An employment contract is a legally binding document that sets out the expectations of an employer to their new starter, along with the terms and conditions of their employment. 

This is formally known as a ‘statement of terms’. 

The minimum requirements

Every employee is entitled to receive their employment contract within two months of them starting employment. 

Terms included in employment contracts can be referred to throughout the duration of the working relationship, including what the employee can expect if they are in breach of any terms.

Taking the time to draft a specific and well-thought out contract will save you time in the long run, together with a great amount of money and hassle. 

What should employers always do?

Below we have listed the most vital dos and don’ts you should consider when creating an employment contract.

DO put the contract in writing

Although it is not a legal requirement to write up your employment contracts, doing so reduces the chances of any misunderstanding occurring.

ACAS states that misunderstandings arising from employment contracts (consequently leading to disputes) are one of the main reasons why employment tribunal claims are pursued. 

For example, say you dismissed a member of staff for breaching their contract and they later try and claim against you for unfair dismissal.  

It’s highly likely they would be unsuccessful as you can prove they not only signed and agreed to the terms of the contract, but that they understood what would happen if they breached such terms.  This however is only possible when you have physical evidence.

DO consider whether you need to add a restrictive covenant

A restrictive covenant is a clause that prohibits someone from taking up a new job with a competing employer after they leave your company. This might be completely inapplicable to your business and can depend on your industry, service you offer and position of the employee. 

You should always consider the nature of the employee’s role and whether or not they would be handling confidential company or client data.  

It may sound like a somewhat negative or untrustworthy aspect to include within your contract, but it’s in the best interest of your company. 

What should employers not do?

DON’T change the terms of the contract without telling the employee

This would almost certainly land you in legal trouble. 

The terms of your employment contract can be altered before they are due to expire, but you must discuss this with the employee and get their consent prior to making any amendments.

DON’T be vague or non-specific

The most basic information you must include is the job description, the duties involved and details about their management and salary. 

This is essentially what you would’ve included in your job vacancy posting, but a lot more detail should be supplied in the employment contract. 

You should take as long as necessary when checking the content of your contracts and ensure that they have been individually tailored for each employee. 

Standardised contracts or templates often have gaps in them or are not entirely applicable to the role, which can leave you vulnerable or confuse your employees.  

Failure to include company policies 

You must assume that everything you fail to include will be seen as acceptable or non-important in the eyes of the employee; such as smoke breaks or dress code.  

Although it may seem unlikely that a new starter will dress in jeans for their first day or go for a smoke break every hour, it always works in your favour to be as clear and straight-forward as possible and communicate your company policies and procedures clearly from the start.