UK Employment Contracts: Basics & Key Considerations

employee reviewing their employment contract

In this post, we’ll give you the lowdown on UK employment contracts, including who needs them, why they’re important, and the terms they should include. We’ll also provide a template you can use to create your own employment contract.

Key facts:

  • An employment contract is a vital document that sets out the rights and responsibilities of both the employer and the employee. 

  • Employment contracts don’t necessarily need to be in writing, but employers must provide employees with a ‘written statement of particulars’ when they start work. 

  • Even if something isn’t expressly stated in the contract, it may be considered part of it if it’s required by employment law or deemed to be an obvious assumption.

Pen your next employment contract with our helpful selection of templates.

What Is an Employment Contract? 

An employment contract is a legally binding agreement between an employer and their employee. It’s usually a written document that sets out the rights, responsibilities, and duties of both the employer and the employee, including what the employee’s role will entail and the compensation they can expect in return.

Types of Employment Contracts in the UK

In UK law, there are three recognised employment statuses: 

  • Employee

  • Worker

  • Self-employed

Self-employed people are not concerned with employment contracts, since they work for themselves rather than for an employee. They may have written agreements or contracts with their clients, but these are not the same as employment contracts. 

While both employees and workers should have a contract or agreement with their employer, workers typically have fewer employment rights than employees. This article will focus on employment contracts for employees, although some parts of it apply to workers too. 

Employment Contract Template

Although all employment contracts are different, most of them are based on the same core framework. You can get started with your first employment contract by downloading our free template — all you need to do is fill in the specifics about your company, your new employee and the work they’ll be doing.  

Does an Employment Contract Have to Be In Writing? 

Technically, an employment contract does not need to be in writing to be legally valid in the UK. However, where it gets confusing is that employers do have to provide their employees with something called a ‘written statement of employment particulars’. 

This is a written document that sets out important details of the employer relationship they’ll have with the new employee. By law, an employer has to provide the main document or ‘principal statement’ on their first day of work, and a wider statement within two months. 

So, what does this mean? Essentially, an employment contract is an agreement between you and your employees, which can be verbal or written. However, since you also have to provide a written statement to employees, in most cases this functions as the employment contract as well. 

In any case, it’s always a good idea to put an employment contract (or any contract) in writing, as this ensures that both parties understand their rights and responsibilities. If you’re ever caught up in an employment dispute, it’s much easier to argue your case if you can point to specific clauses in your employment contract — which can be difficult to prove if it’s not in writing. 

When Does an Employment Contract Begin? 

According to the gov.uk website, an employment contract begins as soon as a new employee accepts a job offer. This means that the contract can begin before the employee starts work, if all of the following apply: 

  • The employee has accepted a job offer from the employer

  • The offer is unconditional, or the employee meets the conditions

  • The employer clearly set out the terms of the job, either verbally or in writing 

Conditions that need to be met for an employment contract to begin might include the employee passing a reference check, a background check or a physical examination. 

Of course, this doesn’t mean that a new employee will start working as soon as the contract starts — there’s often a delay while they work a notice period at a previous job, or while you’re getting ready to welcome them on board. The best course of action is to clearly state both the date of the start of the contract and the start of employment in your employment contract. 

Why Are Employment Contracts Important? 

Employment contracts are designed to reduce risks for both employees and employers. From the employee’s perspective, an employment contract is a clear statement of what is expected of them, and what they will receive from their employer in return. It reassures them that they can expect fair compensation and safe and secure working conditions.

A well-put-together employment contract can also help employers to avoid employee disputes because everything is clearly set out and agreed upon. A good contract should set standards for your employees and can help to protect your company’s sensitive information. 

Download Now: Our Handy Employment Contract Templates

Template Employment Contract

We took the time to create some helpful, UK-specific employment contract templates to help your organisation sign your next great hire. Download them today for free.

EN_What Are Common Employment Contract Terms?

The ‘terms’ of a contract are the parts that are legally binding. Generally, an employment contract includes a combination of specific terms, and implied terms. 

Specific terms

Specific terms are the legal terms that apply to your relationship with the employee in question. These don’t necessarily have to appear in a written contract. According to the gov.uk website, they could also be: 

  • In an employee handbook 

  • On a company noticeboard

  • In an offer letter

  • Stated in collective agreements with trade unions or staff associations 

When a contract term is stated somewhere other than in the actual written contract itself, it’s sometimes known as an ‘incorporated term’. It’s a good idea to note which other sources are relevant to the contract in the contract itself. 

Implied terms

Implied terms are terms that are not officially stated in a contract, but which are implied either by the employee’s statutory rights or by common assumption. Implied terms might include: 

  • That the employee must not lie, cheat or steal from their employer

  • That the employer must provide safe and secure working conditions 

  • Something that is specifically necessary for the job, like a delivery driver having a valid driving licence

Implied terms may also include things relating to the employee’s statutory rights, like the right to 5.6 weeks of paid holiday per year. Even if this is not explicitly stated in the contract, it’s still a part of it because it’s a legal right. 

Other terms might be implied because of the way things have always been done in the organisation. For example, if your company has always given every employee a Christmas bonus, it’s reasonable for employees to expect that this will apply to them too. Legally speaking, this could form part of their contract, and you could be penalised if you don’t provide it. 

How Do You Put Together An Employment Contract?

If you need to create your own employment contract, you have three main options:  

  • Write your employment contract from scratch 

  • Ask a lawyer to draw up a contract for you 

  • Use an employment contract template as a starting point

If you’ve never created a contract before, it’s a good idea to get some professional help. You might want to consider asking a lawyer or HR expert to help you create your first few contracts. As you gain confidence, you’ll be able to use these initial contracts as a guide for creating new ones.

Here are a few tips to help you create legal and compliant contracts: 

  • Create contracts for all employees and workers: To make sure your company is protected, it’s important to have contracts in place for all of your staff — not just full-time employees. Part-time workers and temporary, seasonal or fixed-term employees should all have a contract too. 

  • Keep your contracts up to date: Whenever an employee’s role, salary or working conditions change, you should update their contract. This ensures that each employee’s contract is reflective of the actual job they do — not what it looked like several years ago. 

  • Include contract terms in your employee handbook: It’s a good idea to include information that may change over time in your employer handbook rather than in each individual employment contract. This makes it easier to make changes without having each employee sign a new contract. 

  • Store signed copies of contracts safely: Employee contracts should be signed by both parties and stored safely. However, this doesn’t mean that you need to store and sign physical copies: you could use an HRIS solution like Personio to digitally sign and store your employees’ contracts so that they’re easily accessible whenever you need them. 

How Do You End an Employment Contract? 

Either an employer or an employee can end an employment contract. When an employee wants to end their contract, they need to give you notice according to the terms set out in their contract. 

If an employer wants to end the contract, there are specific rules to be followed depending on whether it’s a dismissal (i.e. firing an employee) or a redundancy (i.e. their role isn’t needed any more). 

When an employer wants to dismiss an employee, they need to have a fair and valid reason, or they could face claims and penalties for unfair dismissal.  Employers should consult the Acas Code of Practice on disciplinary and grievance procedures to ensure they’re handling dismissals fairly and legally. 

FAQs: Employment Contracts UK 

Still have questions about UK employment contracts? Here are the answers to some FAQs. 

Every employee should have an employment contract, but this does not necessarily have to be in writing. However, an employer must give their employees a written statement describing their rights and responsibilities when they start work. 

What Should Be Included In a UK Employment Contract?

A UK employment contract is an agreement between an employer and an employee, which could be written or verbal. The employer must also provide a written statement of particulars, which consists of: 

  • The main document, which must include details about the employer, the employee, and the work they’ll do. Employers must provide this on (or before) the employer’s first day of work. 

  • A wider written statement, which contains further details about things like the employee’s pension scheme, collective agreements and disciplinary and grievance procedures. The employer has two months to provide this statement. 

You can find full details of the written statement of particulars and the minimum information it must include on the gov.uk website

What Makes An Employment Contract in the UK Legally Binding? 

Any contract of employment between an employer and an employee in the UK is legally binding, whether or not it’s a written document. As soon as the employer offers the employee a post and the employee accepts it, there is a contract in place. 

Easily Manage Employment Contracts With Personio

Writing, signing, storing and updating employment contracts can be a lot of work — but an HR solution like Personio can help you to manage the load. 

Using Personio, you can create custom templates for employment contracts (and any other HR document you need). This means you don’t need to start from square one every time you hire a new employee — you can just fill in a few key details and have your contract ready to go. 

Personio’s electronic signature solution allows you to quickly, easily and legally sign employment contracts and send them through to your new employees for signature — saving you time, paper and money. All contracts are securely stored in your employees’ digital file, and you can easily make changes or renew a contract when you need to. You’ll even get automated notifications when a contract is about to expire. 

Want to learn how Personio can take the hassle out of managing contracts for your UK employees? Book a free demo to find out more. 

Disclaimer

We would like to inform you that the contents of our website (including any legal contributions) are for non-binding informational purposes only and does not in any way constitute legal advice. The content of this information cannot and is not intended to replace individual and binding legal advice from e.g. a lawyer that addresses your specific situation. In this respect, all information provided is without guarantee of correctness, completeness and up-to-dateness.

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