Employment Contracts | What should be included?

Why have an employment contract?
An employer must provide an employee with their employment terms (known as a "statement of terms") within two months of their start date. However, a statement of terms is the bare minimum required by law and does not protect employers properly. That is why an employment contract is much better for both employers and employees. A comprehensive employment contract allows an employer to specify an employee's duties and responsibilities - so an employee knows what is expected of them. See below for what should be included.


Contract of Employment - Contents
See our Contract of Employment Templates for all the different employment contracts we provide.


Save Time & Money
For employers who want all the necessary contracts, employment policies and documents required to manage employees, we recommend buying a Staff Handbook. - this is the quickest and most cost-effective way to comply with all current employment regulations.


1. Names of the Parties
The employer's organisation details and the employee's full name and address.


2. Start Date
This is important as it also includes a brief statement to say that employment with a previous employer does not count towards the various rights gained by employees after one and two years of service. In other words, the employee starts again from zero with the new employer. (Exceptions to this are where an employer has taken over an organisation with existing employees - their employment rights are maintained.)


3. Job Title and Description
This usually follows the job title and description specified in any recruitment advertisement and subsequent offer letter. However, to suit the employer, it also allows for flexibility in the employee's role.


4. Place of Work
Allows the employer to specify the location where the employee will work. However, it also allows the employer to specify any other location in the future. This gives the employer much greater flexibility.


5. Hours of Work
The employee's hours are specified in the contract; however, the employee also agrees to work additional hours if the employer reasonably requests it. However, the hours cannot exceed the 48-hour per week as specified by the Working Time Regulations (unless the employee has signed a voluntary opt-out from the Regulations).


6. Probationary Period
The employer can specify a trial period for the employee with the option of a short notice period at the end of the trial if the employee does not fulfil expectations. The employer can also extend the trial period.


7. Salary
Details the employee's gross salary before tax, national insurance, and any deductions. It also specifies when payment is made.


8. Assessments
The employer can state when the employee will receive their first work assessment and the timing of all subsequent regular assessments, for example, every 12 months.


9. Deductions
This clause details all the circumstances in which the employer can make deductions from the employee's salary.


10. Expenses
The employer can agree with the employee which work-related expenses will be covered and when the employee will be reimbursed. However, to prevent errors and possible fraud, the clause makes it clear that proof of payment is required.


11. Holidays
This clause specifies when the holiday year will run from. This is important as the employer may wish to prevent employees from taking busy work periods off, for example, Christmas time for hospitality, retail or entertainment industries. This clause also allows the employer to specify the number of days per year that an employee can take (subject to a statutory minimum of 28 days) and whether bank and public holidays are included or excluded from this. The clause also includes further details regarding rolling-over holidays into the next year, restrictions on holidays where the employee has already given notice and on termination the pro-rata payment instead of any unused holiday entitlement.


12. Sickness & Disability
Absence due to sickness is a significant cost burden for employers. This clause states by what time the employee must inform the employer that they will be unable to attend work (it does allow for a third party to contact the employer on the employee's behalf). The clause also states when a doctor's certificate is required and whether the employee will receive statutory or contractual sick pay. It is recommended that organisations have a separate Sickness & Absence Policy.


13. Pension
This clause states the pension provision provided by the employer; all employers have a duty to provide a pension scheme.


14. Notice
The notice period to be given by either the employer or the employee. However, this clause also provides a detailed list of actions that constitute gross misconduct allowing the employer to dismiss without giving notice. Please see our Grievance & Disciplinary Policy, which is included free with all our contracts.


15. Restrictive Covenants
This is only included in the CompactLaw Employment Contract for Senior Staff. It protects all confidential and commercial information belonging to the employer. It prevents an employee from setting up a competing business whilst still employed. Also, it prevents an employee from competing for a set period of time and within a defined geographical area once they have left the employer. Other restrictions include attempts to encourage other employees to leave and work in a competing business. Finally, the clause states that any breaches will entitle the employer to seek legal redress, including damages for any loss.


16. Grievance and Disciplinary Procedure
This clause refers to the detailed separate Grievance and Disciplinary Policy that comes free with each CompactLaw Employment Contract.


17. Retirement
Refers to a separate Retirement Policy - which every organisation should have in place. This clause and the retirement policy ensure compliance with the Equality Act 2010


18. Severability
This standard paragraph states that each paragraph, subparagraph or clause is independent of each other, so if one is invalid or does not apply to the employee, the rest of the contract remains valid.


19. Prior Agreements
Another standard paragraph stating the contract contains all the terms agreed between the employer and the employee and that no previous agreement (written or verbal) counts.


20. Jurisdiction
Confirms the contract of employment comes under the jurisdiction of the English courts; however, it can also be changed to specify Scotland (if required).


Further Information
Staff & Employee Handbooks
Grievance & Disciplinary Policy