An employment contract establishes the rights, responsibilities and duties of an employer and an employee. You should check any employment contract terms carefully before agreeing to them. If in doubt, seek professional help.
Your employee rights
Legal rights include the right to be paid the National Living Wage or National Minimum Wage and the right to paid holidays.
From April 2017, the National Living Wage for those aged 25 and over is £7.50 an hour.
See the current National Minimum Wage rates on GOV.UK
For most employees, once your employer is covered by rules being phased in from October 2012, they’re also obliged to enrol you in a pension scheme.
This process is called automatic enrolment.
Any rights you have under a contract of employment, such as medical insurance, are in addition to the rights you have in law.
Certain employment contracts might seek to limit some of the rights you have in law.
You and your employer can agree to any terms you want, but some terms seeking to limit your legal rights might be ineffective.
For example, agreements to be paid less than the minimum wage will be ineffective.
Your employee contract – express terms and implied terms explained
A written employment contract is usually made up of a mix of two types of contractual terms:
- Express terms
- Implied terms
Express terms are elements of your contract specifically mentioned, either in writing or agreed orally, by both employer and employee.
These might include:
- Sick pay
- Redundancy pay
- Hours of work, including overtime hours
- How much notice is needed to end the contract
- How much you will be paid (including overtime and bonus pay)
- Holiday pay, as well as how much time you’re entitled to take off (most full-time workers are entitled to 28 days and part-time workers get the same amount, in proportion to the number of days/hours they work)
Express terms can be found in your work contract, but also:
- The job advert
- Any letters you receive from your employer
- Documents you were asked to sign, such as a staff handbook or manual
Make sure you keep copies of all documents given to you by your employer.
This makes it much easier if there is a dispute about your contract.
Implied terms are not written, but can be implied into most employee contracts.
For example, you won’t steal from your employer or you won’t give away confidential information.
Your employer must, in turn, provide a safe working environment and shouldn’t ask you to do anything illegal, such as drive an uninsured vehicle.
An important part of an employment contract is the idea of mutual trust and confidence between employer and employee.
Terms might also be implied through custom and practice.
This is where arrangements have never clearly been agreed but over time have become part of the contract.
Examples of this might include finishing early on a Friday, or a Christmas bonus.
For an entitlement to become established by custom and practice it must usually be:
- Long standing
- Automatically received
- Expected and well-known
Your employment status
There are three kinds of employment status:
There is no clear definition of the difference between workers and employees, but here’s a rough guide:
Workers will have, as a minimum, core employment rights like rest breaks and an entitlement to the National Minimum Wage or National Living Wage, might be entitled to sick pay and maternity leave. The employer will be responsible for deducting tax and National Insurance. The work could still be casual.
Employees are workers who have more than just basic rights and more responsibilities: such as a requirement to give notice if you want to leave. If your employer tells you when and where the work has to be done, supplies the tools and equipment, and can subject you to a disciplinary procedure, then you are likely to be an employee and will have an employment contract.
Self-employed people are contracted to provide a service to their clients or customers. If you can decide when you want to work, and can substitute yourself with a replacement, make your own sickness and holiday arrangements and pay your own tax and National Insurance, you’re likely to be self-employed. Your contract will be a contract for services.
You need to be clear about your status to know what your entitlements are.
Employment status is different from your working pattern
You can be an employee or a worker but be working:
- Part time,
- Fixed term,
- As a temp
- On a zero hour contract
- As a temp employee.
- Seasonacasual, zero hours, seasonal or as a temp.
Fixed-term employees should be treated no less favorably than comparable permanent employees, unless the employer can objectively justify less favourable treatment.
If there is a dispute, only a court or employment tribunal can make a final decision as to your employment status.
Most employment contracts are in writing – but they don’t have to be.
An oral contract is just as binding but is much harder to prove.
Having a written contract provides better certainty and can help prevent or resolve disputes with your employer in the future.
If you are not given a written contract, you’re entitled to a written statement of your main employment terms within two months of starting work, no matter how few hours you work per week.
The statement must give details about:
- Job title
- Sick pay
- Pay details
- Notice periods
- Pension schemes
- Employment start date
- Employee and employer names
- Hours of work and place of work
- Holiday entitlement and holiday pay
- Grievance, dismissal and disciplinary procedures
When you get your contract you should read it carefully before signing it, because by signing it you are agreeing to the terms of the contract.
If there is something in the contract you don’t agree with or think is unfair, you can discuss it with your employer and ask whether they’ll change it or leave it out of the contract.
You might also be able to get advice from:
- A solicitor,
- Your trade union (if you’re a member),
- ACAS (the Advisory, Conciliation and Arbitration Service) in England, Scotland and Wales, or
- The Labour Relations Agency (LRA) in Northern Ireland.
If the contract with your employer is broken, for example they don’t pay you for something which they should, you should first try to sort it out informally with your employer.
If you don’t succeed you could try raising a grievance. If the issue is still not resolved, you can try mediation through ACAS or the LRA, if your employer agrees.
You can contact the ACAS helpline on 0300 123 1100 and the LRA helpline on 028 9032 1442.
If you can’t sort out the problem, you could use an employment tribunal (this is called an industrial tribunal in Northern Ireland).
While typically there are no legal costs, you will have to pay a fee which will depend on the type of claim you are making.
If you are on a very low income, you might not have to pay the fee.
There’s more information about tribunal fees on GOV.UK
You will only be able to get a payment for damages if you can prove real financial loss – there’s no compensation for hurt feelings or being upset unless there is evidence of discrimination.
Zero-hours contracts and key-time contracts
Zero-hours contracts don’t specify the number of hours an employee will be required to work.
They affect mostly hotel, catering and shop staff, and apply to roughly one in twenty workers.
Contracts will often say you must be ready to work when asked.
If you’re on call to work extra shifts in addition to your minimum number of guaranteed contractual hours, then you’re not necessarily on a zero hours contract. Check with your employer if you’re unsure.
Key-time contracts guarantee you some work, but not regular hours each week.
The difficulty with both these kinds of contracts is you aren’t paid for any time spent waiting around.
However, legally, if you’re on a zero hours contract you’re entitled to be paid for any time you have to be on work premises unless your contract says otherwise, even waiting for work to start.
You should be paid your normal hourly rate, or at least the National Living Wage or National Minimum Wage.
Unauthorised deductions from wages
If an employer is going to make deductions from your wages, then they should be legally authorised.
For example tax and National Insurance, and put into your contract with a written explanation or agreed in writing before they are made.
There are some exceptions, for example if you have been overpaid by mistake or have not worked because you have taken part in industrial action.
There is special protection for retail employees meaning it’s illegal for an employer to deduct more than 10% of their gross wages for cash shortages or stock shortfalls.
Employers sometimes give new employees a probationary period.
Your contract can contain terms applying only during your probationary period, but these terms cannot take away your statutory rights.
For example, during a probationary period, you might not have all the rights you’ll have once the period is over, but there can be no reduction in your statutory rights.
For example to paid holiday, statutory maternity leave or sick pay.
Your full contractual rights start on your first day of work, unless your contract says otherwise.
Changes to contracts
Your employer might want to change the terms of your contract, for example:
- Change your pay
- Change the work you do
- Change your place of work
- Cut or change the hours you work
In theory, your employer can’t change the terms of your contract without your agreement.
However, in reality, you might be faced with the choice of accepting the change or being made redundant.