Contracts of Employment
Contracts of employment can vary from sector to sector. They are useful for both employer and employee and are the foundation of the employment relationship. A contract of employment sets out the rights and responsibilities of both parties. This is useful since it means that both parties know what is expected of them by the other party. Contracts of employment minimise misunderstandings and clarify what is expected of the employer and the employee.
Contracts of employment need not be written and are essentially created as soon as an employee accepts a job offer. However it is good practice for an employer to clarify the terms in writing as soon as possible in order to avoid confusion and uncertainty. Further, new employees are entitled to have a written statement of the main terms within 2 months of starting work, whether or not a written contract is later created.
What do they contain?
The employment contract includes general details about the job such as start date, job title and description, working hours, remuneration terms and place of work. They are also used to help meet the needs of the employer’s business and to ensure their business interests are protected and this is how they can serve to protect the employer. It is essential that the contract contains all the relevant information from the very beginning as this provides a basis of protection for the employer. The express terms of the contract are paramount because in the event that there is a dispute between employer and employee then the contract provides the first place of interest in settling the dispute and can save time and expense.
Terms which might be useful for employers to include in the contract of employment are:
- Duration of the contract of employment if for a fixed term
- Holiday pay entitlement (if beyond statutory requirements)
- Sick pay entitlement (if beyond statutory requirements)
- Pension information
- Maternity, paternity, adoption and parental leave rights (if beyond statutory requirements)
- Restrictive covenants or confidentiality clauses
- Disciplinary and dismissal procedures
- Notice periods (if beyond statutory requirements)
Anything else that the employer wants to communicate to the employee at the outset of the employee relationship can also be included in the contract of employment. If an employer is not going beyond any specific legal requirements (such as for example statutory sick pay) then it is still useful to include the legal requirements in the contract of employment because it means employees are aware of what they are entitled to whilst they are working for you and this can minimise disputes that may arise because employees already know their entitlements.
Not all contractual terms need to be expressly stated within the contract. There are many terms which will be implied into the contract of employment and these will commonly be duties of the employer and employee. Commonly implied duties of the employee within the contract of employment are:
- to obey reasonable and lawful instructions
- to exercise diligence and care in performing duties
- to adapt and cooperate
- duty of fidelity, loyalty and confidentiality
Like express terms, a remedy can be sought if the implied terms of the contract are breached.
Written contracts of employment follow the normal rules for validly constituted contracts. Therefore there must be an offer, an acceptance of the offer, a consideration and an intention for the contract to be legally enforceable.
An employee handbook providing much more detailed information can also be provided to new employees along with their contract of employment and this can hold useful information such as the grievance or disciplinary procedure used by the employer.
Employers should consult a solicitor for more detailed advice on contracts of employment to ensure that they are compliant with current legislation, are legally enforceable and meet the needs of the employer, or for general employment law advice.