What is an employment contract?
Employment contracts are legal contracts between an employer and a worker. Its goal is to define the terms of employment, such as each party’s rights, obligations, and duties, and it is governed by the same fundamental legislation that governs all other contracts.
It should contain various legally enforceable conditions, such as the employer’s obligation to pay the employee’s salary and the employee’s obligation to labour in return for payment.
Depending on an individual’s job position, several kinds of contracts may apply, so be sure to understand the labour status of the person you’re employing before creating or mailing an employment contract.
It’s vital to note that, from April 6, 2020, every individual employee and worker will be entitled to obtain a written statement of particulars on the first day of their job.
Employment contract vs written statement of particulars
A written declaration, unlike an employment agreement, is governed by the law. It is usually shorter and may simply restate what has previously been agreed upon verbally or in writing, but the employer must provide detailed details to the employee. A written statement of particulars might consist of many documents, but it must be delivered at the very least before the employee or worker begins working for you.
The following items must be included in written statements:
- Name and address of the employer
- The job title or description of the person or workforce
- The employee’s place of employment (or places of employment) as well as any related relocation criteria
- If an employer or worker is forced to labour abroad for more than a month, they are entitled to compensation,
- The employee’s start date and whether or not past employment counts toward continuous employment.
- Any probationary period, the length of the probationary period, and the criteria of the probationary period
- How the employee will be compensated, including the amount and frequency of payment
- Working hours, including any overtime pay
- The employee’s or worker’s holiday entitlement, including if it includes public holidays, and how it is computed if the employee or worker quits.
- Any advantages that an employee or worker will obtain as a result of their job
- If employment expires, either party must provide a notice period.
- Whether the position is permanent, temporary, or fixed-term, as well as how long it is projected to continue—information about absence/incapacity and the amount of sick leave and pay available.
- Maternity and paternity leave, as well as compassionate leave, are examples of paid leave entitlements that are in addition to annual leave and holiday pay.
- Procedures for disciplinary action and grievances
- Any information on any collective bargaining agreements
- Information about the pension plan
- Any education or training requirements
Because formal contracts are rare, a declaration in writing is often the best evidence of the terms an employer and employee have agreed upon. Alternatively, the employer might include all relevant elements, including the written statement, in the employment contract and omit it.
A separate written contract takes precedence over a written statement since it is more thorough and gives more information about what the employer and employee have agreed upon. In most circumstances, both parties also sign to demonstrate that it has been read, understood, and agreed upon, providing more clarity on both parties’ expectations and duties.
An employment contract will be legally enforceable if the conditions are fair and offer, acceptance, consideration, clarity of terms, and a desire to form a legal relationship, as with other commercial transactions.
What else should I think about including in a contract?
Depending on the nature of your business or job, you may choose to include additional material in your employment contract to ensure that your firm is adequately protected and that the responsibilities of both parties are clearly defined.
The following are examples of extra clauses:
- Additional information about absence, disciplinary, grievance, and dismissal processes, as well as where to get further information
- Security (including IT), confidentiality, and GDPR obligations, particularly due to blended working, are all important considerations.
- How will intellectual property (IP) be handled?
- Notice durations and any payments instead of notifications are detailed.
- Employee obligations upon termination of employment, such as the return of corporate property and the continuation of confidentiality and intellectual property protections
- After the end of their job, post-termination limitations, i.e., no solicitation of customers or employees within a geographical region for a limited, reasonable amount of time.
- The contract’s governing law and jurisdiction
- Specific sections address the sorts of job advantages workers may get, such as bonuses, commissions, corporate cars, and healthcare.
The advantages of having an employee handbook
Keeping a non-contractual employee handbook with extra information on business rules and procedures is a terrific method to keep track of anything you may need or want your workers to know. This enables you to establish clear standards and proper and consistent methods to be followed in certain working settings.
It may be difficult and time-consuming to draft the correct employment contract and accompanying documents that will help your business today and in the future. If you are unsure about what to include, you should obtain employment-specific guidance.
