Employment Contracts in the UK

An employment contract is a legally binding agreement between an employer and an employee that sets out the terms and conditions of the employment relationship. In the UK, every employee has a contract from the moment they accept a job offer, whether or not anything is written down.

Written Statement of Particulars

Since 6 April 2020, employers must provide a written statement of employment particulars to every employee and worker on or before their first day of work. This is not the full contract but contains the key terms required by section 1 of the Employment Rights Act 1996.

Principal Statement (Day One)

The following must be provided on the first day:

Wider Written Statement (Within 2 Months)

The following can be provided within the first 2 months:

Types of Employment Contract

Zero-Hours Contracts

Under a zero-hours contract, the employer is not obliged to offer work and the worker is not obliged to accept it. Key rules:

• Workers on zero-hours contracts have the same rights to holiday pay , national minimum wage and rest breaks
• Exclusivity clauses are banned — the employer cannot prevent the worker from working for others
• Holiday entitlement accrues based on hours worked

Key Contractual Terms

Remuneration

The contract should specify:

• Basic salary or hourly rate (which must meet the national minimum wage or National Living Wage )
• Overtime rates and conditions
• Bonus structure and eligibility
• Commission arrangements
• Pay review dates

All pay is processed through PAYE payroll with deductions for income tax, National Insurance and pension contributions.

Restrictive Covenants

Employment contracts often include clauses that restrict the employee after they leave:

• Non-compete — preventing the employee from working for a competitor for a specified period
• Non-solicitation — preventing the employee from approaching clients or customers
• Non-dealing — preventing the employee from doing business with former clients
• Confidentiality — protecting trade secrets and sensitive information

Restrictive covenants must be reasonable in scope and duration to be enforceable. Courts will not enforce a covenant that goes further than necessary to protect the employer’s legitimate business interests.

Probationary Period

A probationary period gives both parties time to assess the arrangement. Common features:

• Typically 3 to 6 months
• Shorter notice period during probation
• Employer can extend probation if performance concerns remain
• The employee still has full statutory employment rights from day one

Implied Terms

Even if not written in the contract, certain terms are implied by law:

• Mutual trust and confidence — neither party will act in a way that undermines the employment relationship
• Duty to provide a safe working environment — the employer must protect the employee’s health and safety
• Duty to pay wages — the employer must pay for work done
• Duty of fidelity — the employee must act honestly and in the employer’s interests during employment
• Reasonable notice — if no notice period is specified, a reasonable period applies

Changing Contract Terms

An employer cannot unilaterally change the terms of an employment contract. Changes require:

• Employee agreement — ideally in writing
• Consultation — particularly for collective changes affecting multiple employees
• Reasonable notice of the proposed change
• A genuine business reason for the change

Imposing changes without agreement can amount to a breach of contract, giving the employee the right to claim constructive dismissal.

Contract and Payroll Records

Employment contracts interact directly with payroll processing:

Employers should keep employment contracts and written statements on file for the duration of employment and for at least 6 years after the employee leaves, to support any potential tribunal claims.