Guide to writing contracts of employment.
As an employer, you are legally bound to provide a written contract for each employee within two months of the date their employment commences. Full and part-time workers are entitled to the same treatment – eg hourly pay, bank holiday entitlement, sick pay, holiday pay, pension payments, and opportunities for promotion.
A contract exists as soon as an employee says yes to the offer of a job, regardless of whether the offer is a written document. The written contract should contain very specific information to ensure that there are no misunderstandings between the employer and employee.
Although you may wish to write up your own contract, it would be wise to have a solicitor examine any contract before it is issued to an employee to ensure that all clauses are valid and legal, particularly as the law changes so frequently. There are many websites offering downloadable contract templates for a fee – if you should decide to use these, you should still have them checked by a lawyer or HR Advisor.
The following sections can be used as a template for a contract of employment:
Names of the parties
The full details of the business, and the employee’s full name and address.
Employment contract start date
Details of the date the employee will start (or started) their role. The contract should also state the date on which the employee’s continuous service began, whether or not this date is earlier than the contract date.
Employee's job title and description
The job title and description as per the advertisement for the job, with any amendments agreed prior to the signing of the contract included. This section should also allow a clause stating that the employee may be expected to carry out any other reasonable duties that fall within the parameters of their role, to allow for flexibility.
Workplace
The contract should specify the address of work, but should also say that this is subject to change, again to allow for flexibility.
Working hours
Hours must come to a maximum of 48 per week due to the Working Time Regulations (unless the employee has opted out voluntarily). The employee’s weekly hours should be specified but you may also wish to include a clause saying that the employee may be required to work additional hours if requested by the employer.
Probationary period
Many employers now offer a trial period for new employees, during which they give the option of a short notice period (e.g. the employee may quit or be asked to leave with only a week’s notice). Trial periods may also be extended if this is stipulated in the contract. A contract should specify the length of the probationary period and state how long the notice period during this time will be.
Salary
This section should state the employee’s full salary before tax and national insurance. It should also state the dates on which the employee will be paid.
Deductions
This section should provide details of all circumstances under which the employer can make deductions from the employee’s salary. It could be unlawful to deduct money from an employee’s pay without such a clause in place.
Expenses
If an employee is entitled to expenses, e.g. travel for business purposes, this section should outline exactly what expenses will be covered. A clause should always be included stating that proof of payment is required to claim expenses.
Holidays
This section should state how many days holiday per year an employee is entitled to (pro rata if the employee is part time) and whether bank holidays and national holidays are included in this. It should specify the dates when a holiday year runs as well as details of whether an employee can roll over holiday into the next year, whether an employee can take holiday after giving notice and pay in lieu of unused holiday time.
Sickness and disability
This should explain how and by what time an employee must call into work if taking a sick day, when a doctor’s certificate will be required and what type of sick pay the employee will be entitled to.
Pension
This clause allows the employer to explain whether the employee will be included within the company’s pension scheme, a stakeholder pension scheme or if the role does not have a pension provision. The laws relating to pensions are changing, so ensure you are aware of what is expected of you as an employer before drawing up a contract. Currently, an employer with at least 5 employees is required to offer access to a stakeholder pension as a minimum.
Notice
The amount of notice to be given by either the employer or employee. It should also include an explanation of any actions that would be considered gross misconduct and could lead to dismissal without notice.
Grievance and disciplinary procedure
This clause should offer details of how an employee can raise any issues, concerns or complaints they may have with their employer, and how these concerns will be dealt with. You should also outline what will happen if an employee breaks certain rules regarding behaviour.
Retirement
Although the law has recently changed so that there is no longer a statutory retirement age, a clause should be included explaining what the employee should do if they wish to retire voluntarily. Always ensure that you fully understand the law before including anything in a contract.
Severability
This should be included as a standard clause in all employment contracts. It states that each clause is independent from the others in a contract, so if one clause should not apply to an employee or is invalid for any reason, the rest of the contract will remain valid.
Prior agreements
This should also be included as standard and should explain that the contract of employment contains all terms of employment and no prior agreements between employer and employee will be valid, regardless of whether they are verbal or written.
Jurisdiction
Confirmation as to whether English and Welsh, Scottish or Northern Irish law applies to the contract.
Particulars of employment
“Apart from the legal obligation to provide a contract of employment within 8 weeks of employment, the main advantage of producing one is that it provides clarity for both employer and employee of what the precise agreement is between them. A well drafted employment contract can also provide significant protection for an employer if things start to go wrong with the employment relationship" – Lucy Pakes, Senior HR Advisor, PicassoHR.
