Employment contracts for SMEs
There is often confusion between Contracts of Employment and Statements of Terms and Conditions of Employment. These are two separate employment agreements and both are important and legally binding.
An Employment Contract is the agreement between you (as the employer) and your staff which is formed when you make a job offer and that job offer is accepted. Like many agreements the employment contract doesn’t need to be in writing, it might be a verbal agreement, but it is preferable to put it in writing so there is no scope for misunderstanding. Most employment contracts simply set out the nature of the job and the salary (pay) that you are offering for the job.
The law requires that you provide your employee with a Statement of Terms and Conditions of Employment (sometimes called the Statement of Particulars or Employer Agreement) within 60 days of them starting to work for you. This applies whether your new employee is full time, part time, permanent or fixed term.
In April 2020 the law will change requiring you to provide a Statement of Terms and Conditions on the very first day of employment.
What must go into a Statement of Terms and Conditions (Employer Agreement)?
By law you must set out the following:
- The name and address of the employer.
- The name and address of the employee.
- The start date of the employment.
- Whether the employment is permanent, temporary or fixed term.
- The jurisdiction under which the contract is made.
- The job title and job description. Usually the job description is provided as an appendix to the Statement of Terms and Conditions.
- The place of work which might be different to the address of the employer.
- The hours of work.
- Remuneration, the way that is calculated and the intervals at which it is paid.
- Holiday entitlement.
- What the employee must do if they are too ill or injured to attend work.
- Your pension provisions.
- Notice period – known as termination of employment.
- Your disciplinary policy – you may signpost to another document if you wish.
- Your grievance policy – you may signpost to another document if you wish.
What can go in a Statement of Terms and Conditions (Employee Agreement)?
It is a good idea to include some other things in the document.
- How you pay expenses.
- A data privacy statement – your GDPR policy.
- A confidentiality agreement.
- Who owns any designs, computer programs or other things your employee might do for your organisation.
- Any restrictive covenants.
- An Equality and Bullying & Harassment Policy
Does the Employment Agreement have to cover absolutely everything?
Some people assume that the Statement of Terms and Conditions (Employee Agreement) must contain the entire scope of the employment relationship but that is not the case. Some things are always implied into the employee agreement or contract. For example, that an employee will not steal from you and that there is a mutual agreement around trust and confidence.
Other things are better set out in a separate document such as a Staff Handbook. You cannot unilaterally change the Statement of Terms & Conditions but you can change things in a non-contractual Staff Handbook so that is the best place to set out things like how you will manage training, poor performance, pay rises and other similar policies and procedures which might evolve as your organisation grows or diversifies.
How can we help?
Each organisation is different and needs slightly different terms in their employment contracts.
- We can advise on what is right for your organisation.
- We can make sure you comply with your legal obligations.
- We can provide you with a bespoke template for you to adapt for each new employee.
- We can be at the end of a telephone to answer your questions.
Please call us on 01428 654 990 or drop an email to email@example.com