Explanatory Notes CONTRACT OF EMPLOYMENT – GENERAL
FULL TIME AND PART TIME
This employment contract has been designed to be used by full time or part-time employees, whether permanent or fixed term. The contract should be issued to employees no later than 8 weeks after they commence employment. It is usual to issue the contract with a letter of offer. The contract of employment should be sent in duplicate and a copy signed by the employee and retained on their file. This will act as proof that the terms and conditions of the contract were received and accepted. Please note that there will often be other documents relating to the employment relationship, principally a staff handbook (see Contractstore document E122) (which, amongst other matters, will deal with disciplinary and grievance procedures, the provision of a company car), a Health and Safety booklet, a record of any voluntary opt-out from some requirements of the Working Time Regulations 1998 (see Contractstore document E121), a policy on employees’ use of email/internet (see Contractstore document E 113), documents setting out the rules and entitlements due under any occupational pension scheme. Specialist legal/ accountancy advice is essential before agreeing to the provision of an occupational pension scheme or a bonus scheme. As an alternative to a staff handbook employers may wish to note that Contractstore has a bundle of standard letters for employers dealing with matters such as maternity/paternity leave (E102) and individual policies for disciplinary and grievance issues. It is important to review your contract to ensure that it is applicable for the changing needs of your business and is up to date in respect of legislative/regulatory changes. This document was last updated in August 2009. As the law changes quite often, you are advised to have your contracts reviewed by an employment law specialist at regular intervals. A brief guide to legal issues underlying contracts of employment is provided by Contractstore document Z153. There are some clauses in the contract which may be changed in accordance with your business requirements; however the list below covers the essential headings of any employment contract: (a) Commencement
(b) Job Title
(c) Place of Work
(d) Remuneration
(e) Hours of Work
(f) Holiday Entitlement
(g) Sick Pay
(h) Pension (where provided)
(i) Retirement
(j) Notice/termination
(k) Disciplinary and Grievance
(l) Data Protection Please note that this document generally provides employees with their minimum statutory rights and that it is always open for employers to provide more generous rights if desired. Guidance on Specific Clauses: 1. Start Date If this contract replaces an earlier contract with the same employer (or where an employee has transferred under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”)), the earliest start date must be stated. Please note that TUPE severely limits an employer’s ability to amend employees’ terms and conditions of employment and specialist employment law advice should be sought before seeking to make changes to existing terms where employees have transferred under TUPE. An employee start date will affect any entitlement to compensation for “Unfair Dismissal” (where 12 months continuous employment is essential) and statutory redundancy pay (where 2 years continuous employment is required) as well as certain other entitlements that are measured by length of service. Where this contract is issued to a new employee a probationary period may be included. The usual period is 3 months but should not normally extend longer than 6 months. Employers should ensure that in any event the probationary period is not extended to close to 12 months as dismissal would then be subject to the employee’s statutory right not to be dismissed unfairly. 2. Location Insert the normal place of work here, however if any travelling is required in the role it should be stated here. If no travel is necessary please state. It is useful for an employer to have the contractual right to require flexibility as to the employee’s place of work so as to reduce the risk that a change of work place would trigger an employee’s entitlement to redundancy pay. Specialist legal advice should be taken to ensure that such flexibility is legally ‘reasonable’. Any requirements to travel outside the UK for periods of more than 4 weeks should also be set out here. 3. Remuneration Normally an employee’s salary will be paid monthly in arrears. Make sure that any deductions from salary are clearly understood and agreed with the employee (excluding tax and NI). 4. Hours of Work [and Overtime] Normal office/ shift hours will apply but if any additional hours are required and agreed to, employers should be aware of the statutory constraints of the Working Time Regulations 1998. It should be clearly agreed whether the employee will be paid overtime for extra hours or is to take the time off ‘in lieu’. Where an employee has opted out of the Working Time Regulations limit on weekly working time but subsequently decides to remove their consent to their opt-out, the maximum period of notice the employee can be asked to give is three months. 5. Holiday Entitlement and Holiday Pay As of April 2009 all full time employees on a five day week are entitled to take 28 days’ paid leave p.a., (equivalent to 5.6 times the normal working week) which includes bank or public holidays. For part-time employees, the same rules apply on a pro rata basis so for someone working 4 days a week, the entitlement is 22.4 days (5.6 x 4) including 4/5 of the annual entitlement to bank/public holidays. 6. Sickness Absence It is common practice to offer a period of full pay for a certain amount of time off sick in addition to the Statutory Sick Pay scheme (‘SSP’). Given the range of benefits offered by different employers, it is advisable for details to be contained within a separate policy, or within part of a staff handbook. Care must be taken to ensure consistent treatment of all employees so as to avoid claims for discrimination. Also bear in mind the impact of the Disability Discrimination Act 1995 in respect of employees who take time off sick by reason of a disability. 7. Pension Where an employer provides an occupational pension scheme membership is commonly allowed upon an employee’s satisfactory completion of the probationary period. If life assurance/medical insurance is offered the contract should state so. Currently employers are not obliged to offer employees membership of an occupational pension scheme. Where the employer employs five or more employees the minimum that an employer has to offer is access to a stakeholder pension scheme to which there is no obligation for an employer to contribute. 8. Disciplinary and Disciplinary and Grievance Procedures All the details of these procedures should be issued to all employees when they first start work. It is prudent to follow the A.C.A.S Code of Practice on Disciplinary and Grievance procedures for these procedures and to have either separate policies or to incorporate those policies in a staff handbook. The ACAS Code can be found here: http://www.acas.org.uk/CHttpHandler.ashx?id=1041. A failure to follow the Acas Code may impact upon Employment Tribunal claims and legal advice should be sought in relation to disciplinary or grievance matters to ensure compliance. 9. Notice This section provides for the statutory minimum notice period of one week that is appropriate during a probationary period and where the employee has been employed for more than one month The following provision reflects the statutory minimum notice that must be given with options for longer notice where an employer may want to specify their own notice period(s). This may for example reflect where the employer and employee are entitled to different periods of notice from each other, or where longer periods of notice are given for employees who have completed more years of service or who are more senior. Separate provision is given for an employee with a fixed term contract. Specific legal advice should be sought in relation to fixed term contracts. Finally there is a garden leave clause. This gives the employer the option of requiring the employee to serve their notice period, but to do away from the office. This may be appropriate in circumstances where the employee is disgruntled about the employer and/or their departure, or perhaps where the employer has reasons for wanting to keep the employee away from current business information, contacts etc. Please note that when an employee is placed on garden leave, they must still be paid their salary, benefits etc in full during the notice period. Specialist advice around termination of employment should always be sought when an employer is considering dismissing an employee. There are currently minimum procedures set out in the Acas Code of Practice which should be followed in relation to disciplinary/conduct and capability matters in order for any dismissal to be fair. Employment Tribunals will take account of a failure to comply with the Code and can increase an award made to reflect such failures. 10. Retirement Under current age discrimination law the normal retirement age for both men and women is 65 years. However all employees have the right to ask their employer to give consideration to defer retirement. There is a statutory retirement procedure that must be followed in order to fairly dismiss an employee for retirement, and in relation to the right to ask to work beyond normal retirement age. Legal advice should be sought before taking action. 11. Confidential Information Employers have the right to protect confidential information such as trade secrets and customer lists etc. both during and after a term of employment. Exceptions, set out in this section, include disclosures required by law. You should ensure that all types of information you wish to protect are listed in this clause. 12. Data Protection and Privacy To ensure compliance with the provisions of the Data Protection Act 1998 (‘DPA’) employers must tell employees the purposes for which they propose to collect and process personal data and sensitive personal data and where that data may be processed outside the European Economic Area this must also be stated. Employers must ensure that they adhere to the principles set out in the DPA (very broadly data must only be collected/processed where necessary, for the purposes advised, held for only so long as necessary and must be held securely).
13. Restrictive Covenants It is reasonable for employers to include this type of clause in employment contracts so as to take steps to protect legitimate business interests. However great care needs to be taken to ensure that any restrictions upon an employee’s future employment are not struck down by the courts as being unreasonable. Restrictions can only go so far as reasonably necessary to protect an organisation’s legitimate business interests. The 6 month limit is a suggestion only and it is essential that specialist legal advice is taken before including any restrictive clause. 14. Entire Agreement This is a standard provision to ensure that there is no confusion as to precisely what the terms of an employee’s contract of employment are. 15. Governing Law This contract is governed by English law and is not suitable for use in other countries.
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