Contracts of Employment

Contracts of employment (employment contracts) are a legally binding agreement between an employer and employee and forms the basis of the employment relationship. Most employees are legally entitled to a written statement of terms and conditions of employment within two calendar months of starting a new job.

What to include in a written statement

The following details must be included in the statement as a minimum:

  • name of employer and employee
  • date employment and any continuous employment started
  • job location
  • pay and frequency of payment, i.e. weekly or monthly
  • job description/job title
  • details of any collective agreement that directly affects the employee’s conditions of employment

This information alone is not enough, though, to protect an employer in the event of a dispute. That is why an employment contract is much better for both employers and employees. It is more comprehensive and ensures that the employee knows what exactly what is expected of them and what they can expect, in turn, from their employer.

Additional information to include in an employment contract

Contracts of employment will differ between companies, however the following information is usually included in all contracts:

  • Method and date of payment
  • Hours of work
  • Notice entitlement
  • Pension scheme provision
  • Sick pay entitlement and conditions of payment
  • Holiday entitlement
  • HR policies and contracts of employment

The contract of employment should refer to HR policies such as the Disciplinary and Grievance Policy and Absence and Sick Pay Policy, but it should make it clear that they do not form part of the employee’s terms and conditions of employment. Otherwise, the employer would need to consult with employees before making any changes. The company could also face a claim for breach of contract if it did not comply with its own policy.

Varying terms and conditions of employment

An existing contract of employment can be varied only with the agreement of both parties. The first step is to consult with the employees affected to explain the business reasons for the proposed change and consider any objections they might put forward. Employees are far more likely to accept changes if they understand the reasons behind them and have the chance to state their views.

All agreed changes must be confirmed in writing within one month.

Dismissal as a last resort

If an employer cannot get agreement to a contractual change, and there is a strong commercial basis for the proposed change, its last resort is to terminate the contact with notice and offer a new contact with revised terms, starting when the old contract ends.

There is a risk of unfair dismissal claims, even from employees who take up the new offer. To defend claims, the employer must demonstrate a good business case for implementing the change and that it acted reasonably in the circumstances.

If you would like to know more about employment contracts and agreements, get in touch!

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