Although a verbal contract is just as binding as a written agreement, the issue is that it can be difficult to prove a verbal agreement – particularly when dealing with salary, hours, or job title. In law, a legal agreement must be in writing and ideally signed by both parties.
Legally a ‘Written Statement of Particulars of Employment’ must be given no later than the first day of employment.
By law the ‘Written Statement’ must specify certain contract terms. For example, the rate of pay or salary, the number of hours of work, the notice period and holiday entitlement, including paid leave. Any contract terms should be equivalent pro rata for those employees who work part-time.
For other types of contract, such as for a fixed term, the end date must also be included in the 'Written Statement'.
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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.
During employment either party may seek to negotiate a new contract, which reflects different or better terms. Where the proposed new contract is initiated by the employer, the changes to the contract must be explained, and the employer must consult with the employee.
If the employee refuses to agree to new terms, this may result in a constructive dismissal claim, which means the employer is in breach of contract. If changes are agreed, this should be documented in writing and the new terms signed.
The 'Written Statement' may set out some of the terms of employment. Other employment terms may be set out in other policy documents, stored perhaps on the intranet or in a handbook or shared drive.
It is important that the employee has access to these other policy documents. The 'Written Statement' and other referenced documents form the 'employment contract'.
The 'Written Statement' must specify the sick pay arrangements. A period of absence due to sickness can involve disruption to service provision for the employer, so it is important that the pay and reporting arrangements are clearly set out in the contract provisions.
HR First can advise on the terms which would be appropriate.
In addition to the statutory provisions, employers may wish to include certain clauses within employment contracts, for example, to protect their commercial interests.
Often the employer may be required to include contract provisions, which it is obliged to fulfil for compliance reasons, for example.
Another area employers may wish to protect is when the employee is instrumental in creating something potentially valuable, and future intellectual property rights need to be clearly assigned and secured in the contract.
In order for an employment contract to be legally enforceable under UK law, the terms must be written in a language that both parties could reasonably be expected to comprehend.
In addition, the employment contract must be relevant to the employee's job, providing a clear answer to what is expected within their role.
Therefore, employers will often have clauses which only apply to specific groups of employees working in some areas of the business.
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 well-draughted contract of employment should explain the terms unambiguously.
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, employers with five or more staff will need, as a minimum, a written health and safety policy and risk assessments.
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Upon commencing a new job, often a probationary period applies. This typically lasts 1 to 6 months.
During this period the contractual terms can be different, including the benefits offered to the employee and the notice period which applies.
This gives the benefit that the new employee can assess whether the job and the company are the right fit.
In the same way, the employer also has the opportunity to assess the new recruit.
Yes, a verbal employment contract is just as legally binding as a written one. However, proving the agreement in a dispute can be challenging. Written contracts are clearer and help avoid misunderstandings.
By law, employers must provide a 'Written Statement' of particulars by the first day of employment. This written statement must include key details of the job, such as pay rate, hours of work, and other main contract terms.
Employers should also clearly state the status of any extra documents referred to in the contract.
An employer faces a fine of up to four weeks' pay if they fail to provide a compliant written statement. Lack of clear terms can also lead to other legal claims, such as a constructive dismissal claim.
A well-written contract protects both the employer and employee by setting clear expectations.
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