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What form should an employment contract take?

There is no set form for an employment contract.  The common forms adopted by employers and businesses include:

  • letter agreement incorporating employment terms
  • letter agreement with a separate schedule of employment terms
  • short form contract of employment
  • longer form contract of employment (or service agreement), particularly for a more senior employee or a director

Terms of employment will also be a combination of the express terms of the employment contract itself and terms which are implied.  Terms may be implied as a matter of business efficacy to reflect the intention of the parties, as a consequence of custom or past practice or by operation of law.  Examples of each include:

  • express terms:
    • salary
    • working hours
    • notice period
  • implied terms:
    • to reflect the parties’ intentions – obligation on employee to hold a professional qualification inherent in the job title
    • custom or past practice – entitlement to an annual bonus
    • operation of law – mutual duty of trust and confidence,  employer’s duty to provide a safe workplace

What must be included in an employment contract?

Whichever form of employment contract is used, English law requires that a number of specified matters are provided in writing to employees on or prior to the commencement of employment.  This is known as a written statement of particulars of employment or a “section 1 statement”, by reference to section 1 of the Employment Rights Act 1996 which is the applicable statute setting out this legal requirement.

The statement can be provided as a separate statement from the employment contract itself.  Often however, the employment contract will incorporate the legal requirements of the section 1 statement and will constitute the section 1 statement.

With limited exceptions, the required particulars must be included in a single document and must be given before commencement of employment.

The particulars which must be included in the section 1 statement are as follows.  Where there are no particulars to be stated for a particular matter, then the fact that there are no particulars for that matter should be stated.

  • names of employer (including address) and employee
  • date of commencement of employment
  • date on which the employee’s period of continuous employment began (if any period of employment with a previous employer will count towards that period)
  • job title and brief work description
  • any probationary period, including its conditions and duration
    place of work
  • pay or rate of pay or the method of calculating the employee’s pay
    when the employee will be paid (weekly, monthly or other specified interval(s))
  • hours of work, including:
    • normal working hours
    • work days
    • variable work hours or days
  • terms and conditions relating to:
    • holiday entitlement, including public holidays and holiday pay (sufficient to enable entitlement to accrued holiday pay on termination of employment to be calculated)
    • incapacity due to sickness or injury, including provision for sick pay
    • other paid leave (for example, maternity or paternity leave)
      pensions and pension schemes
  • other benefits provided by the employer not already provided
    notice period for termination of employment given by the employee
  • any collective agreement which directly affect the terms and conditions of employment
  • if the employee is required to work outside the UK for a period of more than one month:
    • the period of such requirement
    • the currency in which the employee will be paid for such  period
    • any additional remuneration or other benefits by reason of such requirement
    • any terms and conditions relating to the employee’s return to the UK
  • in relation to training:
    • any training entitlement provided by the employer
    • any part of that entitlement which the employer requires the employee to complete
    • other training which the employer requires the employee to complete but which the employer will not pay for

The written statement must also include (or the employer must provide a separate note within 2 months of the commencement of employment of):

  • the disciplinary rules and disciplinary and dismissal decision-making procedure applicable to the employee (or a reference to where they can be accessed)
  • the person to whom the employee should raise any grievance or complaint about any disciplinary or dismissal decision, including details of the applicable process

Any change to the written statement must be given to the employee at the earliest opportunity and, in any event, within 1 month.

If the employer fails to give the written statement as required, the employee may refer the matter to an employment tribunal to determine what particulars ought to have been provided.

In addition, where the employer has failed to provide the written statement as required and the employee successfully brings another substantive claim at an employment tribunal, the employee could be entitled to an increased award of a minimum of two weeks pay or a maximum of four weeks pay.  Such increased award is not payable if there are exceptional circumstances which would make an additional award unjust or inequitable.

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