Employment contracts

An employment contract is a legal relationship you enter into with each of your employees. The contract sets out the employment conditions and the employee’s rights, responsibilities, and duties.  

As soon as an employee accepts your job offer, they enter into an employment contract with you. The contract doesn’t need to be a written agreement, but having a paper copy is advised as it will be easier for everyone to understand the terms of the contract.  

Both employers and employees must follow the contract until it ends or is changed. It would end if an employer or employee gave notice or an employee was dismissed.  

Certain parts of an employment contract are legally binding – these are known as ‘contract terms’.  

GOV.UK states that contract terms could be:  

• In a written contract, or similar document like a written statement of employment  
  Verbally agreed. 
• In an employee handbook or on a company notice board  
  In an offer letter from the employer.  
• Required by law (for example, an employer must pay employees at least the National Minimum Wage).  
• In collective agreements - negotiated agreements between employers and trade unions or staff associations  
  Implied terms - automatically part of a contract even if they are not written down.

An employment contract often automatically comes with implied terms. While these might not have been explicitly agreed between employer and employee, they are assumed and still apply to the contract.  

Implied terms might include:  

• An employee not stealing from their employer. 
• Employees being provided with a safe working environment  
• Legal requirements – like a minimum of 5.6 weeks’ paid holiday.

When an employee begins working, they must be given a ‘written statement of employment particulars’. This is different to an employment contract and should set out the particulars of employment.  

A ‘written statement of employment particulars’ consists of a principal statement and a wider written statement.  

A principal statement must be given to an employee on their first day of employment, and should include:  

• The business’s name 
  The employee’s name and job title  
• The employee’s start date 
• A description of the employee’s job responsibilities  
• How much and how often the employee will be paid 
• The hours of work (and whether the employee will have to work Sundays, nights, or overtime)  
• The employee’s specific holiday entitlement (and whether this includes public holidays) 
• Where the employee will be working from and whether they might have to relocate  
• The end date of a fixed-term contract (or how long a temporary job is expected to last) 
• The employee’s notice period 

Within their first two months of employment, employees must be provided with a wider written statement. This should highlight things such as pension schemes, non-compulsory training opportunities, disciplinary procedures and any collective agreements. 

More information can be found on the GOV.UK here. 

Both employers and employees can make the decision to terminate an employment contract. This will either happen when an employee resigns or is dismissed by their employer.  

With resignations and dismissals, there can be a lot to consider, and it is important that the law is always followed when dealing with either. You can find more information at Acas.  

The specific type of employment contracts you provide will depend on the type of staff you are employing. For more specific support, take a look at:  

• Full time and part-time contracts  
• Fixed-term contracts  
• Agency staff   
• Freelancers, consultants, and contractors  
• Zero-hour contracts  
• Employing family, young people and volunteers