Do all employees need a contract of employment?

Short answer “no”. Which makes it very tempting to skip, especially if you are a new company with a very large to-do list.

The arrangement for you to pay someone in return for their work constitutes in itself a contract of employment. You do have to provide a written statement of employment particulars. 

Currently, every employee working for you longer than 1 month is entitled to receive this within 2 months of their start date, however, with the introduction of the Good Work Plan in April 2020, the right to receive a written statement of terms becomes a right from day one for both employees and workers. *Watch out for more information in our posts about the Good Work Plan.

This statement doesn’t constitute a formal contract of employmentbut it does contain much of what you provide in a contract anyway. The information the statement must contain is as follows: 

  • Name of your company and the employee
  • Start date of the employee
  • Job Title
  • Description of job role & responsibilities 
  • Salary and how often they will be paid (e.g. weekly or monthly)
  • Hours of work (and if they need to work on Sundays, nights, or overtime)
  • Holiday entitlement – how many days off, whether that includes Bank Holidays, and your holiday pay policy 
  • Employer notice period
  • Employee notice period
  • Job location
  • Details of any collective agreements made with the employee’s representatives (trade unions etc). 

It doesn’t have to contain but needs to signpost where the following information is:

  • Pensions and pension schemes
  • Disciplinary and grievance procedures
  • The appeals procedure for disciplinary and grievance processes

So why should you provide your employees with a contract?

Well first off, you are already halfway there! You are legally obliged to provide the above information so you have nothing to lose, and a whole lot more to gain. Because a statement of employment is designed to give clarity and protection to your employees. However, for the employer’s interest, a written contract is a much better option. Because:

It’s your chance to be specific

This is an opportunity for you to be specific about what you need for your business, here’s a couple of examples:

– If an employee has access to confidential company information you can include a clause preventing the employee from divulging this information.

– Maybe you need to make agreements on intellectual property.

If it’s not in a contract, you aren’t protected.

Peace of mind for both you and your employee

Verbal agreements can constitute a legally binding contract but there is so much room for error and misunderstanding that way.

Having your agreement with an employee set down in writing means everything is much clearer and, crucially, much more robust. 

If you are going to start writing new contracts of employment for your staff, please make sure you get specialist advice as this is an area that can cost your business greatly if you don’t. If you’re a new business we offer an HR package called “Kick Start Your Business” which includes a contract of employment for your staff.

Spread the love

Subscribe to Our monthly HR Newsletter to stay up to date with the latest HR news, practical advice and top tips.