Contracts of Employment

What is a Contract of Employment?

There is always a contract between an employee and employer. You may not have anything in writing, but a contract will still exist. This is because your agreement to work for your employer and your employer's agreement to pay you for your work forms a contract. Your employer does have to give you a written statement within two months of you starting work. The statement must contain certain terms and conditions.

A contract gives both you and your employer certain rights and obligations. The most common example is that you have a right to be paid for the work you do. Your employer has a right to give reasonable instructions to you and for you to work at your job. These rights and obligations are called contractual terms.

The rights that you have under your contract of employment are in addition to the rights you have under law, such as, for example, the right to a national minimum wage and the right to paid holidays.

Generally, you and your employer can agree to whatever terms you wish to be in the contract, but you cannot agree to a contractual term which gives you less rights than you have under law.

A contract of employment will usually be made up of two types of contractual terms. These are:

  • express terms
  • implied terms.

Express contractual terms

Express terms in an employment contract are those that are explicitly agreed between you and your employer and can include:

  • amount of wages, including any overtime or bonus pay
  • hours of work, including overtime hours (there is a legal limit for most employees on the maximum number of hours they can work per week)
  • holiday pay, including how much time off you are entitled to (nearly all workers are entitled by law to 24 days' paid holiday - they may be entitled to more under their contract. Part-time workers are entitled to a pro rata amount)
  • sick pay
  • redundancy pay
  • how much warning (notice) the employer must give you if you are dismissed.

The express contractual terms may not be in one written document, but may be in a number of different documents.

They may not be written at all. The express terms may be found in:

  • the job advertisement
  • a written statement of main terms and conditions (see under heading Employee's right to written details about the employment contract)
  • any letters sent by your employer to you before you started work
  • anything you were asked to sign when or since you started work
  • instructions or announcements made by your employer on a notice board at work
  • an office manual or staff handbook
  • payslips.

You may not have possession of all the relevant papers. You may be able to get copies from your Personnel Department,supervisor or trade union representative.

You should always keep any papers given to you by your employer.

Because a contract will still exist even if there is nothing written down, anything which was said to you by your employer about your rights, and anything which you agreed verbally, should be recorded.


Implied contractual terms

Implied terms in an employment contract are those which are not specifically agreed between the employer and employee. Implied terms are:

  • general terms which are implied into most contracts of employment
  • terms implied by custom and practice
  • terms from agreements made with the employer by a trade union or staff association.

General implied terms
The following duties and obligations will usually be implied into any contract of employment:

  • the employee and employer have a duty of trust to each other. This means, for example, that if you give your employer's industrial secrets to a competitor, you will have broken an implied contractual term of trust
  • the employer and employee have a duty of care towards each other and other employees. This means, for example, that the employer should provide a safe working environment for the employee and that the employee should use machinery safely
  • the employee has a duty to obey any reasonable instructions given by the employer. There is no legal definition of reasonable, but it would not be reasonable to tell an employee to do something unlawful, for example, a lorry driver should not be told to drive an uninsured or untaxed vehicle
  • your employer has a duty to pay your wages and provide work. As long as you are willing to work, your employer must pay your wages even if no work is available, unless your contract says otherwise.

Terms implied by custom and practice
When dealing with a particular employment problem, there may be no express contractual term covering the matter. In such a case, it is helpful to look at what has happened to other employees in the workplace. This is because if other employees have been given this right, you can argue that you also have the right under 'custom and practice'.

Rights under the Contract of Employment

The contract of employment is the agreement made between the employer and the employee. This could be in the form of a written agreement or what has been agreed verbally between them.

In addition, the contract of employment will also include 'custom and practice' agreements. These are how things are usually done in the workplace, for example, if the employer always gives the employees a day's holiday in August. Even though this is not mentioned in the written contract this will form part of the contract of employment as it is the usual practice.

If the written contract says one thing, but in practice all the employees have been doing something else with the employer's knowledge, the 'custom and practice' would form the contract rather than the written statement.

A trade union may have negotiated an agreement with an employer about conditions at work. The negotiated agreement will often form part of a contract of employment, particularly if the conditions negotiated are more favourable than the previous ones.

Illegal Contracts of Employment

Some contracts of employment will be illegal if:

  • the employee gets all or part of their wages as 'cash in hand'; and
  • tax and national insurance contributions are not paid; and
  • the employee knows they are getting paid in this way to avoid paying national insurance and tax.

Written Statement of the Main Terms and Conditions of Employment

All employees, regardless of the number of hours they work per week, are entitled to receive a written statement from their employer, within two months of starting work. The statement describes the main terms of the contract of employment.

The statement must give details about:

  • job title
  • wages
  • hours of work
  • holiday entitlement
  • sick pay
  • pension schemes
  • notice
  • grievance, dismissal and disciplinary procedure.