What Is A Contract Of Employment

Contracts of employment quite simply are a legally binding agreement between an employer and employee, which sets out in writing the main terms and conditions of employment. These will include statutory terms and conditions, such as pay, holiday entitlement and working hours and may also include specific clauses related to the nature of the business for example compulsory closure days, which are common in the education sector.

It is also normally a statutory legal requirement for an employer to provide all employees with a written statement of their main terms and conditions of employment, which would usually take the form of a contract of employment and would normally be provided within 2 months of an employee commencing employment. Failure to do this could result in a claim arising. New start up companies or those who are about to employ staff for the first time are often the ones who do not realise their legal obligation to provide a contract of employment or at the least a written statement of main terms and conditions, and the timeframe in which to do so.

Another challenge often faced by businesses is to know which type of contract of employment to adopt and which one fits their business needs most. This can seem like a complex area for businesses to navigate but with some simple guidance and a clear understanding of what the company does this can be easily overcome. The following is a brief overview of some of the most common types of contracts of employment available to employers:

Permanent Employment Contract

These contracts of employment will be provided for regular employees who are expected to remain with the company for a substantial period of time. There are no time limits applied to these contracts of employment unlike in the case of a fixed term contract of employment.

Fixed Term Contract

These type of contracts of employment last for a specific period of time and usually end once the specified period of time has elapsed. They are set in advance and can be renewed. However it is advised that they do not exceed more than 18 to 24 months as it would be likely the type of contract relationship you would be seeking is more permanent and therefore is better suited to a permananent contract of employment arrangement. Employees who are based on a fixed-term contract are eligible for all of the same rights and benefits as a permanent member of staff.

Part-time Contract

Employees work on a part-time basis and work a certain number of hours each week for example. Employees who are based on a part-time contract are eligible for all of the same rights and benefits as a permanent member of staff.

Annualised Hours Contract

The employee works a certain number of hours throughout the whole year, which they are informed about in advance. They will have specific core hours that they work i.e. every week and any extra hours can be agreed flexibly to meet the business demands if required, providing both parties are in agreement.

Zero Hour Contract

This allows individuals to work for the business on an ‘as and when needed basis’. There is no requirement for the employer to provide employees with work but neither do the employees have to carry out work for the employer.

Zero hour contracts of employment often receive bad press and are seen by many as an unfair way of engaging people in work. Recently there has been a change in the law regarding zero hour contracts, which states they can still be utilised but it is now illegal to include any exclusivity clauses within them such as applying a restriction on the individual working for a competitor, another employer or within close proximity to where the employing business operates.

The benefit to both an employer and employee in having a well written contract of employment can be substantial. They provide clearly outlined terms and conditions of employment that are legally binding and are referred to regularly to gain clarification. Furthermore they are agreed to by both parties so no ambiguity arises should disputes occur.

The key message is if you are an employer who finds yourself in a situation where you have no contracts of employment in place for your employees, or the ones you have are outdated and need refreshing to bring them back in line with current employment practices, or you are a company on the brink of employing people then make your life easier and get fit for purpose contracts of employment in place, sooner rather than later. The benefits far outweigh the hassle.

For more information on contracts of employment and the employment contract writing services Strathrgy Consultants can provide please visit us at www.strathrgy.com/employment-contract-writing

If you would like to be kept up to date with the latest HR news then please fill in your email address in the subscription box to the right of this page.

Donna Fairbrother

Director, Strathrgy Consultants Limited