What should an employment contract include?

What should an employment contract include?

Employment contracts come in many different forms.  Usually, the more senior the employee, the longer and more detailed the employment contract will be.  Certain particulars must, as a legal minimum requirement, be provided to employees in relation to their employment terms.  Employment contracts will usually then cover additional matters over and above the legal minimum requirement.

There is no set form for an employment contract and employment contracts can vary in what they cover, what form they take and how detailed and how long they are.  In general, the more senior the employee, the longer the employment contract usually is.

As a minimum legal requirement, whenever someone begins work as an employee of a company, by law, they must be provided with a written statement of certain particulars of their employment.  This is known as a “section 1 statement”.  The statement can be provided separately from an employment contract.  Usually however the employment contract will incorporate what must be included in, and will constitute, the section 1 statement.

In addition to the matters required to be covered by the section 1 statement, the employment contract might then include other provisions which the employer wants to include expressly in the agreement. 

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:

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

Employment contract must haves

To comply with the legal requirement of a section 1 statement, must haves for employment contracts include:

  • names of employer and employee
  • date of commencement of employment, including date of period of continuous employment
  • job title and brief job description
  • any probationary period, including its conditions and duration
  • place of work
  • pay or rate of pay and when employee will be paid
  • hours of work, including normal working days and hours and any variable days or hours
  • holiday entitlement terms, including public holidays and holiday pay
  • terms relating to incapacity, including sick pay
  • terms of other paid leave, for example maternity or paternity leave
  • pension scheme entitlement
  • other employee benefits
  • notice period which the employee must give to terminate employment
  • whether there is any collective agreement affecting the terms of employment
  • provisions relating to working outside the UK
  • details of any training entitlement

The employee must also be provided with details of:

  • the disciplinary rules and the disciplinary and dismissal procedure applicable to the employee
  • the person to whom the employee may raise a grievance or compliant about any disciplinary or dismissal decision

Failure to provide the section 1 statement may result in an increased payment under an employment tribunal claim of up to 4 weeks’ pay.

In addition to the legal requirements of section 1 statements, employment contracts may include a number of additional clauses, depending on the employee’s role and seniority, the employer’s business and the remuneration and other benefits applicable to the employment.

Examples of additional express terms which can be covered in employment contracts include:

  • provisions relating to pay and benefits, for example bonus entitlement or car allowance
  • clauses aimed at the protection of the business, including an express confidentiality clause,  post-employment restrictive covenants and the assignment of intellectual property rights created during the course of employment
  • provisions applicable to termination of employment, including clauses for garden leave and termination of employment on payment in lieu of notice, including post-restrictive covenants

Paper Rock employment contract templates

At Paper Rock, we have a range of legal document templates for employees which comply with the legal requirements for employment agreements and which vary depending on the seniority of the employee.

Each template is written in plain English and is accompanied by clear explanatory guidance on the document and its use. 

For more details, visit our employment documents page.

Related Posts

Shopping Basket