreed
  • needed to give ’business efficacy’ to the contract (that is, to make the contract work properly).

Examples of terms that are implied into a contract of employment include:

  • a duty of mutual trust and confidence between the employer and employee
  • the employer’s duty to provide a safe system of work and safe workplace
  • the right to receive at least the national minimum wage (implied by statute)
  • the right to a minimum period of notice (implied by statute)
  • equality relating to men and women’s pay (implied by statute).

As many terms as possible should be clearly set out in writing and given to the new employee before or when they start the job. This will help avoid uncertainty or dispute between the employer and the employee about the terms.
[hr height=”30″ style=”default” line=”default” themecolor=”1″]

The legal position

A contract of employment is in many respects no different from any other contract that two parties might enter into. As such, it is governed by contract law, which means that there needs to be:

  • an offer of employment by the employer, which should be clear and unambiguous and may be conditional
  • acceptance of that offer by the employee
  • consideration between the parties, for example the work done by the employee in return for the wages paid by the employer
  • an intention to create a legally binding arrangement.

[hr height=”30″ style=”default” line=”default” themecolor=”1″]

Types of contract

A contract of employment only applies where there is an employer/employee relationship. There’s an important distinction between a contract of service, which is a contract of employment and a contract for services, which might apply to a subcontractor or freelance worker.

  • mutuality of obligation – does the employer have to provide work, and does the worker have to take work that is offered?
  • control – does the employer control how the worker does the work, and do the employer’s disciplinary procedures apply to the worker?
  • integration – how far is the employee integrated into the employer’s organisation?
  • multiple – looks at a number of factors including ‘substitution’ (that is, can the worker send another person to do work for the employer on their behalf?)

It’s important that employers make the relationship clear at the outset, not least because employees have many more rights in law than non-employees.

 

Permanent Contracts – the employee is employed by the organisation on an ongoing a basis with no predetermined end date to the agreement

Fixed Term – the employee is employed by the organisation on an ongoing a basis with a predetermined end date to the agreement (note back tobacco fixed term contracts add up to create continuous service)

Term Time – a contract for workers who only work during the school terms, they normally have special terms for the treatment of holidays

Zero Hours – this is an evolution of a casual agreement, they are binding under law, but state that the relationship exists only when the employee works, when not working they are not tied to the organisation or its rules
[hr height=”30″ style=”default” line=”default” themecolor=”1″]

The written statement of particulars

The essential elements of the written statement of particulars of employment are set out in the Employment Rights Act 1996, as amended by the Employment Act 2002. Some information must be included in one document while other information can be delivered in instalments.

Items to be included in the main document:

  • names of the employer and employee
  • date when employment began
  • date on which the employee’s continuous employment began
  • scale or rate of remuneration or the method of calculating the remuneration
  • intervals at which remuneration is paid, that is, weekly, monthly or other specified intervals
  • terms and conditions relating to hours of work, including any terms and conditions relating to normal working hours
  • terms and conditions relating to entitlement to holidays, including public holidays and holiday pay, in such a manner as to allow them to be precisely calculated
  • job title or a brief description of the type of work the employee is employed to do
  • place of work or an indication that an employee is required or permitted to work at various locations.

Items that can be provided in instalments:

  • terms and conditions relating to incapacity for work due to sickness or injury, including any provision for sick pay
  • terms and conditions relating to pensions and pension schemes
  • length of notice the employee is required to give and receive to terminate the contract
  • where the employment is not intended to be permanent, the length it is intended to last, or the end date if it is for a fixed term
  • any collective agreements, which directly affect the terms and conditions of employment, including where the employer is not a party, the persons by whom they were made
  • where the employee is required to work outside the UK for a period of one month or more, details of the time they are to work abroad, the currency they will be paid in, any
  • additional remuneration payable and any benefits provided by reason of working outside the UK and any terms relating to the employee’s return to the UK.

While the Employment Rights Act 1996 states certain items that must be included in the written statement of particulars, employers can refer their employees to their employee handbook or other policies for precise details of issues such as:

  • documents relating to disciplinary and grievance rules and procedures
  • documents relating to sickness and pensions
  • documents relating to the detail of bonus or commission schemes
  • collective agreements
  • other terms that are not mandatory terms (for example, private health care, overtime, holiday arrangements, retirement).

The written statement may additionally contain other clauses that an employer wishes to rely on. Where an offer letter or written contract sets out the main employment terms and conditions, this can satisfy the requirements of the written statement.

The written statement of particulars must be provided within two months of the employment starting.

There are exceptions to the requirement to provide a written statement of particulars for those employed for one month or less, or for employees in particular categories. However, it may still be advisable and good practice to provide such employees with a written statement to avoid dispute.