CONTRACTS OF EMPLOYMENT

CONTRACTS OF EMPLOYMENT

Further resources:

FAQ - Contracts of Employment

Contracts and offers of employment documents

Employers guide to changing contractual terms

News Item 7.11.15: Government issues guidance on use of zero hours contracts

Whether or not formal terms are written down (the employment contract) the law implies certain terms of employment. These may not be the terms the employer wanted and so a formal written contract is strongly advised, and in any case written terms must be supplied by law after 2 months of employment. Failing to do so could result in the Company being made to pay 2-4 weeks’ pay per employee if the case finds its way to a tribunal, and an award would be a racing certainty if the employee ever had cause to take their employer to a tribunal in the future. In addition it is inevitable there will be disagreements about the terms and conditions of employment. These may be easily resolved without recourse to litigation if the contract terms are clear and unambiguous.

There are several types of commonly used ‘employment’ contracts. We list the main variations below.

Type

Description

Casual

Casual workers are not guaranteed hours in any week and don’t have to accept them if offered. As they are not employees they don’t have access to a range of employment rights, including the right to claim unfair dismissal and the right to redundancy pay. However, if the person is in fact working regular hours each week, it may be that the contract is not casual at all. Even casual workers should be given a contract for services, as a breach of rules or procedure by a casual can have the same damaging impact as a breach committed by a permanent employee.

Employee Shareholder

Employee shareholders waive their rights to certain key employment laws in exchange for £2,000 - £50,000 of shares in the business. It applies to limited liability companies only and isn’t expected to be widely taken up.

Fixed term

Usually covers a specific project or covers for an absent employee and has an end date with no further notice necessary. Legislation requires fixed term employees to be treated broadly the same as their permanent counterparts and mistakes can sometimes be made for example by paying maternity cover staff less than the person they were covering. Fixed term employees may be entitled to redundancy pay for assignments of more than 2 years (unless the work they were recruited to do is still continuing).

Permanent

Permanent employees may still be dismissed relatively easily in their first 2 years providing the reason for dismissal is not unlawful or is not unlawful discrimination e.g. the employee is dismissed because she is pregnant.

Self employed

Not a contract of employment, but a contract for services. Self-employed contracts are sometimes used to avoid paying employers national insurance contributions and legislation has been written to counter such measures – see our section on employment status for more.

Temporary

A temporary ‘worker’ does not have the same employment rights as an employee. These are usually agency workers, employed and paid by an agency and supplied by them to the end employer. A directly engaged temporary employee however will have more employment rights, including the right to redundancy pay and to bring an employment tribunal claim (if they have sufficient service or if the case concerns unlawful discrimination)

Zero hours

Under a zero hours contract workers are not guaranteed any weekly hours at all, but if they are asked to work them they will do so under the terms of the contract. Holidays are calculated normally against hours actually worked. Whether the person is an ‘employee’ or ‘worker’ depends on whether there is a mutuality of obligation – in some cases the worker is invited to work say 20 hours per week, but is not obliged to work them. This is likely to indicate worker status (similar to casual workers). A zero hours contract will typically (but not necessarily) differ from a standard casual worker agreement in that, while the employer is under no obligation to offer work, the individual is usually obliged to be available and to accept the work when it is offered.

We offer off the shelf contracts of employment that are customisable to a degree. However, we find in practice that most contracts need to be specific to the needs of each individual business. Part of our service to our subscribing clients is to look at their precise requirements and draft a contract specifically for them. Larger clients often need a few versions to reflect levels of seniority or job function. Once drafted, an annual review will ensure that contracts are kept up to date.

Help and support

All of our clients upon commencing their subscription will be offered a) an inspection of their existing contracts of employment and/or b) new bespoke contracts of employment drafted by us. We aim to do this within 30 days of the subscription commencing. All new employees taken on by our clients must be issued contracts of employment recommended by us in order to qualify for the Employment Tribunal Protection Guarantee (subject to tariff).

myhrdept can provide a range of outsourced HR support including on-site presence if required. We believe we offer the best combination of quality and price available in the UK. Call us on 01628 820515 to discuss your requirements or email us and we’ll call you.