What should be included in a contract of employment?

Gill Wooldridge takes at look at what should be included in a contract of employment.  If you are an employer or an employee and we can help with issues relating to this note or on any other employment related matter, please contact gill@bradleyhayneslaw.co.uk or call us on 01905 900 919. 

What should be included in a contract of employment?

The relationship between employer and employee can be complex, lengthy and can evolve.  This article seeks to explain what the necessary provisions are to go into a contract of employment, the importance of the details imbedded in each clause and why it is important for any employer to include them.

It must however be remembered that this article outlines what should be included in a written contract of employment. There are other terms that govern a contract of employment, some will be implied, others potentially can develop over time or through ‘custom and practice’.

Keep it certain and keep it clear

The clearer that both parties are with what is required of them, the more protection the contract can offer should the future employment relationship sour; writing down what is expected of both sides provides more certainty for all concerned.

It is also the right of any employee to receive a written statement of terms and conditions of employment within eight weeks of their employment starting with you.  Here are the examples of what should be made clear in the contract:

• Include the name and address of the employee as well as the details of your business, this clarifies who the contract will be applicable for and who is going to be bound by its terms.
• The date when the contract of employment started so that both parties have a timeline of when the employer/employee relationship started. Keep in mind that an employee’s continuous service could have started earlier than the contract date.
• The salary that an employee will receive before any tax or national insurance is deducted.
• Deductions by an employer in any circumstances must be written down in the employment contract, with the employee aware of what circumstances you are able to make a deduction from their salary. Any deductions that are not specifically agreed in a contract of employment could be deemed unlawful.
• It is important to outline what holiday entitlement an employee will receive, whether this includes bank holidays or public holidays, whether the holiday entitlement can be rolled over yearly and when the holiday year starts.
• Notice requirements outline how much notice is required to be given by your employee or yourself as well as circumstances where notice will not be required such as in cases of gross negligence on the employee’s part.

Other important terms

There are other terms which should be provided in writing such as:

• Any workplace or personal pension scheme that the employee will be entitled to join.
• Any Disciplinary or Grievance procedures for an employee to understand how any problems or disputes would be handled;
• Guidelines on Sickness such as the type of sick pay the employee will be entitled to or if an employee will be required to provide proof of illness from a doctor or other medical practitioner.
• Any collective agreements which apply to all employees.

Keep it flexible

As well as keeping it clear, it will be in an employer’s best interest to keep the details of the employment contract flexible so that the employee knows the full range of tasks they may be required to complete or locations to travel if they are required to work at multiple sites. Examples of where flexibility could be added into the employment contract would be:

• The employee’s job title and description such as the reasonable duties that will be required of an employee through their job description. It may be necessary during the course of the employment to require an employee to work on a matter they would not usually do but is in relation to what their job title covers.
• The address of the workplace may not be the only place that an employee is required to work. It could require travel to other offices or sites and that need for an employee to travel should be stated clearly in a contract to ensure the employee is aware.
• An employee’s contractual hours should be stated clearly but it may be in the interests of an employer and employee to be flexible with them, for example it may be the wishes of both employer and employee to opt out of working time regulations. This would require both parties to agree specifically to that arrangement.
• It may also be worth introducing a probationary period into a contract of employment, which in turn could be extended if you require further time to ensure the suitability of a new employee for your business. The probationary period would normally include a reduced notice period. Although the length of this period would need to be clearly specified.

Contract Terms

There are other important clauses to put into a contract of employment not just for the sake of the employee/employer relationship itself but for the validity of the contract, such as clauses regarding:

• The jurisdiction of the contract of employment detailing which country’s laws are applicable to the contract of employment, for example England and Wales;
• The inclusion of a severity clause which would protect the wider contract of employment from challenge if one particular clause was found to be invalid;
• A clause invalidating any prior agreement between the employer and employee, which reinforces that the relationship between employer and employee is just that set out in the employment contract and not anything that might have been said or done before;

Well drafted employment contracts provide employer and employee with clarity as to what is expected of them through the lifecycle of the relationship and provide more certainty as to the outcome should the relationship change.  Please get in touch with our employment team by contacting gill@bradleyhayneslaw.co.uk if you need contracts of employment preparing for your business or need any advice on their terms.