An Employment Contract is an agreement between an employer and an employee and is the basis of the employment relationship. A Contract is made when an offer of employment is accepted and a number of rights and duties arise as soon as this happens.
Whilst Employment Contracts do not need to be written to be legally valid, setting an Employment Contract down in writing cuts down on the number of disagreements that may occur at a later date. In any event, the Employment Rights Act 1996 requires employers to provide their employees with a written statement of the main terms of their employment within two calendar months of starting work. The easiest way of complying with this regulation is to include these items in a written Contract of Employment.
Apart from the terms which are set out explicitly in a written Contract, the Courts have also established that an Employment Contract has some terms implied into it in all situations. These are:
- To maintain trust and confidence through cooperation
- To act in good faith towards each other
- To take reasonable care in ensuring health and safety in the workplace
It is also possible for some terms to become part of the Contract due to the employer and employee's behaviour through their custom and practice over time or through a firm's rules and policies, particularly if the employee has been made aware of these rules and given access to them.
To compy with the provisions of Section 1 of the Employment Rights Act 1996 an Employment Contract should include the following:
- The employee's name.
- The employer's name.
- The date the employment (and the period of continuous employment) began.
- Pay and the intervals at which the employee will be paid.
- Hours of work.
- Holiday entitlement.
- Entitlement to sick leave, including any entitlement to sick pay.
- Pensions and pension schemes.
- The employer and employee's entitlement to notice of termination.
- The employee's job title or a brief description.
- Where it is not permanent, the period for which the employee's employment is expected to continue or, if it is for a fixed term, the date when it will end.
- Either the place of work or if the employee is required or allowed to work in more than one location, an indication of this and of the employer's address.
- Details of the existence of any relevant collective agreements which directly affect the terms and conditions of the employee's employment - including if the employer is not a party, the person's by whom they were made.
- A note giving certain details of disciplinary and grievance procedures and stating whether or not a pensions contracting out certificate is in force for the employee's employment.
If an employee is normaly employed in the UK but will be required to work abroad for the same employer for a period of more than one month, the statement must also cover:
- The period for which the employment abroad is to last.
- The currency in which the employee will be paid.
- Any additional pay or benefits.
- The terms relating to the employee's return to the UK
Where there are no details to be given for one of the items required in the statement, for example, if there is no pension entitlement, then this must be stated.
Apart from having formal Contracts of Employment, it is sensible for all employers to have written policies covering such things as the employer's maternity policy, adoption policy, internet and e-mail policy. health and safety policy, paternity policy and company car policy amongst others.