Employment - contracts

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Employment Contracts

What is an employment contract?
An employment contract, or 'contract of employment', is an agreement between an employer and an employee which sets out their employment rights, responsibilities and duties. These are called the 'terms' of the contract.

An employment contract doesn't have to be in writing. However, an employee is entitled to a written statement of their main employment terms within two months of starting work.  The employment contract is made as soon as there is an acceptance of a job offer. Having a written contract could cut out disputes with employers at a later date, and will help employees to understand their employment rights.

An employee and their employer are bound to the employment contract until it ends (usually by giving notice) or until the terms are changed (usually in an agreement between the employee and employer).

Terms of an employment contract
The terms of an employment contract could be of several different types, some of which do not need to be written down.   An employee should be aware of what the terms of the employment contract are, so that they can understand some of their employment rights.

Written statement of employment particulars
An employee, who has been working for their employer for longer than one month, has the right to receive a written statement of employment particulars. This must be provided by their employer within two months of them starting, even if they are going to work for them for less than two months. The written statement will set out some of their main employment rights.

Contract to provide services
If an employee has  a 'contract to provide services' or a 'contract for services' with someone, then this is different from an employment contract and generally means they are self employed.

A contract to provide services is an agreement between someone and another person to undertake some work for them (for example paint their house). The person does not become an 'employee' for this person - they just provide them with a service.

Temporary agency workers may be contracted with their agency under a 'contract for services'. The agency, as an employment business, will be obliged to provide the temporary agency worker with a written contract.  As part of de Poel's agency audit process, we check temporary agency workers are issued with such contracts.

Changing employment contract terms

What or who can change a contract of employment?
Either an employee or employer might want to change the employment contract. However, neither an employee nor employer can change the employment contract without each other's agreement. Changes should normally be made after negotiation and agreement. Changes to employment contracts could be made by:

• agreement between the employee and employer
• collective agreement - this is a negotiation between the employee and employer and a trade union or staff association
• implication - that is through a change in long standing custom and practice (for example if your employer allows all employees a day off each year for New Year's Eve)
• If a collective agreement makes a change to employment contracts, the change will still apply to the employee even if they are not a member of the trade union or staff association.

Reasons for changing an employment contract
An employer sometimes needs to make changes to working practice because of economic circumstances. The business may need to be reorganised, moved to a new location, or there may need to be changes because of new laws or regulations. Things that might change include:

• rates of pay
• working time (for example, longer or shorter hours, different days)
• duties and responsibilities
• the duties and responsibilities of your immediate boss
• the location of where you work

Employers might need to make a change to correct a mistake in drawing up the contract. Depending on the situation, it might be in the employee's best interests to allow the mistake to be corrected.

Employees' need
Employees might also ask to change the terms of their contract. For example, they might want:

• better pay (you don't have an automatic right to a pay rise, unless it's in your contract)
• improved working conditions
• more holiday
• different working hours
• to work flexible hours
• to work part-time

Written statement of particulars

Employees are entitled to receive a statement of their employment particulars within two months of starting work. This sets out the main employment terms, including the job description, pay, hours of work and any disciplinary or grievance procedures.

What is a written statement of employment particulars?
An employee, who has been employed for longer than one month, should receive a 'written statement of employment particulars'. Employers have a duty to give employees this within two months of them starting work. It still applies even if the employee will only be working for them for two months. The statement sets out in writing some of the main employment terms, known as the 'principle statement'. It will not necessarily cover all of the employment terms and may cover only the ones an employer has a duty to include.

Principal statement
An employer must provide you with some of your employment details in one single document. This is known as the 'principal statement' and must include:

• name and employer's name
• job title or a brief job description
• the date when employment began
• pay rate and when pay will be paid
• hours of work
• holiday entitlement
• place of work
• sick pay arrangements
• notice periods
• information about disciplinary and grievance procedures
• any collective agreements that affect employment terms or conditions
• pensions and pension schemes

The job offer letter, or employment contract, could be the employees, principal statement or full written statement. There is no need for the employer to give them a separate written statement if everything is covered in either of these two documents.

An employer can give the employee photocopies from their staff handbook or other documents that contain the details of employment. If they do this the employee should still receive a written statement telling them what detail the photocopies contain.

If an employer does not offer one of the terms that must be set out in the written statement (such as a pension scheme), they must say that it is not offered in a written statement. An employer cannot just leave it out. The written statement must be clear and correct. An employee cannot be dismissed for asking for a written statement.

Most of the required employment details must be set out in the written statement itself. However, there are a number of exceptions:

• entitlement to sick leave, including any entitlement to sick pay
• pensions and pension schemes
• disciplinary rules and disciplinary or dismissal procedures
• further steps (such as appeal procedures) under the disciplinary, dismissal or grievance procedures.

For these details, an employer could point the employee to another document, which they have a reasonable opportunity of reading. For example, a staff handbook made available in the staff room or on the company intranet.

An employer does not need to set out notice period in the written statement. Instead, they could refer the employee to the relevant legislation or to a collective agreement. These are agreements that have been made between an employer and a trade union or staff association. The employment contract should make it clear which agreements apply to the employee and who can negotiate on their behalf. These agreements can apply to an employee even if they are not a member of the trade union or staff association.

Disciplinary and grievance procedures
The written statement of employment particulars must also include any disciplinary rules, and any disciplinary or dismissal procedures that an employer has. It should also cover who the employee can apply to (either by name or description, for example job title) if the employee:

• is not happy with a disciplinary or dismissal decision
• has a workplace grievance or problem

Relocation

Sometimes companies move location, perhaps because of the need to reduce costs, find bigger premises, for restructuring or to merge with another business.  If an employer moves, employees have certain rights and obligations.

Do employees have to move if their employer moves?
If an employer moves the location of their business, the situation depends firstly on the terms of contract of employment. Some contracts include a 'mobility clause' which says the employee has to move within certain limits. If there is a mobility clause in the contract the employer can normally force the employee to move to places allowed by the clause unless this is completely unreasonable.

When refusing to move becomes redundancy
If an employee does not want to move with their employer, they may become redundant because:

• the job at the current location no longer exists
• an alternative is offered, but is refused as unsuitable.

Whether the employee gets redundancy payment depends on a number of factors, including how long they have been working for the employer. However, the most important question is whether they have ' unreasonably' refused an offer of suitable alternative work.

There is no fixed distance which is 'reasonable'- it depends on the particular circumstances.  For instance, if the new location is just a few miles away and is driven to or public transport used.  However, if it involves a difficult journey, even if it's only a few miles away, or affects personal matters like family situation or children's education, it may be reasonable to say no.  When an employee is faced with redundancy there is a right to a trial period in any alternative job offered.