An employment contract can be in a verbal or written form. An employment contract is formed between an employer and an employee, once an agreement is made for the employer to pay the employee for work undertaken. A verbal contract is just as binding as a written agreement. With verbal contracts, the difficulty may be remembering what was agreed and that is where a dispute may arise!
Legal Obligations for Employers regarding Employment Contacts
Legally a ‘Written Statement of Particulars of Employment’ must be given no later than the first day of employment.
Legally the ‘Written Statement’ must specify specific elements of the terms of the contract. For example the rate of pay and hours of work. If the employer fails to provide a legally compliant Written Statement, the employer can be subject to a fine of up to four weeks’ pay. Therefore it is important that employers issue a compliant statement to each employee on time.
The Written Statement may set out some of the terms of employment. Other terms can be defined by reference to other policy documents. The Written Statement and other reference documents form the ‘contract of employment’.
Other Employment Terms
In addition to the terms set out in the ‘Written Statement’, employers may wish to include other terms. For example to protect their commercial interests.
Often the employer may be required to include protections in the Statement. For example to reflect the obligations the employer has with clients. This is especially important where the employee is involved in work for the employer which involves access to sensitive or commercially valuable information.
Another area an employer may wish to protect is where the employee is instrumental in creating something which is potentially valuable and the future intellectual property rights need to be clearly assigned and secured.
In order for an employment contract to be legally enforceable the terms must be written in language that both the parties could reasonably be expected to comprehend. In additional the terms must be relevant to the work undertaken by the employee. Therefore often employers will have some clauses which only apply to specific groups of employees working in some areas of the business.
Contractual Status
Where the employer refers to additional documents, the employer must set out clearly the contractual status of these other terms. Failure to do so could result in disputes and claims arising needlessly.
A good contract of employment is unambiguous. If there are conditions that may change, for example, after a probation period, this should be spelt out. Fundamentally the employer needs to set out the scope, expectations and conditions of the role and what the employee will receive in return. In this way the risks of disputes and litigation will be minimised. Furthermore the employee is clear as to what is expected and can focus on the tasks the employer requires.
In addition to the terms in the Statement of Particulars of Employment, a disciplinary and grievance procedure is legally required. Additionally employers are legally obligated to provide an auto enrolment compliant pension scheme.
Furthermore for employers or five or more staff, will need as a minimum a written health and safety policy and risk assessments. We offer a package for Start Ups, which includes comprehensive support and guidance for new employers.