In order for both an employer and employee to be clear about the terms of employment, an employment contract is the document typically used.

The definition of an employment contract is a legally binding agreement between an employer and employee. This is further defined in the Employee Rights Act 1996 as a “contract of service or apprenticeship”.

An employment contract outlines the terms and conditions of employment including duties and the rights and responsibilities of both employer and employee.

Benefits of the Employment Contract

Although the content of each contract will differ according to the nature of the business and job being offered, each offers the same kinds of benefits.

A written contract allows an employer the ability, during the notice period, to place employees on garden leave. It also allows an employer to make a payment to an employee in lieu of notice, which doesn’t require the employee to work out their notice.

The intellectual property of a business, as well as its confidential information can be protected by an employment contract. Other items like trade secrets and customer connections can also be afforded protection.

The Difference between “Worker” and “Employee”

Under the Employment Rights Act 1996, Section 230, a worker refers to any person who performs work personally without being a customer or client. Under this definition, a worker is entitled to holidays, health and safety protection, a minimum wage and can join a trade union.

In the same document and section, an employee is defined as anyone having a contract of service with an employer. An employee has all of the rights of a worker, but with the additional rights to protection from employer insolvency or sale of the business as well as the right to reasonable and fair notice of redundancy or dismissal. An employee is also entitled to occupational pension and time off due to child care and maternity leave. As well, they are entitled to a written statement of the employment contract.

The Written or Principle Statement

For employees, a written statement of employment must be given by the employer within two months of starting employment but ideally on the first day. The written statement can also be provided in instalments.

If an employee doesn’t receive their written statement from an employer, it’s advised that they first seek resolution on an informal basis. It’s only if this attempt doesn’t work that the employee should then consider raising a formal grievance. A claim to an employment tribunal can also be made, although this is considered to be a last resort. If a tribunal claim is successful, compensation in the form of up to 4 weeks’ pay could be awarded to the employee.

Contract Terms

The terms outlined in a contract can be found in several locations. Contract terms are legally binding.

Terms of a contract can appear an official written contract, whether an employment contract or another written employment statement. Terms can also be verbally agreed upon. A business’s notices board can contain contract terms, as can an employee handbook.

An employer can include contract terms in offer letters sent to potential employees, and collective agreements between the employer and trade or staff associations can also include contract terms. There are also those terms that are required by law, such as the mandatory payment of at least the National Minimum Wage.

The employment contract is a crucial element of any employment relationship. Therefore, its contents should be carefully considered and presented.

Tricia Hay

Tricia Hay is Owner, Director of First Base Employment Limited