| Index »Employment Contract
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| Employment Contract
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| A contract is an agreement between two parties enforceable by law. A contract of employment is a contract of service and comes into being when an employee agrees to work for an employer in return for pay. A contract of employment is a legal agreement between an employer and an employee. It comes into force when an employee agrees to work for an employer in return for pay. An employer is legally required to put some of the main details of an employee's work in writing - including hours, pay and leave.
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| If you are an employee, you must get a 'written statement of employment particulars' setting out some of your main terms Your contract is so much more than a bit of paper with lots of small print. You need to read it carefully before you sign and if you don't understand something, be sure to ask your employer. If you're not careful, you could sign away some of your most important rights. Your employer is legally obliged to provide the terms and conditions of employment within two months of your starting date, but it's best if you can go over your contract with you employer as soon as you join the company.
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| What Are Contract Terms?
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The terms of the contract are the rights and obligations which bind the parties to the contract. |
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The terms of a contract can be express (those which are explicitly agreed between the parties, either in writing or orally) or implied (those which have not been spelled out but which would be taken by the parties to form part of the contract). |
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| Terms are implied, for instance, because they are:
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Too obvious to mention or because the parties assumed they would be incorporated at the time the contract was entered into (eg: that the employee will not steal from the employer or that the employer will provide a safe working environment) |
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Necessary to make the contract workable (eg: that an employee employed as a driver will hold a valid current driving licence) |
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He custom and practice of the business or industry, ie: where a custom or practice has been adopted over a period of time. |
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Express terms may be established by referring to various sources, particularly the written statement of terms and conditions (to which most employees are entitled under the Employment Rights Act 1996), the letter of appointment and written or oral statements made by the employer and accepted by the employee. Express terms may also be incorporated into individual contracts by reference to other documents, such as collective agreements and company handbooks. |
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Statutory terms are those implied or imposed by an Act of Parliament or Statutory Instrument, eg: the imposition of an equality clause into an employee's contract and the entitlement to be paid the national minimum wage or given a minimum period of notice. Agreements to contract out of statutory terms are normally void under the law.(1) |
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| The Contract Statement must include:
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Pay |
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Hours of work |
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Holiday entitlement |
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Sick pay arrangements |
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Notice periods |
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Information about disciplinary and grievance procedures |
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| These can be explained below, the work contract will generally cover the following aspects:
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| The Name Of The Employer And Employee
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| You need to know the name of the employer, in case you need to take action against them in the future.
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| The Job Title And Job Description
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| Although employers don't have to provide a job description, it's best to try and get one. This will give you something to refer back to if you think you are being forced to do unreasonable tasks by a bullying boss. It's also useful when you're going for promotion; provide examples of how you excel at everything in your job description, and evidence of any extra responsibilities you have taken on that aren't mentioned.
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| Date Of Commencement Of Employment
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| This doesn't have to be the date you start work; it is the date you officially become an employee.
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| Temporary Employment
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| If the employment is temporary, the likely duration should be stated; or if it is for a fixed term it should be clear when the employment ends.
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| Place Of Work
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| You must be told where you will be working. The employer's address should also be stated.
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| Rate Of Pay And Pay Intervals
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| This tells you how much you will be paid (before tax), and how often.
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| Normal Hours Of Work
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| Check the normal working hours and look for mentions of compulsory overtime, or whether time off in lieu (TOIL) is given. Some contracts limit the hours that can be worked (such as lorry drivers).
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| Holiday Entitlement And Holiday Pay
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| From 1 October 2007 all workers have a statutory right to at least 4.8 weeks paid annual leave (that's 24 days paid holiday if you work five days a week). There is a minimum right to paid holiday, but your employer may offer more than this.
From 1 October this year you are entitled to a minimum of 4.8 weeks. The entitlement will increase again to 5.6 weeks from 1 April 2009 . Those working part-time are entitled to the same level of holiday pro rata (so 4.8 then 5.6 times your usual working week)
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| Pension Scheme
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| The general terms of the pension should be here, with reference to documents which set out the terms in detail. If there are no pension rights, the contract must say so.
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| Sick Pay
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| This will tell you the amount of pay you are entitled to if you are not able to work. If there are no terms or conditions related to pay due to injury or sickness, the work contract must say so. See Advice Guide's information on sickness at work for more advice.
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| Period Of Notice
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| This says how much notice you must give if you quit, normally at least one week. If you have been employed for at least one month then you are entitled to at least one week's notice of dismissal.
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| Disciplinary Rules And Procedure
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| The rules for your type of work may be about punctuality or drunkenness. Procedures used if you break any of these rules must be listed.
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| Grievance Procedure
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| This will tell you how complaints are handled at work. If you're going to be employed for more than a month and work eight hours or more a week, your employer must give you a work contract stating the terms and conditions of your job, within two months of the start of work. Oral terms are just as binding as those in writing, but in a dispute over any terms, a written contract is concrete proof whereas verbal agreements are hard to prove.
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| Maternity Leave
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| If you're about to become a mum, make sure your employer treats you right.
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| Paternity Leave
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| If you're about to become a dad, make sure your employer treats you right.
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| Holiday Entitlements
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| Your Holiday Rights
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| There is a minimum right to paid holiday, but your employer may offer more than this. The details of Holiday Pay are: From 1 October this year you are entitled to a minimum of 4.8 weeks The entitlement will increase again to 5.6 weeks from 1 April 2009 Those working part-time are entitled to the same level of holiday pro rata (so 4.8 then 5.6 times your usual working week) You start building up holiday as soon as you start work. Your employer can control when you take your holiday. When you finish a job, you get paid for any holiday you've not taken. You do not have a statutory right to be paid leave on bank and public holidays. If paid leave is given on a bank or public holiday, this can count towards your minimum holiday entitlement. There are eight permanent bank and public holidays in Great Britain.
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| If you work on a bank or public holiday, there is no automatic right to an enhanced pay rate. What you get paid depends on your contract of employment. Information on taking holidays in order to qualify for the right to annual leave you need to be classed as a worker. If you're self-employed, you have no statutory right to be paid annual leave.
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| Agreeing Holiday Rights
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| Annual leave should be agreed when an employee starts work. Holiday entitlements are sometimes mentioned in job advertisements and are often discussed at a job interview. The details of how much holiday an employee gets should be confirmed when a successful candidate receives a formal job offer.
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| Once an employee starts work details of holidays and holiday pay entitlement should be found in:
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The employee's written contract, where there is one |
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A written statement of employment particulars given to employees by their employer. |
| The written statement is required by law and must be given to employees by the employer no later than two months after the start of employment.
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| What's My 'Working Week'?
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| Your working week is your usual hourly pattern of work. This should be set out in your contract of employment. The working week might include overtime (check your contract) but does not usually include journey time to your usual place of work.
The document should contain sufficient detail to enable the employee's entitlement to be precisely calculated, including any entitlement to accrued holiday pay on the termination of employment.
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| The Legal Minimum
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| Under the Working Time Regulations 1998 (as amended), workers (including part timers and most agency and freelance workers) have the right to:
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4.8 weeks' paid leave each year (from 1 October 2007) |
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payment for untaken statutory leave entitlement on termination of employment. |
| Statutory annual leave entitlement will increase from 4.8 weeks to 5.6 weeks (capped at 28 days) on 1 April 2009. Many workers already get contractual leave which is more than 28 days. Their holiday entitlement will not change as a result of the amendments to the Working Time Regulations.
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| The Leave Year
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| The first thing an employee needs to do is check their written statement or contract of employment. Is there a set start and finish date for the holiday year - for example, April to March? If not, the leave will begin:
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on the date the worker began work for the current employer, or |
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1 October (the anniversary of the regulations becoming law). |
| If a worker starts work part way through the company's leave year, the initial holiday entitlement is based on the period from that date until the leave year ends. In most cases, employers will calculate entitlement for a part year pro rata to the full year. So, if a worker begins work in July and the company's leave year runs from April to March, the entitlement will be three-quarters of the full entitlement for that year.
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| Public Holidays
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| Generally, public holidays include bank holidays, holidays by Royal Proclamation and 'common law holidays'. When public holidays in the Christmas and New Year period fall on Saturdays and Sundays, alternative week days are declared public holidays.There is no statutory entitlement to paid leave for public holidays. Any right to paid time off for such holidays depends on the terms of the worker's contract. If public holidays are not expressly covered in the contract, the right to paid leave may have built up through custom and practice. Paid public holidays can be counted as part of the statutory 4.8 weeks' holiday entitlement under the Working Time Regulations 1998 (as amended).
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| Taking Leave
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| Building Up Leave
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| Under the Working Time Regulations, employers can use an accrual system to calculate how much leave a worker has built up during their first year of employment. Under such an accrual system, leave is built up monthly in advance at the rate of one twelfth of the annual entitlement. For example, a full-time worker in the eighth month of employment would have built up 16 days' leave. This calculation is based on annual entitlement of 24 days x 8/12ths = 16. From 1 April 2009, when the holiday entitlement increases to 28 days (5.6 weeks), the figure will be 18.6 days' leave (based on the calculation 28 days x 8/12ths = 18.6).
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| An employer who chooses not to use the accrual system can still control the timing and taking of leave - see 'Restrictions on taking leave' below.
From 1 October 2007 any holiday entitlement over 4 weeks (20 days for a five-day week, 16 days for a four-day week etc) can be carried over into the following leave year. However, there is no statutory right to carry leave over - it must be agreed between the employer and the worker. As a temporary measure employers can pay employees in lieu of the additional days or part days introduced on 1 October 2007.
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| Applying For Leave
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| Workers are required to give notice to their employers if they wish to take a holiday. The notice must be twice as long as the period of leave requested. For example, a worker wanting one week's holiday needs to give two week's notice. The employer can refuse permission by giving counter notice at least as long as the leave requested, i.e. one week.
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| Restrictions On Taking Leave
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| Restrictions on taking holidays may be expressly stated in the contract of employment, implied from custom and practice or incorporated into individual contracts from a collective agreement between the employer and trade union(s).
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Shut down for certain periods during which all or some groups of workers have to use their annual holiday entitlement |
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If you take out this type of mortgage, check regularly that you're on target to pay off the mortgage when it's due. If not, then increase your savings. |
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If you take out this type of mortgage, check regularly that you're on target to pay off the mortgage when it's due. If not, then increase your savings. |
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Nominate particular dates as days of closure, when workers are expected to take annual leave (for example, over the Christmas and New Year period) |
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Determine the maximum amounts of leave that can be taken on any one occasion and also the periods when leave may be taken. |
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| An employer can require a worker to take all or any of the leave to which a worker is entitled at specific times, provided that the worker is given prior notice.
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| Holiday Pay
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| For each week of their statutory leave entitlement workers are entitled to be paid a week's pay calculated in accordance with sections 221-224 of the Employment Rights Act 1996 as follows:
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| Workers With Normal Working Hours
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If a worker's pay does not vary with the amount of work done then a week's pay is the amount due for a week's work under the worker's contract. Pay for non contractual overtime is excluded. |
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If a worker's pay varies with the amount of work done then the amount of a week's pay is the pay for the normal weekly working hours multiplied by the workers average hourly rate over the preceding 12 weeks. This may occur under a piece work, bonus or commission system. |
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To calculate the average hourly rate, only hours where the worker was working, and the pay related to them, should be taken into account. Overtime hours can be included although pay for these hours should be adjusted to the normal rate. Any week in which no pay was due, for hours worked, should be replaced by the last previous week in which pay was received for hours worked. |
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Shift and rota workers, whose pay varies because they work their normal hours at varying times and in varying amounts in different weeks, have their week's pay calculated differently. Their average weekly hours of work, in the preceding twelve weeks, are multiplied by their average hourly rate. The hourly rate is calculated as above and includes any shift allowance which is payable. |
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| Workers With No Normal Working Hours.
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| If a worker has no normal working hours then a week's pay is the average pay received over the preceding 12 weeks. Any week for which no pay was due should be replaced by the last previous week for which pay was due.
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| Who Does The Working Time Regulations Apply To?
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| The provisions in the regulations on holidays and holiday pay do not, at present, apply to services such as the armed forces or police or parts of the civil protection services where their activities conflict with the statutory entitlement to paid annual leave.
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| Part-Time Worker's Holiday Entitlement?
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| Part-time workers are entitled to the same holidays as full time workers, calculated on a pro-rata basis. For example, an employee who works three days a week is entitled to 14.4 days' paid holiday - their normal working week multiplied by 4.8. An employee who works four days a week is entitled to 19.2 days' paid holiday - their normal working week multiplied by 4.8.
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| Position Of Agency Or Casual Workers
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| Agency and casual workers are entitled to holidays under the Working Time Regulations 1998 in the same way as other workers. However, entitlement will depend on their employment relationship, pattern of work and length of service and therefore may be calculated on a pro rata basis. Where this is the case, wages on each termination will normally contain an element of holiday pay where the appropriate leave entitlement has not been taken.
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| Does Leave Accrue During Periods Of Absence?
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| As long as a contract exists between the employer and the worker, the statutory minimum entitlement to paid holiday will continue to accrue during periods of absence, such as ordinary and additional maternity leave. However, if a worker does not exercise their right to take annual leave within a leave year, then their statutory entitlement to paid holiday will be lost as they are not allowed to carry this over to the next leave year. For example, if a person is on sick leave for the whole of a leave year there is no statutory entitlement to annual leave for that year. This is a complex area and if you are in any doubt you should seek legal advice. For the first 26 weeks of maternity leave, holiday entitlement accrues at the contractual rate. From the 27th week, leave accrues at the statutory rate (unless the contract says differently).
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| What Can A Worker Do If Holiday Entitlement Is Denied?
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| Workers denied statutory entitlements to paid annual leave should seek to settle disputes with their employer by talking through the problem. If the problem cannot be resolved informally, the worker should follow the organisation's grievance procedure. Workers must complete step 1 of the statutory grievance procedure if they wish to use the grievance as the basis of a complaint to an employment tribunal. This means they have to tell the employer about their grievance in writing. If it is not possible to reach an agreement in this way, workers may submit a complaint to an Employment Tribunal within three months of the refusal. If the complaint is upheld, the tribunal may award compensation to be paid to the worker by the employer.
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| What Happens When A Worker Has Taken More Leave Than Their Entitlement On Termination Of Employment?
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| Regulation 14 (4) of the Working Time Regulations 1998 states that an employer and worker can draw up a 'relevant agreement' (for example, in the contract of employment) to provide that a worker will compensate the employer, whether by payment, undertaking additional work or otherwise if leave already taken is in excess of entitlement when employment ends. There should be a 'relevant agreement' in place; if not, and a deduction of overpayment is made by the employer from the worker's final wage payment, the worker may have the right to submit a claim to an Employment Tribunal under Section 13 of the Employment Rights Act 1996 - the right not to suffer unauthorised deductions.
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| What Needs To Be Considered When Workers Request Extended Leave?
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| There is no general statutory right to extended leave without pay and whether it is granted is a matter for agreement between employers, their workers or, if appropriate, their trade unions. It may be helpful to have a policy on extended leave which applies to all workers. An agreement that a worker should return to work on a particular date will not prevent a complaint of unfair dismissal to an Employment Tribunal if a worker is dismissed for failing to return as agreed. In such cases all the factors should be considered and the need to act reasonably should be borne in mind before dismissal is carried out.
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| Does An Employee Have A Right To Time Off To Look For A New Job?
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| An employee who is being made redundant is entitled to take reasonable time off with pay (but no more than 2/5ths of a week's pay in total, regardless of the length of time off allowed) to look for another job, or to arrange training for future employment. The employee, who must have at least two years' continuous service, can take the time off within working hours while under notice. Once you're working there are lots of different things to learn and consider, including your rights in the workplace and health issues at work.
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