If you are new to being an employer, are you aware of your legal duties and obligations to your staff?  As an employer, it is essential to have some form of employment contract between yourself and your employee.  Below we look at what an employment contract is and explain the necessary paperwork to be completed in accordance with employment law.

Employee Contracts – what do they entail?

  • A contract of employment constitutes of an agreement between employer and employee, setting out the employment rights, duties and responsibilities of both parties.
  • On acceptance of the offer, the contract becomes binding until either the period of employment ends, or, the terms of contract are changed.
  • The contract does not necessarily need to be in writing. However, all employees are entitled to receive a statement of employment within two months of starting work (see below).
  • Not all terms of contract will be explicitly defined. For example, a rule such as, ‘do not steal from the company’ would be expected of any employee and is against the law, so naturally it would lead to termination of contract if carried out.  Some of the more obvious rules can be omitted from the contract, but can appear in the employee handbook if necessary.
  • It is unlikely in smaller firms that a staff association or union would be in operation, but if necessary details of how the relationship operates would form part of the employment contract, (typically this would relate to how working conditions and rates of pay are negotiated).
  • Once issued/signed, an employment contract can only be changed with the permission of both parties.

Written statement of employment particulars

Within two months of an employee starting work, you must provide an employee with a ‘statement of employment’-if the employee is working for one month or more.

If the employee is to work abroad for one month or more, in the first instance, then they must receive this before they leave.

The statement may come in two parts, a ‘principal statement’ and a ‘written statement’.  The principal statement must include the list below as a minimum.  It can be provided by way of letter, written employment contract or as a separate document.

  • Name of the employer/company.
  • Name of the employee.
  • Job title and description of duties.
  • Rate of pay, and payment dates/cycle.
  • Hours of work and any details of unsociable hours (nightshifts/weekends).
  • Start date of employment.
  • Holiday entitlement (including public holidays).
  • Where the job is located, and if the employee may have to relocate.
  • If the business has multiple locations, then the employer must be notified of the different locations he/she is expected to work in.

Although the following details don’t form part of the mandatory ‘principal statement’, they must be included in the written statement.

  • Periods of notice.
  • End date, (if fixed term contract)
  • Information related to any collective agreements (that could affect or be related to: terms of employment, or employee/employer conduct.)
  • Employee pensions.
  • Who to contact about a grievance.
  • How to complain about the handling of a grievance, or disciplinary or dismissal procedure.

The written statement does not need to contain information relating to:

  • Sick pay arrangements.
  • Disciplinary / Grievance procedures (except in Northern Ireland).

But you must let employees know where to find this information.

Termination or breach of contract.

  • The contract may be terminated by an employee who resigns, or an employer may terminate the contract by dismissing the employee.
  • Employers must stick to the notice period stipulated in the contract, or use the statutory minimum notice period, if longer.
  • Disputes may arise between employers and their employees, and the terms of an employment contract can be breached by either side (e.g. the employer fails to pay the staff member the pre-agreed wage, or the employee fails to turn up to work on time).
  • ACAS and Citizens Advice suggest that you should try to resolve any disagreements informally in the first instance. If the problem cannot be solved in this way, an employee may decide to raise a grievance against his/her employer (following the grievance guidelines referred to in the statement of employment).
  • As a last resort, your business could be taken to an employment tribunal – this can cause a great deal of stress on both sides and can be extremely costly for the business.
  • To keep you and your company protected, ensure that you provide a clear statement of employment to every employee.  Inconsistencies could cause greater problems when dealing with a grievance.