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Contract of Employment Definition

What is an employment contract and what should be in one? This guide explains how the terms and agreements in a contract of employment work.

EMPLOYMENT CONTRACT UK: In simple terms it is a verbal or a written agreement.

A contractual agreement between an employer and an employee forms the basis of an employment relationship.

Thus, everyone starting a job has entitlement to a contract of employment with their employer.

As a rule, employment contracts set out a list of terms and agreements. They include employment conditions, duties, rights, and responsibilities.

There is a legal requirement for employers and their employees to follow the ‘terms’ in a contract. Both parties must do so until the end of the contract. Typical reasons for an employment contract to end include:

  • Either an employer or an employee gives notice to end the employment relationship.
  • The employee gets dismissed from their position in the workplace.
  • There is a change of employment contract terms and conditions. As a rule, this requires an agreement between the employer and the employee.

Note: There is a difference between an employment contract and a ‘contract to provide services’. Having an agreement to do some work for someone would be providing a service (e.g. mowing their lawn).

Accepting a Contract of Employment

Accepting a job offer means an individual already has a contract with an employer. There is no legal requirement for an employment contract to be in a written format. But, having a written contract of employment is always a safer option.

Employment Contract Terms Required by Law

The ‘terms’ form the legal parts in employment contracts. Thus, employers must make it clear which parts are ‘legally’ binding. These are typical examples of where you find employment contract terms.

Implied Terms of a Contract of Employment

Some issues may not have ‘clear’ definitions stated in employment contract. In cases such as these, you and your employer can use ‘implied terms’. Some examples include:

  • Employees should not steal property from their employer.
  • Employers will provide a safe and secure working environment.
  • Certain legal requirements (e.g. the right to 5.6 weeks of paid holidays).
  • Necessities to complete the job (e.g. having a valid driver licence).
  • Certain traditions within the company (e.g. paying a Christmas bonus).

Collective Agreement Definition

Some employers make ‘collective agreements’ with representatives of their employees. Often, they are from staff associations or trade unions. It allows negotiations of terms and conditions such as working hours or pay. General terms of a collective agreement would usually include:

  • When and how negotiations get organised.
  • Which employees will get covered by such an agreement.
  • Who is going to be representing the employees.
  • Details about the terms and conditions covered by the agreement.

Employment Contracts Information Guide

The UK laws of employment do not force employers to make written contracts for employees. But, they should provide all new workers with a written statement of basic terms and conditions. This should get done within sixty (60) days of an individual starting work. This statement must include:

  • The employee’s pay details.
  • The working hours.
  • A period for termination.
  • Company grievance procedures.

A written statement of employment particulars is a legal requirement. The written statement forms part of your employment contract. But, a ‘written’ contract of employment is not. It can be a verbal agreement.

The contractual agreement should include some essential employment characteristics. They may be express terms or implied. But, a contract still exists between an employer and an employee – even with no written terms.

It will also include the legal aspects and constraints put upon the employer. It will include the legal requirement to pay at least the minimum wage. The statutory allowance for annual leave is also a mandatory consideration.

Note: None of the foregoing need to be in writing, except for written notices, handbook etc.

Many workers start a job without knowing what the contract actually involves. But, by doing so, they will have agreed to the terms of employment as laid down by that employer.

You cannot afterwards claim ignorance in not knowing what the terms are. Verbal agreement is binding upon you and your employer for the full term of your employment. The contract can only get changed with negotiation between both parties.

Contract of Employment Definition in the United Kingdom