An employment contract is the legal form of the relationship between employee and employer. There is no strict requirement that the contract be in writing, and it does not have to take the form of a long, complicated legal document.
English law does require employers to provide a written statement of employment within two months of them starting work. Crucially, this is not a replacement for the contract. For more information on the written statement, and how it differs from employment contracts, check out our blog post.
The importance of a carefully drafted contract cannot be overstated. Ensuring clarity and a high degree of satisfaction for employee and employer alike is the key to long-term stability in an employment relationship.
Poorly drafted, confusing, and vague contracts provide ripe ground for difficulties in the future, especially where circumstances change, or employees and employers wish to part ways.[tweet_dis_img][/tweet_dis_img]
Basics of employment contracts
Every contract should strive to be as bespoke as possible and will depend on the nature of the business and the role in question. There are four key areas that an employment contract should cover:
- Conditions of employment
The key areas, as well as any additional clauses in the contract that serve as the basis for employment are called “terms” and must be followed by the relevant party.
Generally, they will include clear indications of expected work and deliverables, as well as remuneration. Failure to respect contract terms can lead to breach of contract, making clarity essential in the initial agreement.
Beyond general definitions of duties and responsibilities, there are many contract terms that are often included despite not being strictly necessary.
The ability to place employees on leave during the notice period, or to make payment instead of notice are common terms that give additional flexibility to employers. Businesses may be concerned about protecting confidential information and intellectual property. Terms for non-disclosure (called covenants in English law) are particularly challenging to draft and enforce.
Where an employment contract fails to specify certain aspects of the employment relationship, terms can be implied and automatically applied by virtue of statute. Common examples include the right to a safe and secure working environment, the right to paid holiday, the prohibition of revealing trade secrets, and the probation of stealing from the employer.
Terms can also be implied from company practice, like in the case of seasonal bonuses. The best way to prevent implied terms from operating in an unexpected way to your detriment is to ensure the contracted is drafted clearly and covers as much ground as is necessary.
Employment contracts are vital for the growth and development of a company, as they outline the relationships within your business. You need a solid foundation on which to build your firm and accomplish your goals. Pay particular consideration to employment agreements to have motivated and productive employees and to protect your business from the inside.