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Overview of the Employment contract

This document is GDPR compliant.

Employment contracts are not only a legal necessity, they can also help set the tone of your business. This straightforward contract of employment is a great way to layout clear expectations for the employer and the employee, laying the foundations for a mutually rewarding relationship. It can be used for permanent employees or fixed-term, temporary employees. Good employment contracts cover key areas such as pay, benefits, hours, holiday, sickness and termination.

Use this contract of employment

  • when you want to employ someone new or sign a new contract with an existing employee
  • when you want to provide the written employment information required by law
  • when you want to use a straightforward employment contract which clarifies the basic agreed employment terms
  • for employees based in England, Wales or Scotland
  • if you want to create a permanent or fixed-term contract

This employment contract covers

  • agreed hours and days of work
  • terms relating to holidays
  • terms dealing with sickness and injury of employees
  • the duties of the role
  • pay and benefits (whether full or part-time)
  • place of work
  • disciplinary and grievance procedures
  • arrangements for ending employment (including employment for a fixed term)
  • information required by law about trade unions and pensions

An employment contract is an agreement between the employer and employee setting out the employee's employment rights, responsibilities and duties. It forms the legal relationship between the employer and employee.

Employers are legally required to give employees who have worked for one month or more a written statement of particulars. This must be done within two months of the start of employment. This employment contract complies with the requirement for a written statement and can be adapted for full-time or part-time permanent employees and for fixed-term employees. Employment contracts must be compliant with the Employment Rights Act 1996, the Employment Act 2002 and the Equality Act 2010.

If you are likely to move premises in the future or operate from more than one site, you should specify this in the employment contract so that you have the right to move the employee to a new place of work. Without this right, it will be up to the employee whether to agree to the move and refusal may cause legal and practical problems. To make the right to move employees more reasonable and acceptable, it is usual to put some geographical limit on the area within which the place of work can be moved.

This employment contract allows you to specify the regions in which the employee may be expected to work.

When there is both an offer letter and a separate employment contract, it's important to say which document takes priority if there is any difference.

This employment contract says that the contract will take priority over the offer letter.

Using a separate job description works best if you want to give a detailed description of the job and can help bring clarity, particularly for mid-level to senior employees. However, you should only reference a separate job description if it will genuinely be created in practice. Otherwise, it's better to put a brief explanation in the employment contract.

This employment contract allows you to reference a separate job if needed or just describe the duties in the contract itself.

For new hires, it is helpful for the employer to have a probationary period (usually 3 months) during which the employee can be assessed. It is unusual (but not impossible) to use a probationary period when an existing employee enters into a new employment contract. You can decide how long you want the probationary period to be.

The option to extend the probationary period (usually for another 3 months) is helpful when employees have not achieved set targets or have performed poorly during the initial period or have been absent. Probationary periods will not stop the employee from gaining unfair dismissal rights when they reach the qualifying service.

This employment contract allows for a probationary period, if needed, and for the probationary period to be extended.

This employment contract allows you to specify regular or irregular hours of work - for example, 9 am - 5 pm Monday - Friday or a certain number of hours per week, at times to be agreed. Check the employee is not working more than 48 hours a week, averaged over 17 weeks. This is the legal maximum, including work for other employers. If an employee works at or close to the maximum, ask them if they are willing to opt-out from the 48 hour limit. If not you must take reasonable steps to ensure that working time stays under the limit. Employees also cannot work for more than 13 hours a day and must either have 24 hours' continuous rest a week or 48 hours a fortnight.

Employees are legally entitled to at least 5.6 weeks paid holiday a year. For an employee working five days week, this equates to 28 days. This can be inclusive or exclusive of bank and public holidays. Employers can agree to a greater holiday allowance. Part-time employees are entitled to a pro-rata entitlement (eg an employee working three days per week would be entitled to 16.8 days' holiday).

All employers are required by law to provide a workplace pension for certain employees. This requirement is known as automatic enrolment (or the auto-enrolment duty) and it applies to all staff who:

  • are aged between 22 and the State Pension age

  • earn at least £10,000 per annum

  • work in the UK

From April 2019, employers must pay at least 3% of an employee’s qualifying earnings (ie their salary before tax) into this workplace pension. They must also deduct contributions of at least 5% from each eligible employee. If these levels of pension contribution are already made through an existing workplace pension scheme, there is no need to take any action, as the requirements of auto-enrolment will be fulfilled.

Fixed-term contracts (ie contracts which end on a specified date rather than continuing indefinitely) can be useful where it is known from the outset that the employment will end after a defined period. Fixed-term employees are protected by law from being treated less favourably than permanent employees and, if they have sufficient length of service, from unfair dismissal. Fixed-term contracts that are renewed or replaced after four years' qualifying service are automatically converted into a contract of indefinite duration. This employment contract allows you to choose fixed-term or employment for an indefinite period.

The minimum permissible notice period from two months' service until two years of service is one week. It is common to say that one week's notice will apply during the probationary period. Until two months service it is lawful to provide for termination without notice but this is unusual.

This employment contract allows the notice period to be specified, although the employer cannot offer less than the statutory minimum.

Ask a lawyer for:

  • employees who will work overseas for more than one month in total
  • employees involved in creating intellectual property central to your business
  • employment contracts with very senior employees or company directors
  • employees based outside England, Wales or Scotland

This employment contract is governed by the law of England and Wales or the law of Scotland.

Other names for Employment contract

Job contract, Contract of employment.