FAQs: Contracts of Employment

1. Do you have to provide your staff with a contract?
2. How soon after employing someone do you have to give a statement of particulars?
3. What terms must a written statement of terms include?
4. Should you put grievance and disciplinary policies into the contract?
5. Can you stop your employee working for somebody else?
6. When is a zero-hours contract suitable?
7. In what ways can you protect your business when one of your employees leave?
8. How much notice do you have to give your employees?
9. Should you have the right to ‘Pay in Lieu of Notice’ in your employees’ contracts?
10. Can you require your employee to work more than 48 hours per week?

Do you have to provide your staff with a contract?

Yes – your employees are entitled to receive a document which meets the requirements of a written statement of employment particulars. See answer to question 3.

Workers and contractors do not have a statutory right to a contract of employment but it is sensible to provide one anyway so all terms are clearly defined.

How soon after employing someone do you have to give a statement of particulars?

You have to provide a written contract within two months of the employee starting their job. If your employee will be working abroad for one month, a contract must be provided before they leave the country.

If your employee leaves their job within two months then you still need to give them a written contract.

What terms must a written statement of terms include?

Your employee’s contract must include certain minimum information:

• Your name and your employee’s name
• The start date of employment
• The date on which your employee’s period of continuous employment began
• Your employee’s salary / rate of pay
• How frequently your employee will be paid (e.g. weekly, monthly)
• Hours of work / normal working hours
• Holiday (and holiday pay) entitlement – or alternatively that there are no specific contractual entitlements
• Sickness (and sick pay) entitlements – or alternatively that there are no specific contractual entitlements
• Any pensions or pension schemes that are in place – or alternatively that there are no specific entitlements
• Notice periods, both to be given by you and your employee – or, alternatively, where they can be found
• Your employee’s job title or a brief description of their work
• The duration of employment
• The place of work or an indication of the area your employee will cover, together with your address as the employer
• Details of any collective agreements which directly affect the individual employee
• Details of any disciplinary rules – or alternatively where they can be found
• Details of any disciplinary procedures – or alternatively where they can be found
• The person to whom your employee should send any appeals against disciplinary sanctions or dismissals and how they should go about doing this –or alternatively where this information can be found
• The person to whom your employee should address any grievances and how they should go about doing this – or alternatively where this information they can be found
• Whether there is a contracting-out certificate (i.e. for the purposes of pensions)

Where your employee will be required to work outside the United Kingdom for a period of more than one month then additional information must be provided.

Should you put grievance and disciplinary policies into the contract?

No. It is better to have a separate disciplinary policy contained in a Handbook.  This will ensure that you can update the policy without needing to seek the employee’s agreement. Also, if you included this in a contract and then departed from them, your employee might be able to sue you for breach of contract.

Can you stop your employee working for somebody else?

Generally speaking, your employees are entitled to work for others while they are not working for you.  In most cases, your employees can even work for competitors in their own time. Therefore, if you want to stop your employee from working for others, it is important that you include any restrictions within the terms of their contract.  Any restrictions must be reasonable.

When is a zero-hours contract suitable?

Zero-hours contracts are most suited where you as the employer cannot guarantee a fixed number of hours each week to their worker.  This type of arrangement is therefore most suitable where you need flexibility – such as between care homes and agency staff, or between shops and casual staff who will only work occasional weekends or different hours according to the needs of the business.  Zero-hours contracts can also provide flexibility for workers as they will generally be able to refuse to work if it is not convenient.

In what ways can you protect your business when one of your employees leave?

Unless you provide for this in their contract, your employees are free to do whatever they want after their employment ends. You can ask your staff to enter into post-termination covenants by which your employee agrees, for example, not to work for other local businesses, similar to yours, or not deal with your clients, for a fixed period after their employment ends. If your ex-employee breaches their covenants, you should be able to apply to Court for an injunction and also compensation. However, post-termination covenants must be reasonable in scope and they must only protect your legitimate business interests.

How much notice do you have to give your employees?

You are free to agree notice periods with your employee and this should be explained in their contract, but notice periods are subject to the statutory minimum:

• After one month the employee is entitled to a minimum of one week’s notice
• After two years, the employee is entitled to one week’s notice for each complete year worked, up to a maximum of 12 weeks

Should you have the right to “Pay in Lieu of Notice” in your employees’ contracts?

Many employers prefer to have “Pay in Lieu of Notice” clauses so that when an employee leaves, or is dismissed, the employer is not required to keep them in the business for the duration of their notice period.  This can be particularly valuable if there is bad feeling between you and your employee, or if you are concerned that your employee might become aware of important sensitive information before they leave.

However, a disadvantage with PILON clauses is that any notice payment is always taxable, even when there is a Settlement Agreement. In cases where your employee has a long notice period, e.g. three months, then you would be liable to pay Employer’s National Insurance. Any settlement offer might also be less attractive to your employee.

Can you require your employee to work more than 48 hours per week?

No. If you need your employee to work more than 48 hours per week you should ask them to sign an opt-out clause.  This can be included within their contract of employment, or it can be signed at a later date, provided that the employee gives their agreement before you ask them to work 48 hours or more.

Find out how we can help with all your Employment Law contract questions and contact us today on 01273 609911, or email info@ms-solicitors.co.uk.