The Benefits of Having a Contract of Employment
Updated: Jun 29
An employment contract is a binding written agreement between an employer and an employee. The contract governs agreed terms between the employer and employee. The agreement provides grounds for termination. The agreement may also provide for a severance package in the event the employee is terminated.
Specific provisions in an employment agreement include:
Length of contract: The agreement will need to specify a work start and end date. This agreement will also specify how many hours of work the employee is to work per day.
Place of work: The location of the employee’s workplace, whether it be remote and working from home or in an allocated office. The employer will need to include this in the employment contract.
Salary: The agreement can specify how much the employee is to be paid in each time frame. The agreement can also state the frequency of salary payment, what date they will be paid as well as what deductions the employer will make from the salary. The agreement can also contain a provision for severance pay.
Holiday entitlement: How many days holiday the employee is entitled to per year.
Termination provisions: Termination clauses set out the express grounds upon which a contract may be ended. They are also known as "break clauses" in some circles. In the business environment, termination clauses specify rights to bring a contract to an end for specified reasons that will need to be highlighted in the contract.
The above list is not exhaustive. Both parties to the contract can negotiate and agree terms before the employment commences. As the contract is binding once signed by both parties it is important to think about the terms carefully before commencing employment. There may be factors which could be important to an employee such a flexibility which can be set out clearly in the contact.
The current pandemic has raised awareness for both the employer and employee about the significance of working life and the ability of working from home. Moving forward from the pandemic it is important to have provisions in place for home working and what is required from the employer and employee.
The benefit of having a contract of employment is to provide both the employer and employee clear expectations of what is required from each party and can protect each parties’ interest. The contract can provide and set out clear guidance of what each party is expected to do. Such as the following:
The scope of work.
Standard of behaviour expected from the employee.
Responsibilities and duties.
Confidentiality guidelines especially if the work involves sensitive information.
By having an agreed contract, it prevents misunderstandings arising. The contract can set out exactly what is required to prevent any ambiguity and potential disputes in the future. Most statutory protection rights are not incorporated into a contract, but they exist alongside and supplement contractual rights. Terms implied by legislation will always override any express terms in an employment contract if the contract provides lower provisions, for example, minimum wage.
The contract can set out procedures for taking holiday entitlement, maternity leave, bereavement leave and sick leave and can be the go-to guide for employees. An employment contract can benefit employers by including confidentiality terms to protect an employer’s data and confidential information especially when working from home like most employees have been during the pandemic. There is no need or requirement for a contract to be long and drawn-out. A more clear and concise employment contract is easier to comprehend.
Employment Law Solicitors
As an employer, in light of Covid-19 and the worldwide pandemic it is more important than ever to ensure your employment contract is up to date and compliant with the latest laws. As an employee, you need to ensure you have reviewed your contract. Also check that your contract is still fit for purpose in light of the changing ways of working, such as home working and increased use of social media.