Hiring a new employee can feel like a big step in the right direction as a business owner, but it’s important that you and your employee get your working relationship off to the best start and ensure it continues smoothly in the future.
It’s important to know as an employer where you stand and what you both expect of each other. A contract does not have to be written down or signed, although the conditions of the job must be shared in a document prior to commencing the job.
So if you’re wondering ‘what is a contract of employment?’ and want to find out whether employment policies are contractual, we will walk you through the basics of employment terms and contracts.
What is an employment contract?
A contract of employment is an agreement that spells out the conditions, rights, responsibilities or duties an employee has at work. These can also be called the ‘terms’ of a contract of employment.
Your staff will need to adhere to these terms until they finish their employment, are dismissed, or the terms change (after an agreement with your and your employees). As soon as an employee starts a job, they will have a contract and will need to respect the terms included in it, even if this is not given to them in written form and was instead agreed in person.
If someone has agreed to do some work for you, this does not mean they have an employment contract. Instead this is called a ‘contract to provide services’.
So yes, employment policies are contractual as the duties they entail form part of your employee's contract and they must respect them whilst they are being employed.
A contract of employment and its terms could come in the format of a handbook, document, offer letter or even a verbal contract. It is also possible that some terms are implied, such as legal requirements like at least 5.6 weeks’ paid leave for holidays.
What is included in an employment contract?
Every contract will be different depending on the job role, type of work, length of contract and your business or sector. Typically, your employment contract will need to cover the following as a minimum:
- Pay / remuneration details
- Working hours and details of any shift work
- Place of work and any relocation obligations
- Notice details
- Any applicable post-termination restrictions
They can also include;
- Holiday entitlement
- Details of your pension scheme
- Probationary period length
- Sick pay terms and allowance
What protection does an employment contract provide?
An employment contract is so important for all parties involved as not only does it establish clarity and reference points, but it can also signify legal binding.
If there is anything particular that needs to be clarified to an employee before they start work (e.g. their hours and responsibilities), a contract can highlight specific points that are different or crucial when working for a certain company.
It is critical that your new employee has a clear understanding of what the contract terms are, it is strongly recommended that bosses or line managers go over the contract with the employee so there are no misunderstandings between the company and the new joiner. Trust and respect are the basis of any successful working relationship, so everyone involved should be aware of what is expected of the employee.
The contract is there to protect both parties if any disagreements were to happen between the company and the employee the contract will be the reference point to use as a reference, as long as the company sticks to its terms it should be a smooth process.
It is vital to ensure that all employment contracts clearly outline what is expected of your employees. In the event of a disagreement, an employment contract can be used as a reference point to uphold the statutory rights of the employer and the employee.
Types of employee contracts
Not all contracts of employment are made the same. Depending on the type of position you are looking to fill, you may find you will need to use one of the following types of written employment contracts.
- Permanent employment contract
A permanent employee contract is a contract that offers ongoing employment at an organisation, until either terminated by the employee or the employer.
A permanent employment contract can be offered for both full and part-time work.
- Temporary contract
Temporary contracts, also known as fixed term contracts, provide a specific end date or milestone that will result in the end of your employee’s term of employment.
- Zero hours contract
A Zero hours contract, also known as a casual contract, is typically created for the completion of one specific piece of work, or for a business who requires on-call workers, such as translators. Unlike with fixed term contracts and permanent employment contracts, employees on this type of contract do not have to be given regular work. Because of this, they can also refuse to work when asked.
Zero hours contract employees maintain their statutory right to annual leave and National Minimum Wage under employment law.
You can get legal assistance from LawBite.
If you need help deciphering or drawing up a contract of employment, or you find yourself in a difficult position with your employee or boss, LawBite is here to help. Our legal advice is easy to access, clear to understand and affordable.
If you need help with an employment tribunal or with any legal issues occurring at your workplace, you can make an enquiry and we will immediately match you with the right lawyer for your situation. Not only will we then arrange a same-day call, but you will receive a no-obligation, fixed-price quote through our platform before getting your employment contract issue sorted.
