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Employment contracts

Employment Contracts

An employer must provide every employee with a written statement of certain specified particulars of the employment. The law is contained in sections 1 to 7 of the Employment Rights Act 1996. The act says that the statement must be given when the employee "begins" employment. It must be provided within two months of the beginning of the employment. A statement need not be provided for an employee who works for less than a month. The law is quite detailed and this publication summarises the position.

Statement or contract?

Contrary to popular belief, the law does not require that an employee is given a written contract of employment. All that is required is the giving of a written statement of the specified particulars mentioned in the legislation. Because a contract can be oral, every employment necessarily brings a contract into existence.

There are in our view substantial advantages from the point of view of both employer and employee of the employee having a written contract. The problem is that if the employer provides only a statement, then while that statement is prima facie evidence of what has been agreed between employer and employee, it is not conclusive.

With a contract, each party knows where he stands and the chances of a dispute as to exactly what was agreed are reduced.

There is no reason why the statutory statement should not be cast in the form of a contract.

What information must be given?

The statement must contain the following information:-

• The names of the employer and the employee.
• The date the employment began.
• The date when the employee's period of continuous employment began (taking into account any employment with a previous employer which counts towards that period).
• The scale or rate of pay (or the means by which pay is calculated).
• The intervals at which the employee is paid (e.g. weekly, monthly).
• Any terms which form part of the agreement with the employee relating to any of the following:-
  • Hours of work (including terms relating to normal hours of work).
  • Holiday entitlement, public holidays and holiday pay.
  • Incapacity for work due to sickness or injury and any terms relating to sick pay.
  • Pensions and pension schemes.

• The length of notice to be given by either party to end the employment.
• The job title (or a brief description of the employee's work).
• If the employment is NOT intended to be permanent, how long it is expected to last. If the employment is for a fixed term, the statement must state the date on which it will end.
• Either the place of work or, where the employee is to work at various places, an indication of that and of the employer's address.
• Any collective agreements which affect the employment. (A collective agreement is an agreement, normally with a trade union, affecting a group of employees).
• Where the employee is required to work outside the U.K. for more than one month, certain information regarding that aspect.

If there are no particulars to be entered under any of the above paragraphs that fact must be stated.

The statement can indicate the terms as to sickness etc. and pensions etc. by referring to some other reasonably accessible document.

Disciplinary Rules

In addition to the above matters, unless the employer has less than twenty employees, the statement must deal with disciplinary matters.

It must:-

• Specify any disciplinary rules, or refer to a reasonably accessible document which sets out those rules.
• Specify a person to whom the employee can apply if he is dissatisfied with any disciplinary decision which relates to him.
• Specify a person to whom the employee can apply to seek redress of any grievance relating to his employment.

The statement must specify how the employee should apply to any such person and, if there are procedures which will follow the application, say what they are or refer to a reasonably accessible document which sets them out.

Note that these provisions do not apply to rules, decisions, grievances or procedures relating to health or safety at work.

Pensions

The statement must say whether a contracting out certificate under chapter I of part III of the Pension Schemes Act 1993 is in force in relation to the employment.

What if something changes?

The employer must give the employee a written statement of any change in the prescribed information within a month of the change.

What if a statement is not provided?

It is not a criminal offence to fail to comply with this area of the law.

However, there are several very good reasons for an employer to provide proper statements:-

• It helps make sure that each party knows where he stands. Providing a contract should ensure that the things the employer wants to have in the contract are in fact part of it.
• An employee who has not been given a statement can apply to an employment tribunal for it to decide what are the terms of his employment. Clearly this is to be avoided, if only on cost grounds.
• It is good business practice

The absence of a statement could be seriously disadvantageous to the employer if proceedings were taken by a sacked employee for unfair dismissal. At best the absence of a statement reflects adversely on the employer.

How to proceed

A properly prepared standard form contract, tailored to the employer's particular requirements, is desirable. We can advise on the type of document you will need. We would investigate your requirements and produce a document to meet your needs. This might be a pre-printed form for use with a number of employees, or a "one off" agreement for a particular senior employee.

Checking through your employment procedures with a legal adviser is worthwhile. All too often we only find out at the litigation stage that some problems could have been avoided if better documentation had been prepared at the outset.