The contract of employment is an agreement that forms the basis of a relationship between employer and employee.
However, the contents of this contract do not need to be presented as formal written document in order to be considered legally valid.
In terms of physical documentation, employers are legally required to give all of their employees a written ‘statement of main terms’. In addition to this, the contract of employment also covers verbal agreements and implied terms.
Statement of main terms
By law, the statement of main terms must include the following pieces of information:
- Name of employer and employee
- Start date
- Place of work
- Details about pay
- Holiday entitlement
- Pension entitlement
Employees must complete one month’s service to receive these terms and must have been issued with a statement within two months of their start date.
The statement of main terms is commonly accompanied by an employee handbook in which the employer can include detailed rules of employment and any other important information the employee needs to know.
Importance of documentation
The statement of main terms and conditions of employment and the employee handbook together form the contract of employment and the framework for the employment relationship. They detail important procedures for both the employer and the employee to follow, such as raising grievances.
These documents allow employers to inform staff what is expected of them in their respective job roles, but also provide an opportunity to detail any benefits that apply to their employment. They can also be used as a key reference point if it is alleged that an employee has broken a rule or is in breach of contract.
The law behind contract of employment
The Employment Rights Act 1996 details the requirement to give an employee a statement of main terms.
The Employment Act 2002 details the compensation that can be awarded for failure to provide a statement of main terms, the equivalent to either 2 or 4 weeks’ pay.
However, the employee must ‘piggy back’ that claim onto another claim e.g. unfair dismissal, unlawful deductions, discrimination, which they must win in order to receive compensation for failure to be provided with a statement of main terms.
- The contract of employment is a legally binding agreement between employer and employee that covers both express and implied terms of employment.
- Although the contract of employment is not a tangible item, a physical statement of main terms must be issued to an employee once they have completed one month’s service, and within two months of their start date.
- The Employment Rights Act 1996 details the essential elements that must be included within the statement of main terms.