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How to write strong employment contracts: Advice for Employers

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How to write strong employment contracts: Advice for Employers

Strong employment contracts are at the heart of every successful business. If done right, they can provide protection for the business and its employees.

However, if they are either not provided at all or done wrong, they can cause trouble and leave your company susceptible to legal claims.

In his latest article, Chris Dobbs outlines how to write strong employment contracts, what to include in them and how to protect yourself from claims.

Why are employment contracts used by businesses?

Employment contracts are used in business to make sure that both the employer and employee are aware of the terms of the employment, including their rights, responsibilities, and more.

This way, everything will be laid out in full to provide clarity and avoid any potential misunderstandings or disputes.

Having a written contract in place will also mean that both parties’ interests are protected, and that the employment is fair and legal.

Is a contract of employment a legal requirement?

In the UK, employers are legally required to give a ‘written statement of employment particulars’ to any employee or worker, who is set to work for the company for more than one month, before they start.  

This written statement is the legal minimum, and therefore doesn’t include all of the terms that you would normally find within a good employment contract.

The written statement’s main purpose is to protect the employee with its terms, rather than the employer.

Although it’s not a legal obligation, we would strongly recommend providing all employees with a full contract of employment, to protect you and your company. I outline all of the terms that should be included to protect the employer later in this article.

Does an employment contract have to be written?

The written statement of employment particulars, as the name suggests, needs to be in writing.

However, an employment contract does not need to be in writing to be legally binding and can be verbal.

On the other hand, a verbal contract comes with certain risks and we would certainly recommend that any employment contracts are written; especially where there are more complex terms.

What are the different types of employment contracts?

There are a few different types of employment contracts in the UK.

  • Full-time contracts
  • Part-time contracts
  • Fixed-term contracts
  • Agency worker contracts
  • Freelancers, consultants, contractors (although these are not really employment contracts, being for self-employed people)
  • Zero-hours contracts

There are also some other types of employment such as temporary contracts, apprenticeships and internships.

As an employer, deciding on which employment contract to offer a member of staff will depend on a few factors, including the needs of your business, their availability, their working hours and the type of work they will be doing.

If you need any assistance with this, our Employment Team would be happy to discuss your specific circumstances with you. You can get in touch here.

Related: The legal implications of recruitment that employers need to know

What is the most common type of employment contract?

The most common type of employment contract is a permanent contract. This means that the employee works on an ongoing basis, without an end date, providing more job security.

Employees on a permanent contract can be on a zero-hours contract, part-time or full-time.

Related: Working Time Regulations

What are the statutory terms of employment contract?

The written statement of employment particulars needs to include:

  • A principal statement – this will usually include an employee’s:
    • Job title
    • Date of employment
    • Rate of pay
    • Working hours
    • Sick pay
    • Notice periods
    • Any remote working provisions
    • Termination conditions
    • Holiday pay
    • Pension provision
  • Information on how disciplinary and grievance issues will be dealt with
  • The policy for working abroad, where applicable

These statutory requirements provide both you as employer and your employee with a clear understanding of what is expected of them.

Its important that these terms are included, and that they are within the legal requirements (for example, pay is equal to or above the National Minimum Wage), to ensure the contract is valid and enforceable.

If the contract is breached by either party, the other party may be eligible to bring a claim for breach of contract and the employee/worker may have a number of other claims as well, examples being unfair dismissal, unlawful deduction of wages and discrimination.

Related: The importance of getting the dismissal process right

What other terms does an employment contract need to include?

Whilst not necessary legally, other terms a good employment contract may include are:

  • Reporting line
  • Detail of duties (often in an appendix or schedule)
  • Probationary period
  • Expenses rules
  • Confidentiality
  • Intellectual property
  • What deductions can be made
  • Family friendly rights, e.g. maternity, paternity, adoption, flexible working and time off for dependents
  • Restrictions during and after employment

Related: How to handle Workplace Grievances in 2023

Do I need an employment contract for my own company?

It is usually a good idea to have directors service agreements in place for directors of a company.  These are similar to a normal employment contract, but will be more complex to include specific directors’ duties.

How to write a contract of employment

Writing a contract of employment can be a difficult task to take on, especially if you’ve never written one before or you want to include some more complex terms.

You obviously need to include the statutory requirements in any contracts, as set out earlier in this article, and could benefit from including the optional terms that we also suggest.

There are loads of templates available online, some good, some not so good. You may or not find these useful, it depends on your circumstances!

Having an experienced lawyer review an employment contract that you’ve written, or assist you in writing one, is a sensible option that can ensure your business is protected.

We’d be happy to do this for you. You can get in touch here.

What other contracts does a business need?

In addition to strong employment contracts, a business that is just getting started will need a variety of other legal contracts and agreements to provide maximum protection from claims.

New and experienced businesses could benefit from introducing, reviewing and updating the below:

If you want individual advice on any of the above, please click on the links to be diverted to the relevant help page.

Employment Solicitors

If you would like some assistance in writing or reviewing an employment contract, or multiple, our bright Employment Team at Frettens would be happy to help.

We can assist you in understanding your legal responsibilities and meeting those within the contract, whilst protecting your and your business’ rights.

You can call us on 01202 499255, or fill out the form at the top of this page, for a free initial appointment.

Tailored courses for Employment & HR Professionals

We also offer a range of tailored Employment Training Courses for new and experienced employers and HR professionals.

These courses provide advice on dealing with disciplinary issues, redundancies, grievances, discrimination and more. We also offer more general introductory, intermediate and advanced employment sessions.

Find out more here.

To keep up to date with employment news, tribunal and updates; you can register for our free newsletter here.

The content of this article, blog or video is not intended as specific legal advice. For tailored assistance, please contact a member of our team.