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Types of Employment Contracts UK

It is important for employers to understand the key differences in employment contracts. This guide explains the different contract types and employer responsibilities.

CONTRACT TYPES: UK employers have tax and employment liabilities for their staff. The different types of employment contract include:

  • Full-time and part-time employment contracts.
  • Fixed-term employment contracts.
  • Contracts for agency workers.
  • Consultants, contractors, and freelancers.
  • Zero hour or ‘casual’ contracts.

It is a worker’s contract type of employment status that determines the extent of their employer’s responsibilities.

Note: Special employment rules apply for employing family members, young people, or volunteers.

Full-time and Part-time Employment Contracts

If you employer workers you must give your employees:

  1. A written statement of employment or contract.
  2. The statutory minimum level of paid holiday and length of workplace rest breaks.
  3. A payslip which shows all deductions (e.g. Tax and NIC).
  4. Statutory Sick Pay (SSP).
  5. Maternity, paternity, and Adoption Pay and Leave.

United Kingdom contract types and employer responsibilities mean you must also:

Fixed-term Employment Contracts

Employers must treat fixed-term employees the same as full-time permanent staff. The 4 key differences with fixed-term contracts are:

  1. They last for a set length of time.
  2. They are set out in advance.
  3. They end when a specific task reached completion.
  4. They end when a specific event has taken place.

Hiring Agency Staff

Employers also have certain responsibilities and obligations when using an employment business to find staff. As a result, you should be aware of the agency workers regulations, meaning:

  • You make payments to the agency. That includes employee National Insurance contributions and Statutory Sick Pay.
  • The agency has a responsibility to ensure workers get their rights under working time regulations.
  • Agency workers get the same terms and conditions as permanent employees after 12 weeks’ continuous employment in the same role. That includes working time, breaks, rest periods, working at night, pay, and annual leave.
  • You must supply the agency with relevant information about the terms and conditions in your business. That ensures they can be sure the worker gets equal treatment after 12 weeks in the same job.
  • You must allow agency workers the use of any shared facilities. That includes access to childcare and a staff canteen if you have one. Make sure you give them information about any job vacancies from the first day they start to work.
  • You will be responsible for their workplace health and safety.

If You Hire Consultants, Contractors, or Freelancers

Hiring a consultant, a contractor, or a freelancer means:

  • They will be self-employed or they are part of another company.
  • They often handle their own tax and National Insurance contributions.
  • They may not have the same entitlement and rights as workers (e.g. the minimum wage).
  • You will be responsible for their workplace health and safety.

Zero Hour Employment Contract (casual contracts)

Most employers call zero hour types of employment contracts ‘casual contracts‘. It is because zero hour contract types are for ‘piece workers‘ or for those who do ‘on call‘ work.

For example, a language interpreter would usually have a zero hour contract because:

  1. They are available for on call to work when you need them.
  2. You do not need to give them regular work.
  3. They do not need to conduct the work even want them to.

People with zero hour contracts have entitlement to statutory annual leave. They must also get National Minimum Wage rates in the same way that regular workers do.

You cannot stop a zero hours worker getting work from anywhere else. In fact, employment laws state they can even ignore a clause in their contract that bans them from:

  1. Searching for work.
  2. Accepting work from a different employer.

Note: You are still responsible for workplace health and safety of staff on zero hour contracts.

Family Members, Young people, or Volunteers

Employing Family Members

All employers who hire family members must:

  • Avoid giving any special treatment relating to promotion, working conditions, and pay.
  • Ensure tax and National Insurance contributions get paid.
  • Follow working time regulations particularly for younger family members.
  • Have adequate Employer’s Liability (EL) insurance that covers all young family members.
  • Check to see if you need to provide them with a workplace pension scheme.

Employing Voluntary Staff and Volunteers

If you take on any volunteers or voluntary staff you:

  • Will be responsible for their workplace health and safety.
  • Must provide inductions and training for the tasks they will perform.

Employing Young People

If you employ young people they must be at least 13 years or older. But, you must also follow special rules on how long they can work and what type of jobs they can do. You must perform a health and safety risk assessment before you take on young workers.

As a rule, young people have certain employment rights which include:

Different rules apply for young workers and apprentices on the National Minimum Wage.

Note: They get classed as an ‘adult worker‘ once they turn 18 and different rules then apply.

Contract Types and Employer Responsibilities in the United Kingdom