An employment contract is simply an agreement between an employee and their employer. Usually an employment contract is issued at the same time as an offer of employment is accepted but, if this is not the case, the contract must be issued within two months of the start date for all employees (not including self-employed or agency staff BUT including part-time or temporary employees regardless of how many hours they are working) who have been employed for more than one month.
Whilst most employment contracts are in writing (and we would recommend this to avoid any ambiguity and also to assist with any disagreements or disputes which may arise) they do not have to be written to be legally binding and, in some cases, there are certain terms which are included legally whether they are express (i.e. specifically mentioned) or implied (not actually written as they are too obvious to need to be included such as things like theft from your employer etc) covering areas such as acting in good faith to one another and taking reasonable steps to ensure health and safety for the employees, colleagues and customers.
An employment contract can contain many varied and different clauses and terms but, as a minimum, should contain all of the following:
- Full legal name of employer (if sole trader this should be the owner’s name and not a company name)
- Employee name
- The date on which employment started
- The date on which continuous employment started
- The location of the job
- Pay rate and frequency (monthly, weekly etc)
- Working hours
- Holiday entitlement
- Job title and ideally a job description
- Details of collective agreements (such as those agreed with a union, where applicable) which affect the employee’s conditions of employment
In addition, to the above, it is common to also include additional information either in the employment contract or in separate documents and references these from within the employment contract. These can include:
- Sick leave process
- Sick pay entitlements
- Details on any pensions (if applicable)
- Disciplinary procedure
- Grievance procedure
- Appeals procedure
A good starting point if you want to create an employment contract in the UK is available on the Gov website at https://www.gov.uk/employment-contracts-and-conditions which offers additional advice for employers as well as a tool to allow you to create an employment contract for your business.