Contracts of Employment

Not only is it a good idea to record terms of employment (i.e. for certainty and to manage expectations) but both employees and workers have a right under Section 8 of the Employment Act 2006 to receive a statement of their written terms and conditions (also referred to as “written particulars”). A “contract of employment” is a valid way of providing the required information but will usually contain other terms as well.

Failure to provide a written statement or contract of employment containing the prescribed particulars (or to provide a compliant/up to date version) can attract an award in tribunal of up to 4 weeks’ pay[1].

Section 8 sets out the requirements with which written particulars must comply – essentially the core terms that must be included. These cover all the obvious points such as the parties’ names, job title, pay, hours of work and more besides. A checklist is included in this note [insert link – note on written particulars]. Note, changes took effect from 1 April 2024 relating to the content of written particulars and when/to whom they must be provided (as also dealt with in this linked resource) [insert link – note on written particulars].

In addition to mandatory terms, it is also common to include optional clauses in a contract of employment which deal with further matters that may be relevant to the working relationship. This can be an opportunity to incorporate provisions aimed at protecting the employer’s position and interests, reflecting sector relevant requirements, and/or setting out details of non-financial benefits. Examples of optional clauses may also be found in this checklist [insert link – note on optional contract clauses].

Generally speaking, there is no direct requirement for a statement of written particulars to be executed (signed) in any particular form – or at all. A contract of employment, however, should be executed by both parties to confirm their agreement to the terms and there are certain formalities with which it must comply to be binding. If certain types of clause are included, the document or instrument will need to be executed as a deed – for instance a power of attorney which is common in intellectual property clauses.

As an employment relationship continues it is normal for there to be changes in key terms such as job role, place of work, remuneration or working pattern – for instance, on promotion or pursuant to a flexible working request. It is important that the written terms of employment are updated as necessary to reflect the reality of the arrangements between the parties (not forgetting any separate job description that may need adjusting). Besides potentially breaching the requirements relating to written particulars (see above), failure to have an up to date contract may expose the employer to evidential problems in demonstrating what the employee is required to do or entitled to receive by way of pay and benefits etc.

The status of the contract is important to note, e.g. in contrast to an employment handbook or policy which tends expressly to be “non-contractual”. The difference consists in the fact that the terms of a contract are binding and enforceable (assuming the contract is valid in the first place). A non-contractual policy or provision, on the other hand, leaves scope for the employer to vary or not follow it without directly being in breach of its obligations though employees’ “legitimate expectations” may be relevant to how changes are implemented.

A contract of employment may contain a variation provision and/or “flexibility” clause. A variation provision specifies how amendments to the written terms are to be agreed and recorded. Flexibility clauses tend to reserve the right for the employer to vary the written terms without needing the specific agreement of the employee. However, flexibility clauses may not be easy to rely on as they need to be clear and cover the subject matter of the variation. Any ambiguity is likely to be construed against the employer, especially if the change adversely impacts rights and entitlements of the employee.

Did you know: you can ask us to carry out contract and handbook reviews and provide an employment document “health check”?

______________________________________________________________________________

Reference:-

[1] Maximum 4 weeks’ pay for failure to provide written particulars at all; up to 2 weeks’ pay for not providing compliant written particulars or not providing a compliant written statement of changes.