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 Employment Contract

Under UK Employment Law from April 2020, you must give this to new starts on or before their first day of employment


Employment Contract

From April 2020 UK employment law has changed and all new starts i.e. employees who work under a contract of employment, and any other worker who personally undertakes work or provides service for your business (assuming you are not a client or customer) such as short-term casual workers, will be entitled to a written statement of employment particulars from day one of their employment. This must contain the specific information outlined in the legislation. All our contract templates have now been updated, are fully compatible with the new legislation and are ready to use.

 




Employment Contract - Where do I start?


You will need to decide whether the job you are offering is ongoing and of indefinite duration, or whether it comes to an end on a fixed-date or after a particular event (e.g. the return of an employee from maternity leave).


If you are confident the role is ongoing, you can offer a permanent employment contract . If the job is likely to run out at a certain point, then a fixed-term employment contract would be the option to go for. Either could be used for full or part-time staff.


If the most important thing is flexibility, then a zero-hours contract will ensure you only have to pay for the hours when you need your staff to be there. There are 2 types of zero-hours contracts: one where the individual is considered to be an employee and one where they are considered to be a worker with less individual employment rights. Most zero hours contracts define the individual as a worker, but take care (and consider the above links) when you decide which contract you should offer.


Once you have interviewed and want to offer the job to someone, you may wish to make a formal offer before you sign an employment contract. This will ensure that both sides understand the main terms of the prospective employment. You should sent a letter of appointment which summarises the main points of the job offer and asks the employee sign their acceptance of the job. You must however ensure you give them a full contract document containing the information detailed above on or before their first day of employment.


Finally if you don't want the hassle of employing staff, then you can take them on as contractors / freelancers using a contract for services where they invoice you for work carried out and you don't need to deal with tax or national insurance issues.


For all these options there is a free template below which you can download and adapt for your business.




What information should be in the Employment Contract?


You must give every new employee a 'written statement of terms and conditions' (known as the principal statement), and from April 2020, this must contain the following information:


  • name of employer and employee
  • job title or a description of the work
  • start date (and end date of a fixed-term contract) and date of continuous employment
  • how much and when the employee will get paid
  • details of all remuneration or benefits  (not just pay) e.g. health insurance
  • agreed normal working hours and days of the week expected to work and whether these may be variable (and if so how that variation would be determined)
  • holiday entitlement including how pay is calculated
  • details of other types of paid leave (e.g. maternity leave)
  • duration and conditions of any probationary period
  • main location of the job (and any other places the employee may be expected to work)
  • notice period
  • information on the pension scheme
  • details of any collective / trade union agreements that directly affect conditions of employment
  • terms related to sickness absence and eligibility for sick pay and leave
  • arrangements around grievance and disciplinary procedures
  • details of training entitlement provided by the employer and any part of that which the worker is required to complete (and any required but which the employer will not bear the cost)

You can expand on the details of such things as your sickness absence policy, grievance and disciplinary procedures, collective agreements, training entitlements and Company pension scheme in seperate documents, on your intranet or your Employee Handbook if you have one. Just make sure this is made available to the new member of staff as soon as possible, no later than two months after the beginning of employment.




What Contractual issues do I need to be aware of?


1. You must ensure that you issue the principal statement containing all the elements mentioned above on or before the  employees start date. If you fail to do so your employee could make a claim to an Employment Tribunal who could make a determination of what particulars ought to have been included or referred to in the statement.


2. You must ensure that you pay your employee at least the National Minimum Wage or National Living Wage. The National Minimum Wage (NMW) is the minimum pay per hour most workers under the age of 25 are entitled to by law. The government's National Living Wage (NLW) is the minimum pay per hour most workers aged 25 and over are entitled to by law. The rate will depend on a worker's age and if they are an apprentice. The current rates can be found here. If HMRC find that an employer hasn't paid at least the NMW, they can send a notice of arrears plus a penalty for not paying the correct rate of pay.The fine for non-payment is up to £20,000 per worker.


3. Your full-time employees are entitled to at least 5.6 weeks' paid holiday a year - this is a legal entitlement and cannot be varied. For an employee working five days a week, this equates to 28 days. You can make this either inclusive or exclusive of bank holidays; you can also agree a greater holiday allowance. Part-time employees are entitled to this allowance on a pro rata basis. For casual or irregular working patterns such as in zero hours contracts, it may well be easiest to calculate the holiday entitlement that accrues as hours are worked. You can find out how to do this here.


4. When calculating hours of work, you should ensure that your employee will not be working more than 48 hours a week, averaged over a 17 week period. This is the legal maximum under the Working Time Regulations and also includes work done for other employers. If an employee will be working at or close to the maximum, you should ask them if they are willing to voluntarily opt-out from the 48 hour limit - if so then they can sign an opt-out agreement (seperate from the employment contract). If not you must take reasonable steps to ensure that working time stays under 48 hours. Employees also have other entitlements:


  • a 20-minute uninterrupted break (unpaid) away from the workstation where the working day is longer than six hours.
  • rest period of at least 11 hours between working days
  • a guaranteed weekly rest period of 24 hours once in every seven days (or 48 hours in every 14 days)
  • a ceiling on night work of an average of eight hours work in every 24


Our ebook on "How to Deal With Staff Who Can't or Won't Perform" by Alex Brogan is now available to download. It comes complete with a comprehensive online template resource pack and access to an email helpdesk. It outlines how to deal with all performance issues from staff not being competent to cases of gross misconduct. There is a small charge for this (£4.99) which will support keeping our other resources free.




Employment Contract Document Downloads


**Note** All our employment contract templates have been updated to reflect the April 2020 changes in legislation but are also suitable for immediate use.


1. Integrated Employment Contract and Staff Handbook
This is a combined employment contract and staff handbook template which contains all the information you need to provide to your new employee. It is fully compliant with employment law and best practice, covers permanent, fixed-term and zero-hours arrangements and is suitable for all SME's even if you are only employing one person. There is also a fully completed example for guidance.


2. Employment Contract Template
This is a blank contract of employment which you can download and adapt for your own business. UK legislation (from April 2020) means that all new workers / employees are entitled to such a statement on or before their first day of employment.


3. Fixed-Term Employment Contract Template
This is a contract template for fixed-term employees, and allows you to specify whether the fixed-term is dependant on time, completion of a task / project, the return of an individual (e.g. following maternity leave) or subject to continued funding.


4. Zero Hour Contract Template
This is a contract suitable for staff who you want to employ on an as-required basis and who do not have any guaranteed hours. We have split this into two templates: one for 'employees' and one for 'workers' as workers now have the right to a statement of terms and conditions under the 2020 legislation changes. For more details on employment status see the Government website here.


5. Letter of Appointment template
Once you have interviewed and want to offer the job, you might want to send a quick letter of appointment. This is how you can quickly offer the job to ensure the individual has all the details they will need to accept the offer and hand in their notice in their current job. Although it does not replace the contract (you will still need this by day one of their employment), it is much quicker to produce than the full contract document. Amended to reflect 2020 legislation changes.


6. Independant Contractor Agreement (Contract for Services) Template
This is a template which you can use if you are hiring freelance or contract employees.


Video Tutorials
We have produced a video tutorial to help employers better understand this complex HR issue.


Please note that we update these templates regularly to reflect changes to employment law. Please ensure you sign up for our email update service here or your downloads may go out of date and be inaccurate.





Useful Links


UK Government Business Website
Tool which allows you to create a written statement of employment.

Advice, Conciliation and Arbitration Service
Information on how to change (vary) a contract of employment