Employment Law
Employment contract guidance
An Employment contract sets out the requirement and the benefit that an employer provides to his employee.
In this article, we introduce the most common terms used in an employment contract following a typical contract's skeleton.
1. Parties
2. Commencement of Employment
3. Probation period
4. Job title
5. Place of work
6. Hours of work
7. Pay
8. Holidays
9. Sickness and absence
10. Pension
11. Data protection
12. Termination of employment
13. Confidentiality
14. Grievance and disciplinary procedures
15. Bribery and corruption
1 Parties
It is fundamental in a written agreement to indicate the parties and identify them at the same time, for a corporate is easy use is register number.
2. The commencement of employment
The contract should specify the start date and indicate whether or not a previous period of employment counts as part of the agreement.
This because an employee in some jurisdiction must complete specific minimum periods of employment to be eligible for certain rights:
- Unfair dismissal
- Statutory redundancy payments
- Statutory maternity pay
3. Probation period
Having a probation period into a contract is to give the employer time to assess the employer before making their position permanent.
Typically, the probation period is between three or six months. During those time the employer it may entitle to dismiss the employee with minimal notice.
4. Job title and duties
The employee’s job title should indicate in the contract within a brief description of the job and the details of the employee’s duties. The explanation most of the time is not detailed, to give flexibility to the Employer.
5. Place of work
The contract should specify the employee as the usual place to work.
If the employee requires remote work, it should indicate in the contract, as well as the procedure to obtain this benefit.
Not indicate such an option in the contract could eventually diminish the opportunity for the employee to obtain it in the future.
Some time is even present a clause that does not allow an employee to work outside the residence country for more than a certain amount of time.
However, the use of technologies has generated the occasion to negotiate those clauses between the parties; remote working is now even incentivate.
6. Hours of work
Accordingly, with the Working Time Regulations 1998 , the average weekly working hours cannot surpass the 48h.
This limit is not applicable if the employee has opted to work for more hours.
It is then necessary to provide the opt-out option on the contract; most of the HR department chose for a separate agreement to ensure it can be a thoughtful choice.
In conclusion, the employee’s hours of work should set out in the contract of employment, and if the employer requires the employee to work more hours, details must be provided, such as:
- Additional pay
- Overtime rate
- Weekend
- Rates applied
In any case, it must be written on the contract.
7 Pay
Any contract should have a clause related to payment; in the majority of cases, the income is paid monthly for the previous month worked.
Any changes should be reported as well as alternative agreements, bonuses, or alternative methods of calculating.
Parties can agree on clauses, contains an obligation on the employer to review the salary each year, and they should be aware that omitting those clauses could lead to an implied right to a salary increase.
Employers should look at this aspect with attention.
8. Holidays
Regulate holiday in a contract is an exercise that as to deal with several normative and regulation.
Under the working time regulations (“WTR”), the minimum holiday entitlement is 5.6 weeks a year (28 days) for a full-time worker.
There aren’t any statutory rights to pay public holidays or days off to compensate public holidays eventually worked.
The only aspect that concerns the law is that the total entitlement cannot be less than a minimum of 28 days for a full-time worker.
However, employers can set specific days as a holiday, for example, to close the office on special days E.G., Christmas day.
Under WTR, statutory leave may only be taken under the year that is due.
The legislation does not discipline concerning the annual leave not taken, and they are rarely carried forward.
In most of the case, untaken annual lives are lost and cannot be paid, but a separate agreement may regulate the matter in a different way.
An employee seeking leave continues to build up statutory holiday and can also take them during the seek-days, but an Employer cannot require taking them instead of a seek days.
On the contrary, if the employee is seeking and unable to take annual leave, they must be allowed to carry it over.
It is a statutory requirement to include the terms that explain what happens in case of untaken holiday in the event of termination of employment.
Finally, where contractual holiday entitlement is provided under a contract of employment over and above the statutory minimum, the agreement should expressly state whether a payment should replace the untaken contractual holiday entitlement in excess.
9. Sickness and absence
Same times company can set up arrangement for pay sick days, in those cases an express clause must be made, in the contract or in a separate arrangement.
Those clauses could also have disposition that can allowed the employer to withhold payment of company sick pay if the employee failed to follow the contractual notification procedure, to reach the limit of a contractual breach.
Nonetheless, sick pay when available could also be payed if not utilised or at the end of the contract, all this disposition should be negotiated and find a proper space in the contract.
10 Pension
Since 2012 there is a duty on employers to automatically enrol jobholders who meet specified criteria into a pension scheme and contribute at specified rates in respect of them.
Employers must use or their own qualifying pension scheme or the national employment saving trust.
Employee instead can ask to redirect those amounts into their pension fund.
In conclusion negotiating a clauses related to pension fund the parties should specify when employee reach the right of contribution, generally is over the 10.000 pounds and three month, and of course when and how opt into one of the options presented.
11 Data protection
It is mandatory to ask and obtain the employee’s consent to process their data, but it cannot be a substitution for any data protection policy.
The company, during the steps precedent to the closure, has already taken the consensus and explain all their policy related to the treatment of personal data.
The employer is required when an organisation is registered with the Information Commissioner’s Office as a data controller unless an exception is applied.
Failure to respect the Privacy normative can lead to disruptive sanctions.
12 termination of employment
In an employment contract, it is best practice always to insert provisions related to how to terminate the agreement itself.
The employer or the employee can be triggered and should indicate the form of accepted communications when formal, but any way suggests the necessary tame frame: the notice period.
For relevant employees that have managed privilege or strategic information may include a gardening period is also settle as a procedure for concluding the contract.
The employee must maintain confidential information confidential during Employment, often the clauses expressly state that the obligation continues following the termination of the contract of Employment.
The employer should ensure that all information it considers confidential is listed as being information sensitive to nature.
However, ensure that confidentiality clauses are respected has always been very difficult; the provision is a valid instrument to start an action in case of breach of confidentiality.
13 Confidentiality
The employee must maintain confidential information private during Employment, often the clauses expressly state that the obligation continues following the termination of the contract of Employment.
The employer should ensure that all information it considers confidential is listed as being information sensitive to nature.
However, ensure that confidentiality clauses are respected has always been very difficult; the provision is a valid instrument to start an action in case of breach of confidentiality.
14. Grievance and disciplinary procedures
Is common find in employee contract clauses that introduce procedure related to grievance and disciplinary procedures, most of the time are clauses of style and the procedure is detailed to a separate policy, however the employer must introduce in a contract or in a policy a proper procedure to receive grievance from their employees.
15 Bribery and Corruption
The Bribery act 2010 includes the introduction of a corporate offence of failing to prevent bribery.
It is a defence for commercial organisation to prove at that at the time of the alleged offence “adequate procedures” were in place, which where design to prevent bribery.
The company must adopt in any case a full anti-bribery policy and procedure.
16. Collective agreements
Those clauses are introduced only in case a collective agreement with a trade union is in place which relate to any term or condition of the employee’s contract of employment.
17. Governing Law and jurisdictions
Is generally the clause that conclude the contract and is the one of which the parties agree the law of the country were the contract is signed or any other law are applicable at the entire contract.
Set this clause will define what law will govern and interpreted the contract of Employment and any dispute arising under it.
Submitting exclusively to the courts if one country/region allows the parties to ensure that proceeding van only be brought in that jurisdiction, with limited exception.
For a template of an employment contract written by us click here.
June 2020
by Daniele Lupi