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The complete guide to employment contracts

Article by: KHES

It seems that Contracts of Employment are the least read documents in the workplace. But that is how it should be. If you have a reasonable relationship with your employees, then neither of you should feel the need to refer to these documents.

Unfortunately, the result of this is that the drafting of these contracts gets ignored. So when there is a problem and your employee looks for a copy of theirs, the contract rarely matches the needs of your business, and may not even comply with the law. A couple of contracts we’ve recently viewed were either clearly downloaded from a website or were written to match the opinions of the HR consultant or solicitor who wrote them rather than the needs of the business.

One of these contracts we recently viewed had a three-stage appeal process in the disciplinary procedure that was most likely written by someone who had a gripe against a previous employer. It said that until the appeal process was completed, no action could be taken against the employee. This meant it could take up to two months to dismiss someone who was stealing from you.

The other contract committed the employer to pay for counselling for any employee who was suffering from stress even if it was not work-related. In both these cases, the employer had fewer than 10 staff.

The trouble is that if you are unfortunate enough to find yourself being taken to an employment tribunal, the first document the tribunal will want to see is the contract of employment (written statement of main terms of employment as it is called in legislation). As an employer, you are obliged to issue one of these to all staff either before they start or on day one of their employment. If you have not done this you have failed at the first test, not a good start.

If you have got a contract but it hasn’t been written specifically for your company, it may contain all sorts of unnecessary conditions. If you haven’t complied with these in your dealings with employees, then get ready for an award against you.


You may have come across many documents online which are template documents from which you can craft your own contracts of employment.

These are a great starting point but that is all that they are. Your organisation is unique. In fact, most primary and social care organisations are which is why you should take expert advice when adapting these extra templates to your own specific circumstances.

The statement of main terms and conditions

This is a document that is often referred to as the contract of employment. However, the full contract is a combination of the statement, any letters or documents that pass between you and the employee and any other agreements that you make verbally (e.g. allowing someone to use company parking space).

It is a legal obligation on you to issue a statement of main terms and conditions of employment on day one of someone’s employment at the latest. In addition, sections 1 – 4 of the Employment Rights Act 1996 define what must be included in the statement for you to comply with your legal obligations.

The list does not contain all the items that are good to cover in a written contract of employment, such as confidentiality rules or how cash is handled. If you work in some sectors (for example in the care sector) you are required to have certain rules in place in order for you to carry out your business.

An added complication can come if you regularly bid for work from the public or charitable sector. Organisations with lawful requirements have certain rules in place before they will give you work. Rules that are often required are:

Equal opportunities and diversity policies

  • Anti-bribery policies.
  • Bullying and harassment policies.
  • Age another discrimination monitoring policies.
  • Rules on the recruitment of staff.
  • Staff appraisal systems.
  • Anti-slavery policies.

Terms which must be included in your written contracts of employment

Let’s start with the terms that seem to cause the most problems.

  1. Employee’s entitlement to Holidays in sufficient detail to allow someone to calculate how much holiday they have accrued if they leave you in the middle of the holiday year. There are very specific rules regarding this. In our experience, the resultant terms in most contracts tend to be too complicated and lead to incorrect details which can be a breach of legislation and an employee can go back as much as six years if you get this wrong.
  2. Details of any disciplinary rules that apply to the employee. As you would expect this delicate area can be a minefield. There are specific procedures that must be observed both in time and in order, otherwise, any action may be construed as unfair.
  3. Employee’s hours of work. This sounds simple, doesn’t it? But you must consider overtime, the days of the week that an employee may be asked to work, the number of hours on each day that they work, how you will deal with staff who are working a few minutes over or under. Think about a disgruntled employee if terms are worded incorrectly and they are in dispute with you.
  4. How often and how they are paid. Again, this is an area that will hardly ever be looked at by 95% of your staff. An employee could take you up on late payments or missing bonuses.
  5. The place of work. This is one area many template documents fail. If you detail their places work as your premises and then move, the contract must be correctly worded otherwise an employee could claim redundancy.
  6. Provisions for sick pay. Similar to holiday pay but not as often cited in tribunals, this must be worded correctly otherwise an awkward employee can ask to go back up to six years for compensation. 
  7. The names of the employer and employee.
  8. The date on which the employment began.
  9. The date on which continuous employment began. Sometimes if someone has worked for you before or if you required them following the transfer of a contract, previous employment has to be taken into account.
  10. The rate of pay, pay scale, or method of calculating pay – it is not acceptable simply to refer someone to their personnel file
  11. Any pension arrangements
  12. Length of notice required by the employee
  13. The length of notice required by the employer
  14. The job title or job description
  15. Any collective agreements that apply
  16. Whether or not the employee will be required to account side the UK for more than a month the details of how they will be paid
  17. Details of any terms and conditions that apply on their return to the UK
  18. Any benefits due to an employee such as car use allowance, private health insurance, etc.
  19. Any entitlement to training
  20. Any mandatory training requirements for when they start working for you
  21. Who will pay for training
  22. Any probation period

Changes to terms and conditions

Any changes you wish to make to these terms and conditions need to be notified in writing to the employee, including pay rises!

Final point

Be careful of including a large number of detailed terms and conditions that restrict your ability to deal with the unexpected. In the last year, the commitment of the vast majority of care staff should give everyone pause for thought about how important the sector is. However, it would be naïve to expect every employee to be like this and we have had a number of clients who have found that a detailed set of policies and procedures end up giving ammunition to an awkward member of staff to refuse to do what is needed.

Article by KHES

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