Contracts

The contract of employment is the agreement between the business and employee, and specifies the employment relationship. The contract does not have to be written down for a contract of employment to exist; however, it is worth having written copies..

Terms in a contract of employment include:

• Employment conditions
• Rights
• Responsibilities
• Duties

“Never contract friendship with a man that is not better than thyself.” 
- Confucius

Employee contract rights

Having a contract provides both parties with responsibilities, obligations, and rights. For example, an employee has the right to be paid for the work they do, and although you can agree to add or remove terms from a contract, you cannot remove a right an employee has under law, such as the right to earn the minimum wage.

Employment contracts start the moment an employee accepts an offer of employment, whether the employee is fully aware of the terms of employment or not.

Many people assume that the full details of an employee’s relationship with their employer are documented within the employment contract; however, this is often not the case. Although your employees’ contracts will detail issues such as remuneration and holidays, some of the terms will likely not be spelled out. These implied terms include:

• Employees not stealing from you
• Providing employees with a safe working environment
• The requirement for employees who drive on business to have a driving licence
• A custom or practice, such as a Christmas bonus

Types of employee contracts

It’s important to know what type of workers you have, whether they’re on fixed-term contracts, zero-hour contracts, or if they’re ‘gig workers’. For example, an employee who has signed a full-time contract has very different rights to those who have been hired as seasonal workers.

There are various types of employment contracts; it’s therefore essential you understand the different types of contracts so you can determine what’s best for your business.

It’s also useful to understand the differences between workers and employees:

• someone who works for a business or individual employer is an employee and entitled to statutory employment rights
• someone who works as a freelancer or for an agency is classed as a worker, and wouldn’t be entitled to the same contractual rights as an employee.

Types of employee contract

Types of employee contract include the following:

• Full-time
• Part-time
• Fixed-term contracts
• Freelancer agreements
• Zero hour contracts
• Casual staff
• Seasonal employees
• Temporary workers

Flexible employment

Flexible working is a way employers can help employees maintain a healthy work-life balance. These types of flexible working agreements aren’t just for parents and carers, every member of staff who’s worked for an employer for a minimum of 26 weeks is eligible to request flexible employment. There are several options for people who require a flexible employment contract including:

• Job sharing
• Remote working
• Part-time
• Compressed hours
• Flexible start and end times
• Annualised hours
• Staggered hours
• Phased retirement

Where you have employees working flexibly it can be essential to have a system that allows you to manage your employee records all in one place.

Agency worker rights

You may find yourself in a position where you need to hire temporary staff via an agency. In this situation, you pay the agency and they’re responsible for making sure their employees’ rights are upheld. Initially someone coming into your business from an agency is a worker, not an employee, and as such that person doesn’t have the same rights. However they are entitled to the following statutory rights:

• National minimum wage
• Paid annual leave
• Health & safety regulations followed in the workplace
• Limits on amount of time worked & breaks
• Discrimination rights (equality act 2010)
• No deductions from wages that would be classed as unlawful

After 12 weeks of continuous work with the same employer, an agency worker gains the same rights as a full-time employee. These rights and regulations do not apply to someone who is self-employed or on a managed service contract.

Overtime

Working overtime basically means an employee has worked more than the hours stated in their contract. Employers are not legally required to pay staff overtime, however the average amount they are paid for the time they’ve worked must be in line with the national minimum wage and no lower. It’s also worth noting that you can’t make a member of staff work more than 48 hours a week unless it’s something they agree to do.

Whether you decide to pay overtime to your employees is something that should be covered within the employee’s contract.

Frequently Asked Questions about Employment Contracts

Our clients ask loads of questions about staff wages, so we’ve answered some of the most common ones below.

Not found an answer to your question? Bright Lightning gives you the answer to thousands of employment questions in seconds.

What should be included in an employment contract?

An employment contract sets out an agreement between an employer and employee. It includes the terms of their employment.

By law, the contract must include:

• Name and address of both parties.
• Employment start date, and when the contract applies from.
• When the contract is expected to end, if temporary or fixed term.
• Job title and brief description of duties.
• Place of work.
• Work hours.
• Pay, including how often and when.
• Holiday entitlement.
• Sickness absence and pay entitlements.
• Details of notice period.
• Workplace pension arrangements.
• Disciplinary and grievance procedures, (or details on where to find them).
• Collective agreements.

There are many other clauses that aren’t legally required but can be beneficial to include.

What is the purpose of a contract?

The key purpose of an employment contract is to make sure both parties understand and agree to the terms of the relationship they’re entering in to.