An employment contract is the agreement between an employer and an employee, defining the nature of their relationship, and their respective rights and obligations. This is a simple explanation that perhaps any reasonable person can produce. In practice however, drafting and negotiating an employment contract can become a big hassle.
The importance of such an agreement is hard to be perceived in the beginning of the employment relationship, however at the end of it – in whatever form it comes, or in case of any arguments between the parties, its content is crucial. Thus, it can either spare you tons of money, efforts and nerves, or quite the opposite. That is why we have created this guide, to navigate you in the field of employment contracts. Please note that it is based on UK law.
Basic Knowledge About Employment contracts
As we already mentioned, an employment contract governs the relationship between an employer and an employee. Its main purpose is to outline the rights and duties of both parties. It shall also include terms as to the ways for terminating the agreement, as well as the appropriate dispute settlement mechanism. Besides these basic provisions, an employment agreement may include vast number of specified terms depending on the desire of the parties.
As a basic rule, an employment contract need not be in writing and its existence can be implied by the relevant circumstances. In practical terms, an oral agreement will deprive the contract of clarity and transparency, which is a prerequisite for disputes. Thus, we strongly recommend always putting everything down in writing.
Although each employment contract is specific according to the nature of the work undertaken and the particular industry, there are some common features that need to be present in any agreement. An employment contract should in any case refer to the obligations of the conducted work, the payment amount and method, any specific requirements for both parties, any property rights to the work produced by the employee etc.
Implied terms are contractual obligations which even if not part of the contract, are automatically applied to it by virtue of statutory laws. In that sense, even if some issues are not covered by the employment agreement, minimum protection terms will apply. Such implied terms include the right to safe and secure working environment, prohibition of the employee stealing from the employer, right to paid 5,6 weeks paid holidays a year, the requirement not to reveal trade secrets etc.
Statutory Written Statement
Another part of the employment relationship is the statutory written statement, which although really similar to the employment contract, is a separate document. It is to be issued within two months of commencing of the employment, and should consist of the following elements:
- the business’s name
- the employee’s name, job title or a description of work and start date
- if a previous job counts towards a period of continuous employment, the date the period started
- how much and how often an employee will get paid
- hours of work (and if employees will have to work Sundays, nights or overtime
- holiday entitlement (and if that includes public holidays)
- where an employee will be working and whether they might have to relocate
- if an employee works in different places, where these will be and what the employer’s address is
- how long a temporary job is expected to last
- the end date of a fixed-term contract
- notice periods
- collective agreements
- who to go to with a grievance
- how to complain about how a grievance is handled
- how to complain about a disciplinary or dismissal decision
Make sure you issue a written statement to all your employees within two months of the starting date of employment.
Further additional guidance to the expected conduct of the employees is the so called employment handbook. This is a common document which is to be present on the working place and to outline clearly some duties and rights that are shared by all workers, namely:
- Equal Opportunities
- Internet and Email use
- Maternity and Parental Leave
- Expected office etiquette
- Other areas where the employer wishes to detail particular office procedures
Employment contracts are vital for the growth and development of a company, as they outline the relationships within the business itself. Thus, you need a solid foundation on which to build your firm and accomplish your goals. Pay particular consideration to employment agreements to have happy and productive employees and to protect your business from the inside.