Contracts of employment

A contract of employment is an agreement between an employer and an employee and sets out the rights and duties which exist between them. All employees have a contract of employment, although it might not be in writing. Here we explain how contracts of employment operate and how they are enforced

What is a contract of employment?

A contract of employment is an agreement made between an employer and an employee which sets out their respective rights and duties (called the ‘terms’ of the contract) and affects the rights which each has in relation to the other. The contract doesn’t have to be in writing, it can be a verbal contract or it can be one which is implied by the working relationship – in other words your agreement to work for your employer and your employer’s agreement to pay you for your work is the contract

However, an employee is entitled to a written statement of the main terms within two months of starting work. This is often known as a section one statement since it sets out the basic minimum particulars of employment required by section 1 of the Employment Rights Act 1996

The contract of employment comes into existence as soon as the employee accepts the employer’s job offer. From that moment onwards both sides are bound by its terms until such time as it is properly ended or the terms change. The purpose of the contract is to set out the rights and obligations between the employer and such as, for example, the employees right to be paid and the employers right to have work done. These rights are in addition to the rights which both have under law, such as, for example, the employees right to a national minimum wage and the right to paid holidays and the employers right to expect the employee to keep confidential sensitive matters relating to the business.

Employed or self-employed?

Because many employment rights, such as the right not to be unfairly dismissed or the right to receive redundancy pay, depend upon a person being “employed” as opposed to “self-employed” it is vital to be sure of a person employment status. It is not uncommon for an employer to refer to a person as self-employed, or a ‘casual worker’ when in fact that person is actually an employee. This is done for a variety of reasons including an attempt to deprive the person of their employment rights or so as to avoid having to pay tax and NIC for the person.

What an employer regards a person as being is not relevant - it is the nature of the relationship which is important. Just because a person is described as self-employed does not make them so. Neither does the fact they pay their own tax and national insurance in the same way as a ‘self-employed’ person. The things which do matter are the way the person works, who decides what work they do and what they can be expected to do by the employer.

Thus, in deciding if a person is employed or self employed it is necessary to consider factors such as the element of control and matters of payment and the provision of materials. Factors which include:

• does the employer tells the person what to do and how to do it or do they simply leave deciding what needs doing to the other person who then gets on and does it?
• does the employer provide the person with work, or do they go out and find their own?
• is the person paid a regular amount at regular intervals or only paid when a particular job is completed?
• who is responsible for doing the actual work – is it the other person and only the other person or can the other person bring in other people to do the work for them?
• does the employer provide the tools and equipment or are they provided by the person doing the work?

In all of the examples above, if the answer to each question is the first of the two possibilities then the chances are that the other person is an employee and not self-employed. Clearly, matters are not always that clear cut, and there will be situations where a person does not satisfy some of the tests but is nevertheless an employee. However, if you have any doubt as your employment status, or if you are an employer wanting to ensure that a person does, or does not, become an employee then contact employmentlawhelp for further information.

The employment rights you have will often depend on whether you are classed as an ‘employee’, ‘worker’ or ‘self employed’. This depends on the type of contract you have with your employer.

Written statements

As already stated above, an employee must receive a written statement of employment particulars setting out the main terms of their employment within two months of starting work. That statement must include, as a minimum:

• pay
• hours of work
• holiday entitlement
• sick pay arrangements
• notice periods
• information about disciplinary and grievance procedures

If you are an employer then employmentlawhelp can assist you in drafting an appropriate statement which can be used as a template within your business and if you are an employee we can advise you as to your rights to have an appropriate statement

You should also be aware that if the terms of a contract change, then the employer must provide the employee with a new statement within one month of the change. This applies whether or not you have a written contract of employment. If you have not received a written statement, or if the statement you have received is not adequate, then the starting point is to approach your employer and request one. Bear in mind that refusal to provide one is against the law (and you can take the employer to an employment tribunal over the issue) and that dismissal for asking for a statement will automatically be unfair.

Call our specialist Employment Law Solicitors on 084 4804 4800 for more information, advice and support on Employment Contracts and Section One Statements.