3 min read | 23 January, 2018 By Melissa Jones
If you think a contract of employment is just another bit of box ticking and no one ever looks at them, think again. Whilst you don’t need to have one in writing it certainly helps to clarify things, especially if there is a dispute down the line.
A contract of employment exists between employer and employee and forms the basis of the employment relationship. Generally speaking, it will cover things such as hours to be worked, scope of the job, holiday entitlement, sick pay, benefits and an employee’s duties and responsibilities.
A contract, whether written down or not, comes into force as soon as the employee accepts their job offer.
While you don’t need to have a contract of employment in writing it is always preferable so the terms are clear for both sides. With the best will in the world, not all business relationships work out positively. If this happens in your business, having comprehensive employment contracts can protect both parties and avoid costly litigation down the line.
Most terms will be set out in writing between an employer and employee – these are explicit contract terms and they will include things like rights, responsibilities and duties, remuneration, legal requirements and benefits.
However, there are also implied terms which may not necessarily be written explicitly but are considered part of the contract. For example, they could be very obvious things such as an employee not stealing from an employer or having a safe place to work in, things needed to make the contract of employment work e.g. like a driver having a driving licence and terms which have been established as custom and practice over time e.g. paying a Christmas bonus.
In addition, there will be statutory terms included in a contract, either implied or explicitly imposed by an Act of Parliament or statutory instrument, such as the right to be paid the minimum national wage.
If someone works for you for more than a month, as a minimum you’ll have to provide them with a written statement of employment within two months of their start date. This isn’t an employment contract but it will include the main conditions of employment.
An employment contract allows you to be specific about terms. This can be especially important if you want to protect trade secrets, include non-compete agreements or if they will be working with sensitive or copyrighted material. It also allows both you, and your employee, to refer back in the event of a future dispute and can be used as evidence if necessary.
It also helps promote good working relationships between you and your employee, painting you as an organised and efficient employer and providing a solid working structure.
A contract can be varied by both employer and employee. An employer might do so because of changes in economic conditions or business reorganisation. An employee might wish to negotiate better terms e.g. pay, job role or benefits.
Changes can only be made with the agreement of both parties and should ideally be in writing. You should consult with your employee and explain any changes you wish to make.