Contracts of Employment: Common Questions & Answers

Q: What is a Contract of Employment?

A: A contract of employment is an agreement between an employer and an employee which sets out their employment rights, responsibilities and duties. The employment contract is an important part of starting a new job, as it is there to ensure that both the employer and the employee understand and agree on the same terms and conditions of the employment relationship.

Q: What must be included in a Contract of Employment?

A: Section 1 of the Employment Rights Act 1996 confirms that a contract should include details of:

• Job Information i.e. job title, description of work, start date of the role, place and hours of work;
• Compensation and Benefits – how much, when and at what intervals will the employee will get paid;
• Time off, sick days, Holiday entitlement, Notice Period, and Pension Scheme.

As of 6^th April 2020, both employees and workers will now have the right to receive a written statement from their first day of employment. The statement must now also include working hours, days of work, all benefits and pay package, length of job, sick leave eligibility, probationary period details and any training that they are required to carry out.

Q: Can I change the terms of a Contract of Employment?

A: Once signed, a contract of employment can be changed but only with the mutual agreement of the employer and employee.

An employer can make changes unilaterally but it could result in the employee bringing a claim for breach of contract if it is a change they disagree with. If an employer does want to change the contract, and cannot get agreement from the employee, they could offer an incentive or terminate the existing contract by notice period and then offer the employee the new contract terms. This is a complex area and we would recommend obtaining specialist legal advice before making any such changes.

Q: Is a Contract of Employment enforceable if it is not signed?

A: The terms of a contract may still have been agreed even if it was never signed. A contract can be made verbally or implied through the conduct of the parties. Put simply, to create a contract, there must have been an offer, acceptance of that offer, some consideration paid, and a clear intention to create legal relations between the parties.

Q: Can my Contract of Employment be illegal and unenforceable?

A: An employee will not be able to enforce their rights at work if they have signed what is determined to be an illegal contract of employment. Your employment contract is likely to deemed illegal if, for example, the employee does not have the right to work in the UK or the parties have agreed to a ‘cash in hand’ arrangement without paying the appropriate employee taxes.

Q: What are the different types of Contracts?

A: There are many different types:

• Indefinite Term Contracts – Full and part time contracts are the most common type of employment contract. They are permanent and ongoing positions. After a period of time, employees under these contracts will gain rights such as maternity pay, redundancy pay, the right not to be unfairly dismissed etc.
• Fixed-term contracts – These only last for a specific period of time. Employees on fixed-term contracts enjoy the same rights and benefits as with any other permanent contract.
• Temporary & Agency contracts – Agency staff have their contracts agreed and managed by a recruitment consultancy or employment agency by whom they are controlled, and as such are generally argued not to be employees of the end-user client. Agency workers usually work on a temporary basis and the length of their contract will be flexible.
• Freelancers, Contractors and Zero-hour contracts – Freelancers and contractors are generally considered self-employed and are not entitled to the same rights as permanent members of staff. With zero hour contractors, the employer is under no obligation to provide a number of hours to work, and the employee does not have to accept any work that is offered to them. They are therefore examples of a very flexible workforce.

Q: Are post-termination restrictions (also known as restrictive covenants) enforceable in my contract of employment?

A: Post-Termination Restrictions seek to prevent a person from carrying out certain activity after the termination of their employment. An employer may be worried that the employee will use certain confidential information they have learned, or client connections they have gained during the employment, in order to compete with the business afterwards. To be enforceable, an employer would generally need to show that:

• It has a legitimate proprietary interest that it is appropriate to protect; and
• The protection sought is no more than is reasonable having regard to the interests of the parties and the public interest.

If you would like to discuss the contents of your Employment Contract, or if you have any post-termination restrictions that you would like to receive advise on, call us today on 01908 660966 / 01604 828282 to book an appointment with Ben Stanton, Associate Partner and Employment Solicitor here at Franklins Solicitors LLP or email Ben at ben.stanton@franklins-sols.co.uk.