An employment contract is an agreement between the employer and worker, stipulating specific aspects of employment. Although the contract can be written down, it doesn’t have to be and can actually be completely verbal. In fact, a verbal contract can be agreed from the moment an employee is given the job. It may also begin from the moment that the individual begins work.
Although there is no legal requirement for a written contract to be made, workers who were employed from 6th April 2020, do have the right to request written terms of employment.
The employment contract is extremely important as it details information on salary, working hours, notice periods and other general guidelines. Whilst a written contract isn’t necessary, it’s often an extremely useful tool. Businesses that have a physical document, detailing all aspects of employment are less likely to suffer misunderstandings later down the line. A physical contract also provides a vital source of information for workers, providing peace of mind.
With this in mind, how do you write an employment contract?
Express Terms vs. Implied Terms
An employment contract will include both express and implied terms. Express terms are the specifics of employment, agreed upon between both employer and worker. Basically, the key information that comes to mind when you think of a contract. This includes the names of both parties, place of work, hours of work, rate of pay, holiday entitlement and notice periods.
Whilst express terms detail the individual agreement between employer and employee, implied terms represent the house rules. As the name suggests, implied terms are an unspoken agreement between the employer and their workers, the foundation of a mutual respectful relationship between both parties. Examples of implied terms include loyalty to the company, protection against harm or damage and confidentiality. Again, although implied terms are often not vocalised or written down, it’s another of those instances in which a physical document outlining these terms can be extremely valuable. Whereas the express terms may be in a contract, implied terms are often included in a staff handbook, which can be provided to employees when they start work.
As an employment contract is of course a legally binding agreement, there are specific legalities to take into consideration. One such legal consideration is the responsibility of the employer to provide written terms, when requested from their employees. If the worker feels as if their employer hasn’t provided written terms, they can try to work things out with their boss but the issue can be escalated. The employee can make a complaint to an employment tribunal and if sufficient evidence supports their case, they may be entitled to compensation.
It’s worth noting that some positions may also include post-employment contractual terms. Examples of such terms can include Non-Disclosure Agreements and other aspects of confidentiality or even a clause that prevents employees from taking clients with them. Any business that would like to include post-employment contractual clauses, should ensure that it’s part of the written statement, provided to employees.
Drawing up an employment contract can be complex, especially for smaller or newer businesses. Fortunately, there is a wealth of online help available, including contract templates to follow. Also, expert help from a third-party vendor can be invaluable. Fortunately, the team at Salhan Accountants offer a comprehensive HR consultancy service, which includes advice on employment contracts and staff handbooks. Don’t hesitate to get in touch with Salhan if you require further help.