Employment Contract Help Guide

Parties to the Agreement

When identifying the parties, you must provide the full legal names and addresses of the company and employee. The company can be either an individual or business entity.

Job Title and Description

Add the job title and provide a detailed description of the tasks that the employee will perform. There is no need to include every individual task that the employee will perform, but their main duties should be outlined.

Commencement Date and Continuous Employment

You must enter a commencement date; this will be the day that the employment contract's terms and conditions will become applicable. Some employees will be considered to have continuous employment where previous employment will be considered applicable. Some circumstances where employment is considered continuous are where an employee has changed job roles and a new employment contract is being issued, the employee worked for an employer that is being acquired or merged with the new employer, or where the employee has more than one job with the employer. It is important to establish if the employee has continuity of employment as this will have effects on the employee’s rights and the employer's liabilities in regards to such things as the right to claim unfair dismissal and statutory redundancy pay.

Remuneration

An employment contract allows you to set out the details of how the employee will be paid. It is important that these details are as clear as possible to prevent any future confusion around payment details. You must enter the amount of pay and the basis on which this pay will be calculated; for example, hourly, weekly or annually. As of April 2019, the UK’s minimum wage for employees aged 25 and over is £8.21. It is important when calculating salaries that the minimum wage is achieved.

The employment contract also allows you to set out additional forms of compensation that the employee may be eligible to receive, such as commission or bonuses. If these are to form part of the employee’s remuneration package, the details of this additional compensation must be outlined.

Probationary Period

You are able to set out a probationary period in your employment contract. Although probationary periods will have no effect on the employee’s statutory rights, probationary periods are helpful for employers who provide benefits or notice periods in excess of what is required by law.

Termination

Employers are required to set out the notice period needed in order to terminate an employee. This does not mean that an employer can terminate an employee by simply serving notice but refers to the amount of notice required in order to complete a lawful termination. Currently, the minimum notice period is set at one week for employees employed for between one month and two years, one week’s notice for every year an employee has been employed between two and 12 years, or 12 weeks’ notice for employees who have been employed for twelve years or more.

The employment contract makes provisions for the employer to pay in lieu of notice.

Pensions

The pension clause in this employment contract has been written with the intention that the employer will comply with their auto enrol requirements set out in the Pension Act 2008. As all staging dates for auto enrolment requirements have passed, all employers are now under an obligation to auto enrol eligible employees.

Holiday Pay

All employees in the UK are entitled to holiday pay and employers must set out the details of this. Employers must state when the holiday year begins so employees are able to calculate their holiday entitlement. Most employers run a holiday year from 1 January to 31 December for ease. The current UK minimum holiday entitlement is 28 days’ annual leave, inclusive of bank holidays, for full-time employees. Part-time employees are entitled to the same on a pro rata basis.

Collective Agreements

Collective agreements are any agreements that may affect an employee's terms and conditions. Normally, these will take shape as union agreements, but may be in other forms. An employer must declare any collective agreements that will effect an employee’s terms and conditions.

Executing the Employment Contract

An employment contract is a relatively easy document to execute. After employment terms are negotiated and the employment contract is completed, a copy should be sent in advance to the new employee for the employee's consideration and, if satisfied, the employee should return a signed copy to the employer. Upon receipt of the employee-signed copy, the employer should sign it and provide the employee with a copy of the fully executed contract.