WHAT TO INCLUDE IN AN EMPLOYEE CONTRACT: A GUIDE FOR EMPLOYERS
An employee contract is a vital document that outlines the terms and conditions of employment. It is a legally binding agreement between an employer and an employee, and it sets out the expectations, rights, and responsibilities of both parties. However knowing what exactly should be included in an employee contract can be very difficult, especially fi you are employing people for the first time or haven’t needed to recruit for a while. In this guide, we’ll outline the key elements that should be included in an employee contract to protect both employers and employees.
Some of these elements, known as written statement of particulars must be given to an employee within one month of starting employment, however they may be incorporated into the contract at a later date.
- Basic Information: The employee contract should start with basic information such as the job title, start date, and work location.
- Job Description: The contract should include a detailed job description outlining the duties and responsibilities of the employee.
- Working Hours: The contract should clearly state the employee’s working hours, including any expected overtime as well as breaks including duration and timings during the day if required.
- Salary and Benefits: The contract should outline the employee’s salary, any bonus or commission structures, and any benefits they are entitled to such as healthcare plans, discount schemes or pension contributions.
- Termination: The contract should detail the terms of termination, including notice periods and grounds for dismissal.
- Confidentiality and Intellectual Property: The contract should include clauses around confidentiality and intellectual property to protect sensitive company information. This may also extend to non-compete clauses and protection of trade secrets.
- Dispute Resolution: The contract should outline how any disputes between the employer and employee will be resolved.
The terms of an employment contract
An employment contract can contain express and implied terms. Express terms are stated in writing and are explicit. These explicit terms usually are defined to meet an employers legal obligations towards the employee such as the right to breaks, holiday, maternity and paternity leave and sickness entitlement.
Meanwhile, implied terms are ones which aren’t necessarily written down in the contract but are implicit, such as a term incorporated by statute or so obvious that it is assumed to have been agreed, e.g. an employer’s duty to provide a safe and comfortable place of work, the employee needing a full driving licence, or the right to receive at least the minimum wage.
You may also as an employer want to add specific clauses to your contract, dependent on the role and industry. For example non-compete clauses should an employee leave, rules on accepting gifts or benefits from customers, dress codes, lines of management etc.
Different types of employment contract
- Full time employment contracts – they are usually given to permanent, full time members of staff.
- Part time employment contracts – Part-time staff usually work less hours than full-time staff but are still considered permanent employees. The contract will be very similar to the Full Time contract but some conditions will be on a pro-rata basis i.e. annual leave, working hours, break length and timing etc.
- Fixed term contracts of employment – These last for a set amount of time which is agreed with the employee in advance. These contracts may not specify a specific amount of time but rather when a project is finished. They will have many of the same rights as permanent staff but certain aspects, such as holiday entitlement and benefits may differ depending on how long the contract is in place for.
- Temporary contract of employment – These are similar to fixed term contracts but the actual end date may be more flexible depending on demand.
- Agency contracts – Agency staff will have their contract agreed and managed by the recruitment agency, so it is the recruitment agency who need to make sure workers’ rights are protected.
- Freelancers and contractors contracts – These vary in each individual case. They can include start/end dates and remuneration for a particular project or rate of pay which would have been agreed with the contractor at the outset.
- Zero-hours contracts – These contracts mean that an employee will only work when required by the employer. However a big difference is a zero-hours employee can look for employment elsewhere and such a contract would be invalid if it prevented them from doing so.
Why should employers provide a contract of employment?
A contract of employment ensures the relationship is clearly defined for both employers and employees. Sadly some relationships are rockier than others but having a contract from the outset can help to protect both parties and avoid costly litigation. It also offers a point of reference should a future dispute arise and can be used as evidence if necessary.
For your new employee, it will also promote a healthy working relationship from the outset and demonstrate you are an organised and efficient employer who provides a solid working environment.
Can you change a contract of employment?
Over time you may want to vary the terms of your employees’ contracts but you should do so with caution as it normally requires the consent of the employee. You can agree changes with them after consultation and offer incentives to get them to accept the changes.
However making changes unilaterally can be risky, as employees can bring an action of breach of contract if they don’t agree. They can also resign and bring a case of constructive dismissal.
Another possible route is terminating the existing contract by notice and then giving re-engagement based on the new contract terms. However, this will be considered as redundancy dismissal and you’ll need to follow rules around consultation periods for redundancy. You will also need to offer re-engagement immediately and even then there is still a risk the employee could bring a case of constructive dismissal.
An employee may also want to change some terms of their contract and negotiate better ones such as higher pay, a change to their job role or different benefits. However they will also need to do this in consultation with you and can only go ahead with mutual agreement.
An employee contract is a crucial document that sets out the terms and conditions of employment. By including the above elements in an employee contract, both employers and employees can be protected and have a clear understanding of their rights and responsibilities. It is essential to work with a qualified HR consultant to ensure that all necessary elements are included in the employee contract.
If you need any help preparing your contracts for new employees, or updating existing contracts, please feel free to get in touch and we will be able to provide tailored solutions for your business and situation.