Employment Contract Essentials and Updates for Employers

A well drafted employment contract is one of the most important documents in any working relationship. It sets out the rights and responsibilities of both employer and employee, and failing to get it right can expose businesses to significant legal risk.

Whether you are hiring your first employee or reviewing your current workforce agreements, it is important to understand what should be included, and recognise when employment contracts need to be updated.

A contract of employment is a legally binding agreement between an employer and an employee. While some terms may be agreed verbally or implied through conduct, certain written particulars must be provided by law.

Since April 2020, employees and workers have been entitled to a written statement of employment particulars which requires that certain information must be provided to an employee from day one of employment. 

Key employment contract terms typically include:

There are different types of employment contracts depending on the role, working pattern and structure of the relationship. Choosing the right type of agreement and ensuring it complies with employment law is crucial to avoid misclassification, uncertainty and future disputes.

These may include:

It is important to distinguish between an employee, worker, contractor or consultant. Getting employment status contract arrangements wrong can create risk around holiday pay, notice, tax, employment rights and termination.

Employers should take particular care when using an employment contract template, as generic documents may not reflect the role, the business or current legal requirements.

Employers often ask the same practical questions when drafting or reviewing employment contracts.

Yes, but post-termination restrictions must be carefully drafted. They must be reasonable in scope, duration and geography, and they should go no further than necessary to protect legitimate business interests.

Examples of post termination restrictions can include:

Poorly drafted restrictions may be difficult to enforce, so employers should seek employment contract advice before relying on them.

Yes, especially where pay structures are performance-related. An employment contract bonus clause or employment contract commission clause should make clear how entitlement is calculated, when payments are due and importantly, whether the arrangement is contractual or discretionary.

Clear wording can help avoid later disputes over pay, benefits or contractual entitlements.

Failing to provide a written statement of employment particulars can create legal risk. Employees and workers have the right to receive key written terms from day one. If a dispute later reaches an Employment Tribunal, failure to provide written particulars may be taken into account and could result in additional compensation in certain circumstances.

For employers, this is a straightforward compliance point that should be built into the recruitment and onboarding process.

It is important that contracts are reviewed periodically to ensure they remain compliant and fit for purpose.

Employers should consider updating employment contracts in response to:

Failing to keep contracts up to date can mean terms become unclear, unenforceable or out of step with current employment law.

A regular employment contract review can help employers identify gaps, outdated clauses and areas of risk before they become disputes.

Employment contracts are more than just paperwork. They are the legal foundation for the employment relationship.

Keeping contracts compliant and up to date helps protect your business, manage risk and maintain staff trust. It can also reduce the likelihood of an employment contract dispute, breach of employment contract claim or Employment Tribunal issue.

At Franklins Solicitors LLP, we provide employment contract advice, draft employment contracts tailored to your business needs and review contracts to ensure compliance with the latest legal standards.

Whether you are revising existing terms, introducing new contracts or dealing with changes to employment contract terms, our Employment Law team can guide you through every step.