Contracts of Employment

All employees have an employment contract with their employer, although it might not be in writing. If you don’t have a written employment contract, your contract would have automatically been created when you started to work for your employer.

What is an Employment Contract?

An employment contract, or ‘contract of employment,^[1] is an agreement between an employer and an employee which sets out their employment rights, responsibilities and duties. These are called the ‘terms' of the contract.

Your employment contract doesn’t have to be in writing. However, you are entitled to a written statement of your main employment terms within two months of starting work.

The employment contract is made as soon as you accept a job offer. If you start work it will show that you accepted the job on the terms offered by the employer, even if you don’t know what they are. Having a written contract could cut out disputes with your employer at a later date, and will help you understand your employment rights.

You and your employer are bound to the employment contract until it ends (usually by giving notice) or until the terms are changed (usually in an agreement between you and your employer).

• The terms of a contract
• Notice pay
• Changes to employment terms

Terms of the Contract

The terms of an employment contract set out what you and your employer can expect of each other. There are several different types and some do not need to be written down in your employment contract.

Written statement of employment particulars

If you are an employee who has been working for your employer for longer than one month, you have the right to receive a written statement of employment particulars. This must be provided by your employer within two months of you starting, even if you are going to work for them for less than two months. The written statement will set out some of your main employment rights.^[2]

Where do the terms of the Contract originate?

Contract terms can come from a number of different sources; for example they could be:

• verbally agreed

   

• in a written contract, or similar document

• in an employee handbook or on a company notice board

• in an offer letter from your employer

• required by law, for example, your employer must pay you at least the minimum wage

• in collective agreements (see below)

• implied terms (see below)

If there's anything in your contract that you're unsure about, or which is confusing, ask your employer to explain it to you.

It should be made clear what is a legally binding part of your contract and what is not. The legal parts of a contract are known as 'terms'.

If either you or your employer breaks a term of the contract, the other is entitled to sue for breach of contract.

Collective Agreements

Employers sometimes make agreements with a trade union or staff association. These are known as 'collective agreements.^[13] Your contract should make it clear which agreements apply to you and who can negotiate on your behalf. These agreements can apply to you even if you're not a member of the trade union or staff association.

Implied terms of the Contract

Implied terms aren't written down anywhere, but are understood to exist. If there's nothing clearly agreed between you and your employer about a particular matter, then it may be covered by an implied term. Terms are implied into a contract for a number of reasons.

Terms that are necessary to make the contract work

Terms can also be implied because they are necessary to make the contract work. The most important of these is the 'duty of mutual trust and confidence'. This means that you and your employer rely on each other to be honest and respectful. For example, your employer trusts you not to destroy company property, and you trust your employer not to bully you.

Terms that are obvious or assumed

Some terms are included either because they are so obvious that it is not felt necessary to write them down, or because it will be assumed that such a term exists. An example of this might be where a contract provides for sick pay without saying how long it will be paid. It will be assumed that it is not intended to be paid forever.

Terms implied by custom and practice

These are specific to an employer or kind of work. They are arrangements that have never been clearly agreed but over time have become part of the contract. For example, you might get a Christmas bonus every year, or the business might close early on particular days.

If a company practice has become a part of your contract then your employer must stick to it, and cannot normally change it without your agreement.

Whether a particular practice has become a part of the contract can be very difficult to decide. There is no fixed time limit after which something is definitely part of the contract. Among other things, it depends on:

• how seriously it has been treated (has the employer acted like they have a choice?)

• how clear it is (has the employer treated the matter differently each time?)

• how long it has been in place

Changes to your Contract of Employment

There may be times when either the employer or employee might want to change your employment contract. However, neither party, in theory, can change your employment contract without each other's agreement. Changes should normally be made after negotiation and agreement.

• Agreed changes don't necessarily have to be in writing

• If they alter the terms in your written statement your employer must give you another written statement showing the changes within a month

Changes to employment contracts could be made by:

• agreement between you and your employer

• collective agreement - this is a negotiation between your employer and a trade union or staff association

• implication - that is through a change in long standing custom and practice (for example if your employer allows all employees a day off each year for New Year's Eve)

If a collective agreement makes a change to employment contracts, the change will still apply to you even if you are not a member of the trade union or staff association.

Reason why the Contractual changes

An employer's need

An employer sometimes needs to make changes to working practice because of economic circumstances. The business may need to be reorganised, moved to a new location, or there may need to be changes because of new laws or regulations. Things that might change include:

• rates of pay

• working time (for example, longer or shorter hours, different days)

• your duties and responsibilities

• the duties and responsibilities of your immediate boss

• the location of where you work

Your employer might need to make a change to correct a mistake in drawing up the contract. Depending on the situation, it might be in your best interests to allow the mistake to be corrected.

In some circumstances, action like a demotion or a pay cut might be authorised as a disciplinary measure.

Employees' need

Employees might also ask to change the terms of their contract. For example, you might want:

• better pay (you don’t have an automatic right to a pay rise, unless it’s in your contract)

• improved working conditions

• more holiday

• different working hours

• to work flexible hours

• to work part-time

Flexible Clauses

Your employment contract may include 'flexibility clauses.^[4] These give your employer the right to change certain conditions (for example, shift patterns) or there may be a 'mobility clause', allowing changes to your job location.

A flexibility clause cannot be used to bring in completely unreasonable changes. This is because there's an 'implied term of mutual trust and confidence' in all employment contracts that requires the employer not to act completely unreasonably

Changes to your employer

If your employer changes, you are normally entitled to receive a new full written statement of employment particulars within two months of the change. You would not be entitled to this if:

• your employer’s name changes without any change to who your employer is (for example if the company is renamed)

• your employer changes, but your job continues unaffected (such as during protected business transfers, also known as TUPE.^[5]

In these circumstances, you are entitled to be given individual written notice of the change at your employer’s earliest opportunity. This must be no later than one month from the date of the change.

Our team of experts has extensive experience of advising on contractual issues during grievances, disciplinary and even the redundancy process - so if you have any problems in relation to contractual issues, please contact us - without obligation - to find out how we might assist.

Please contact us to discuss how we will be able to support and accompany you at your place of work.