5 Key Terms To Include In All Employment Contracts

5 Key Terms To Include In All Employment Contracts

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As a business owner, you’re faced with certain responsibilities when you decide to bring on new staff. An employment contract between you and your employee is one of these and is in fact a legal requirement. The contract serves as a mechanism designed to protect both you and your employee. It does so by ensuring that the employee knows exactly what is expected of them and as an employer, you’re protected in the knowledge that should they breach the contract, you have the original agreement and consequences in writing. But, if you don’t understand all of your obligations as an employer, you could find yourself in front of an employment tribunal. To prevent this from happening, we’ve put together 5 employment contract essentials every employer should know.  

When should a contract be provided? 

Put simply, the sooner the better.  

All employees with at least one month’s continuous service for your business are entitled to an employment contract as a statutory right. This means that an employer must provide a contract within two months of the start of employment. Should an employer fail to do so, the employee has the right to make a claim at an employment tribunal which could result in compensation of 2-4 week’s pay being awarded to them.  

Statutory Requirements

As specified by the Employment Rights Act 1996 the following must be included within an employments contract: 

  • Name of employer and employee 
  • Jot title and brief description of the role 
  • Date stating when employment begins and any other previous employment with the business that counts as continuous 
  • Salary received by the employee and how they will receive payment 
  • Hours, place of work and dates (if applicable) 
  • Holiday, sick pay and pension entitlement provisions 
  • Length of notice required by an employer 
  • Any collective agreements that form part of the employment 

Implied Terms

Terms of employment contracts may not necessarily take the form of a formal, written contract. They could take the shape of a verbal agreement, employee handbook, an offer letter or through implied terms. 

Implied terms are automatically made part of the contract even if they’re not written down. These cover issues such as not stealing from the employer, the employer’s responsibility to provide a safe and secure working environment and something that may be necessary for the employee to carry out their new role e.g a driver having a valid license.  

Compensation

Your employees must understand any compensation they are
entitled to and on what basis. These may include:-

  • Salary and wages
  • Bonuses
  • Benefits
  • Holiday entitlement
  • Profit sharing
  • Vehicle allowances

Termination

While neither you nor your employee will be thinking about terminating the contract at this point specifying rights and obligations should this circumstance arise is extremely important. When determining contract termination, employers must consider an appropriate notice period not only to enable the employee to find a new job but also to allow the employer enough time to identify a replacement.

An employment contract is one of the most important relationships an individual will enter into. Therefore it is vital that both employer and employees have a clear understanding of these terms in order to best protect each parties’ interests.

 

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