Employment contract template

What form should an employment contract take?

There is no fixed format for an employment contract.  Common forms of types of employment contracts adopted by employers include:

• a letter agreement incorporating the legally binding employment terms
• a letter agreement with a separate schedule of employment terms
• a short form contract of employment
• a longer form contract of employment (or service agreement), typically for senior employees or directors

Employment terms consist of both express terms stated in the contract and implied terms.  Implied terms may arise from business efficacy, reflecting the intention of the parties, custom or past practice or operation of law.  Examples include:

• express terms: salary, working hours (full time employees or part time contracts) and written notice period or term of a fixed term contract
• implied terms:
  • reflecting the parties’ intentions – requirement for the employee to have 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 (including the protection of the employer’s confidential information), employer’s duty to provide a safe workplace

What must be included in an employment contract?

Regardless of the form, English law mandates that certain specified matters are provided in writing to employees at or before the commencement of employment, 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.

The section 1 statement can be a separate document or incorporated into the employment contract.  With limited exceptions, the required particulars must be included in a single document and provided before employment begins.  

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, this should be stated.

• names of employer (including address) and employee
• date of commencement of employment and period of continuous employment
• 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 (taking into account the national minimum wage applicable to the employee)
• 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) details of the applicable disciplinary and grievance procedures, namely:

• 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.