Employment contracts
A contract of employment is an agreement between employer and employee and is the basis of the employment relationship. A contract is made when an offer of employment is accepted. A number of rights and duties, enforceable through the courts, arise as soon as this happens.
Most employment contracts do not need to be in writing to be legally valid, but writing down the terms of the contract will cut down on disagreements later on. The Employment Rights Act 1996 requires employers to provide most employees with a written statement of the main terms within two calendar months of starting work. Many employers include an introduction to terms and conditions as part of the induction programme for new starters. This gives employees a chance to ask questions and for the employer to test understanding of the employment contract.
Not all terms are always explicitly agreed in writing (express terms). The courts have established that all employment contracts have the following terms included, whether express or implied:
- to maintain trust and confidence through co-operation
- to act in good faith towards each other
- to take reasonable care to ensure health and safety in the workplace
Some implied terms can become part of the contract because of the employer and employee's behaviour, through custom and practice over time, or through a firm's rules (particularly if the employee has been made aware of them and given access to them).
 What should be included in my written statement?
Your written statement must include:
- your name
- your employer's name
- the date when your employment (and the period of continuous employment) began
- pay and the intervals at which you will be paid
- hours of work
- holiday entitlement
- entitlement to sick leave, including any entitlement to sick pay
- pensions and pension schemes
- your and your employer's entitlement to notice of termination
- job title or a brief job description
- where it is not permanent, the period for which your employment is expected to continue or, if it is for a fixed term, the date when it will end
- either the place of work or, if you're required or allowed to work in more than one location, an indication of this and of your employer's address
- details of the existence of any relevant collective agreements which directly affect the terms and conditions of your employment - including, if your employer isn't a party, the persons by whom they were made
- a note giving certain details of disciplinary and grievance procedures, and stating whether or not a pensions contracting-out certificate is in force for your employment
If you're normally employed in the UK but will be required to work abroad for the same employer for a period of more than one month, the statement must also cover:
- the period for which the employment abroad is to last
- the currency in which you will be paid
- any additional pay or benefits
- terms relating to your return to the UK
Where there are no details to be given for one of the items required in the statement (for example, where there is no pension entitlement), this must be stated.
Who isn't entitled to a written statement?Anyone who is not an employee, for example an independent contractor or freelancer, plus certain mariners and employees who ordinarily work outside Great Britain.
Can I sue my employer for breach of contract?
You would normally raise such an issue with your line manager in the first instance. He may well be able to sort the matter out quickly, particularly if an obvious mistake has been made. Failing this, you may feel the need to raise a formal grievance. Legal action should be seen as a last resort, in the event of the matter not being resolved to your satisfaction internally. If you suffer a measurable financial loss because your employer has not followed the agreed terms of your contract you can seek damages by making a breach of contract claim. Normally this must be made to a county or other civil court but if the employment has ended, it may be made to an employment tribunal.
Employers who suffer a measurable financial loss because an employee has departed from the agreed terms of the contract of employment can also seek damages in the same way – as a breach of contract claim or, if the employee has already claimed breach of contract to the tribunal, as a counter-claim.
How much notice of termination should I get?
Both you and your employer are normally entitled to a minimum period of notice of termination of employment. After one month's employment, you must give your employer at least one week's notice; this minimum is unaffected by longer service. Your employer must give you:
- at least one week's notice after one month's employment
- two weeks after two years
- three weeks after three years and so on up to 12 weeks after 12 years or more
However, you and your employer will be entitled to a longer period of notice than the statutory minimum if this is provided for in the contract of employment.
Most employees, subject to certain conditions, are entitled to certain payments during the statutory notice period. You can waive your right to notice or to payment in lieu of notice. Your employer can also waive their right to notice.
As a fixed-term employee, do I have the same rights as my colleagues?
The Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 aim to ensure that employees on fixed-term contracts are treated no less favourably than comparable permanent employees. Under the regulations these employees have the right to the same terms and conditions of employment as comparable permanent employees. Examples of fixed-term work include:
- agricultural workers doing 'seasonal' work
- shop assistants working for the Christmas period
- employees covering maternity leave
- employees doing a specific task – like painting a house
For further information, see Fixed-term work - Guidance at the Department for Business, Enterprise and Regulatory Reform (BERR) website. (opens in a new window)
What should I include in a written statement?
The written statement must include:
- your name/your organisation's name
- your employee's name
- the date when the employment (and the period of continuous employment) began
- pay and the intervals at which it will be paid
- hours of work
- holiday entitlement
- entitlement to sick leave, including any entitlement to sick pay
- pensions and pension schemes
- your and your employee's entitlement to notice of termination
- job title or a brief job description
- where it is not permanent, the period for which the employment is expected to continue or, if it is for a fixed term, the date when it will end
- either the place of work or, if your employee is required or allowed to work in more than one location, an indication of this and of your address
- details of the existence of any relevant collective agreements which directly affect the terms and conditions of your employee's employment - including, where you are not a party, the persons by whom they were made
- a note giving certain details of your disciplinary and grievance procedures, and stating whether or not a pensions contracting-out certificate is in force for the employment in question
If your employee is normally employed in the UK but you will require them to work abroad for a period of more than one month, the statement must also cover:
- the period for which the employment abroad will last
- the currency in which the employee will be paid
- any additional pay or benefits
- terms relating to the employee's return to the UK
Where there are no particulars to be given for one of the items required to be covered in the statement (for example, where there is no pension entitlement), this must be stated.
Who isn't entitled to a written statement?Anyone who is not an employee, for example an independent contractor or freelancer, plus certain mariners and employees who ordinarily work outside Great Britain.
Can my employee claim for breach of contract?
Disputes can often be resolved between the two parties without recourse to legal action, by the employee either taking the matter up with his line manager or raising a formal grievance. Employees who suffer a measurable financial loss because you have not followed the agreed terms of their contract can seek damages by making a breach of contract claim. Normally this must be made to a county or other civil court but if the employment has ended, it may be made to an employment tribunal.
If you suffer a measurable financial loss because an employee has departed from the agreed terms of the contract of employment, you can also seek damages in the same way – as a breach of contract claim or, if your employee has already claimed breach of contract to the tribunal, as a counter-claim.
How much notice of termination must I give?
Both you and your employees are normally entitled to a minimum period of notice of termination of employment. After one month's employment, your employee must give you at least one week's notice; this minimum is unaffected by longer service. You must give your employee:
- at least one week's notice after one month's employment
- two weeks after two years
- three weeks after three years and so on up to 12 weeks after 12 years or more
However, you and your employee will be entitled to a longer period of notice than the statutory minimum if this is provided for in the contract of employment.
Most employees, subject to certain conditions, are entitled to certain payments during the statutory notice period. Employees can waive their right to notice or to payment in lieu of notice. You can also waive your own right to notice.
Must I treat fixed-term employees the same as my other employees?
The Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 aim to ensure that employees on fixed-term contracts are treated no less favourably than comparable permanent employees. Under the regulations these employees have the right to the same terms and conditions of employment as comparable permanent employees. Examples of fixed-term work include:
- agricultural workers doing 'seasonal' work
- shop assistants working for the Christmas period
- employees covering maternity leave
- employees doing a specific task – like painting a house
For further information, see Fixed-term work - Guidance at the Department for Business, Enterprise and Regulatory Reform (BERR) website. (opens in a new window)
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