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Understand Contracts of Employment

By: Dave Howell - Updated: 1 Aug 2013 | comments*Discuss
Employment Employment Contracts

When you make a formal offer of employment to an applicant a contract comes into existence. This contract can be written, oral or simply implied. Whichever format the offer of employment takes, it’s important to remember that the employment contract exists as a legal agreement between your business and its employee.

There is no legal requirement to provide a written employment contract, but it’s a good idea to at least record in writing (called the employee statement) a description of the main duties that the job entails. This information could come in useful if a dispute occurs that ultimately ends up in an employment tribunal. This information is in addition to the legal rights of your employee that are enshrined in employment law that your legal advisor can help you navigate to ensure your business is complying with all the required legislation.

Employment Contracts

The contract of employment that you offer to anyone that wants to work for your franchise business can be:

  • Oral
  • Written
  • Implied

It is not uncommon for a contract of employment to be a mixture of all three of these formats. Totally oral or implied contracts have the disadvantage in that their contents are more difficult to prove if you become involved in an employment dispute. It is more common for a written employment contract or statement to have the basic outline of the job, with additional duties implied or agreed orally.

As there may be special clauses in your employment contract always get expert legal advice before issuing the contract or statement to your employee. Also, employment contracts are not the same as employment statements. Written statements of employment must be issued within two months of your employee starting work.

How to Write an Employment Contract

Employment contracts and employment statements are often used as interchangeable terms when they are in fact quite different. The employment contract comes into force when you offer a person a job with your business. You then need to issue a statement that must have the basic information listed below:

  • Hour of work
  • Pay
  • Sick pay
  • Period of notice required
  • Holiday entitlement
  • Disciplinary and grievance procedures
  • Job title
  • Date the employment started
  • The legal name of the company they are working for as trading names can be different

To help you create an employee written statement you can use the interactive service on the Business Link website.

As well as the information above, the contracts of employment you issue could also contain some implied duties. Some of these terms of employment may be obvious such as your employee won’t steal from your business, but others such as your agreement to provide a safe working environment is a good example of an implied contract term. Also, if your employee needs particular skills such as an HGV licence, the implied terms would state this.

Changing an Employment Contract

As an employer you can’t change the terms and conditions of the contract or statement you have with your employees whenever you want to. Whether the contract you have with them is implied, oral or written, you must get their approval of any changes you want to make. If you don’t, your employee could sue for breach of contract. Also, your employee may want to change their contract to move into part-time working for instance. You can read more information on varying the terms of employee contracts on the ACAS website: www.acas.org.uk.

Consulting your employees before you make any changes to their employment contracts can avoid any grievance they may bring against your business as a result. Also, if your employees are members of a trade union, consulting them as well can be a very good idea to avoid any misunderstandings at a later stage. The BERR has more detailed help and advice about changes to employment contracts: http://tinyurl.com.

Employment contracts and the minimum wage

One of the fundamental components of any employee contract is the level of pay that an employee can expect. There is now a legal commitment your business has to make and one of the rights of your employees to get paid at least the minimum wage. This currently stands at £6.31 for the main rate of minimum wage. This applies to employees over 22 years of age. For workers aged 18-21, the rate is £5.03.If you need any queries about the minimum wage you can call a dedicated helpline on: 0845 6000 678.

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