What are contracts of employment?

An employment contract, also known as a contract of employment, is a legally binding agreement between an employer and an employee. Both parties must adhere to the terms of the contract until its termination or any subsequent changes to the terms. Such contracts can take the form of either verbal agreements or written documents.

When an individual begins their employment, it is the legal responsibility of the employer to provide a written statement of employment particulars within 2 months of the start of employment. In the majority of cases, an employer will issue a contract of employment, which is a more comprehensive document than a written statement of employment particulars

In this article, we will outline the essential elements that should be included in employment contracts and explore the various terms and clauses that typically constitute their contents. To begin with, let’s explore the question, “What is in a contract of employment?”

What is in a contract of employment?

Employment contracts vary between companies and are tailored to each specific business. While there is no standard format, common sections typically found in a contract of employment include:

• The employer’s and employee’s name and address
• Nature of employment
• Date the employment will begin
• Rate of remuneration
• When an employee will be paid
• Working hours
• Holiday and sickness entitlement
• The length of any probation period
• Any other contractual benefits (for example childcare vouchers or lunch)
• Whether training is provided
• Notice period
• Usual place of work and if there is a requirement to work elsewhere.
• The details of any pension scheme.
• The terms of any collective agreement (if applicable).
• Notice provisions, and whether payment in lieu of notice is permitted [PILON]

These sections collectively form the framework of a contract of employment.

What are the terms of a contract?

The terms of a contract refer to the specific provisions and conditions that are agreed upon by the employer and employee.

Here are the different types of terms typically found in a contract of employment:

• Express terms – these are specific terms that are put in writing by the employer. For example, an employee’s rate of pay or working hours.
• Statutory terms – these come from employment law itself and don’t have to be in writing. For example, statutory redundancy pays, an employee is entitled to this if they satisfy the legal rules of entitlement.
• Implied terms – these are terms that are not expressly set out in the contract but can be implied into an employment contract by common law or statute, a classic example is that stealing from the employer is prohibited.
• Custom and practice – they are terms that are unwritten, but so well-known within the workplace they can become part of the employment contract.
• Incorporated terms – these are terms from other services, such as staff handbooks or a collective agreement that a trade union has negotiated.
• Exclusivity clauses – these stop the employee from working for another employer without the express consent of the employer.

It’s important to note that the specific terms of a contract can vary depending on the nature of the agreement and the intentions of the parties involved.

Senior Employee Contract Clauses

Senior employees, such as executives or managers, often have contract clauses that reflect their increased responsibilities within the company. These additional clauses are unique to address their specific needs and expectations.

The two most common clauses found within a senior positions contract include:

• Post-termination restrictions – This prohibits employees from doing specific things following their employment. For example, not working for a competitor. These are called restrictive covenants. To be lawful they can only provide sufficient cover to protect the legitimate business interests of the employer. This is a complex area of law and it is strongly recommended to seek legal advice on this topic.
• Garden leave – This allows the employer to request that the employee stays at home during their notice period. This is normally because there are concerns about confidentiality, so garden leave means any confidential information the employee knows is out of date once their notice period is over.

How can Taylor Bracewell’s Employment team help?

Contracts of employment play a crucial role in establishing the rights and obligations of both employers and employees. Whether you are an employer seeking to draft or review employment contracts, or an employee facing issues related to your contract, our dedicated employment law team is here to assist you.

With our expertise and experience, we can provide the guidance and support needed to navigate the complexities of employment contracts. Don’t hesitate to reach out to our expert employment team for further assistance and tailored solutions to your specific employment needs. Contact our Doncaster team on 01302 341414 or our Sheffield team on 0114 272 1884 or by filling out our online enquiry form.