How to draw up an employment contract

Employers are legally bound to provide a written statement of terms and conditions from day one of a new worker starting. Sue Temelty of The HR Dept expalins what's compulsory and what can be added later, once your new member of staff has settled in

UK employers are legally bound to provide a written statement of terms and conditions, laying out the basic terms of the engagement, to each employee by the first day of employment.

Within two months after the start of employment, employers must provide a wider written statement or contract of employment which outlines policies on training, pension rights and disciplinary and grievance procedures.

Once you have first established the person’s employment status – whether they are an employee or a worker – we would recommend a proper contract from day one rather than two separate documents. This allows employers to stipulate terms to cover important areas such as data protection, confidentiality, reference requirements and the like.

‘We recommend that employers provide the widest-ranging contract as early as possible during the engagement’

We advise our clients that it is good business practice to do this from the beginning of employment, not only because it creates a culture of rigour and trust, but also because it saves time in the long run by avoiding the need to issue a wider statement or contract later on.

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What the employment contract must include

As an employer, the principal employment statement must include at least the following details:

  • the names of the employer and the employee or worker, including addresses
  • the title of the job in question and a description of the work to be done, with any other expected or potential duties, to allow for some flexibility
  • the date when the engagement starts
  • how much and how often an employee or worker will get paid, before tax and national insurance, as well as the expected date of payment
  • working hours, including any potential variation such as Sundays, night shifts or overtime
  • holidays, detailing days per year that they are entitled to (pro rata if the employee is working part-time) on a set annual period and including information about rolling holiday over
  • location, as well as any potential for relocation to give extra flexibility to the employer
  • expected duration for the job, including the end-date if the engagement is on a fixed-term contract
  • any probationary period, which gives employers or employees the option to terminate the engagement at short notice during the early days or the employment
  • details about benefits the employee can expect, such as childcare vouchers or lunch being included
  • training that is obligatory for proper performance of the role, and whether or not this is paid for by the employer
  • sick pay and procedures around it, in terms of requirement for a doctor’s certificate and the payment the employee will receive
  • other paid leave such as maternity or paternity leave
  • notice periods – the amount of time both the employer and the employee will be asked to provide before termination of the engagement, as well as information about any actions which could constitute gross misconduct, and which could lead to dismissal without notice.

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Employment contract for staff working abroad

There are also some details which employers must include if the employee or worker will be required to work outside the UK for more than a month.

These are:

  • the amount of time that they will need to be abroad for
  • the currency in which they are going to be paid
  • any additional pay or benefits that they will receive
  • terms regarding their return to the UK

Regarding all of this information, it is up to the employer to choose whether they include this it in the principal statement or as part of a separate document. If they choose the latter, then the employee or worker must have reasonable access to it, such as via the employer’s intranet.

The wider written statement

As mentioned earlier, we recommend that employers provide the widest-ranging contract as early as possible during the engagement, in order to provide clarity regarding the relationship and to minimise risk of exposure to unfair dismissal claims which are detrimental to both parties.

If, however, you choose to provide the wider statement at the two-month limit, this document must also include information regarding:

  • the employee’s rights to your company pensions and pension schemes
  • any rights to collective agreements where employee representatives can negotiate for terms and conditions on their behalf
  • any other right to non-compulsory training provided by the employer
  • details regarding disciplinary and grievance procedures

We would also recommend that contracts of employment are considered carefully so that they reflect the particular circumstances of the business in question. Professional advice may pay dividends here.

Sue Tumelty is founder and executive director of The HR Dept

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Sue Tumelty

Sue Tumelty is founder and executive director of The HR Dept Ltd.

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Employment Contracts

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