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Noting the particulars of the employment contract

Published 09 July 2018

Ask most employees what is in their employment contract and the chances are they will know the main points, may guess at others and there may be some oohing and aahing.

Filmmaker Samuel Goldwyn (1) is famously quoted as saying that a verbal contract isn't worth the paper it's written on.

The reality is that there is a contract between an employee and employer even if it is not in writing. The agreement to carry out work for an employer, and its agreement to pay for it, forms a contract.

Employment contracts (2) give both an employer and an employee certain rights and obligations.

An employee also has legal rights (3) in addition to those in the employment contract. This includes the right not to work more than 48 hours a week unless agreed and not to be paid less than the national minimum wage.

Employers who failed to pay the national minimum wage - which included professional sports clubs, the Odeon cinema chain and the Navy - were recently named and shamed. (4).

It was reported that about 22,400 UK workers were owed back pay worth £1.44m as a result of the underpayments – a record number of people found by HM Revenue & Customs to have fallen victim to illegally low pay.

So what is typically covered in an employment contract and what does it mean?

The contract will start when an employee commences work for an employer, which means the new recruit accepts the terms and conditions offered.

Within two months of starting work most employees should be provided with a written statement detailing the main terms and conditions of employment.

A contract 'starts' as soon as an offer of employment is accepted. Starting work proves that the terms and conditions offered by the employer are accepted. Any changes to the contract can only be made with agreement from both parties.

The contract will typically include the following terms:

·         Statutory terms: an employee’s legal rights in accordance with the law.

·         Express terms: terms agreed and accepted by both parties.

·         Implied terms: obvious terms that do not need to be written down. The most common example cited being that the employee will not steal from the employer.

·         Incorporated terms: included from work rules or collective agreements.

It is a general misconception that the contract is made up only on the basis of what is written down. It can also include terms that are not written down.

If a way of working differs to that what is agreed in the contract and it becomes established and accepted over a period of time it becomes part of the contract through what is known as custom and practice (5)

Custom and practice means any unofficial feature of company, trade or industry culture that has become the 'norm'. These are the implied terms and unwritten rules not explicitly referred to in an employment contract or formal policy documents.

It is advisable to have a contract in writing and agreed changes also documented in writing. Either an employer or an employee can decide to end a contract.

An employer will often end the contract by dismissing the employee, which can be for disciplinary, redundancy or capability reasons. It must follow a fair process in doing so. For example in disciplinary dismissals an employer should follow the ACAS Code of Practice (6) , which provides statutory guidance.

An employee can chose to resign by giving the correct or agreed amount of notice. They can also ask to leave without giving the required notice, but it is up to the employer whether or not it will accept it.

 

References

1.Samuel Goldwyn [Internet]. IMDb. [cited 2018 Jul 7]. Available from: http://www.imdb.com/name/nm0326418/bio

2.Employment contracts [Internet]. GOV.UK. [cited 2018 Jul 7]. Available from: https://www.gov.uk/employment-contracts-and-conditions

3.Rights at work [Internet]. [cited 2018 Jul 7]. Available from: http://www.citizensadvice.org.uk/work/rights-at-work/

4.Booth R. Back pay worth £1.44m owed to thousands of UK workers, official figures show. The Guardian [Internet]. 2018 Jul 5 [cited 2018 Jul 7]; Available from: http://www.theguardian.com/society/2018/jul/06/thousands-of-uk-workers-owed-back-pay-worth-144m-official-figures-show

5.What is meant by custom and practice? | workSMART [Internet]. [cited 2018 Jul 8]. Available from: https://worksmart.org.uk/work-rights/pay-and-contracts/contract-terminology/what-meant-custom-and-practice

6.ACAS Code of Practice [Internet]. Castle Associates Ltd. 2017 [cited 2018 Jul 8]. Available from: http://castleassociates.org.uk/support-centre/acas-code-practice

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