Employment Contracts

All employees have an employment contract with their employer, although it might not be in writing.

If you don’t have a written employment contract, your contract would have automatically been created when you started to work for your employer.

WHAT IS AN EMPLOYMENT CONTRACT?

An employment contract, or ‘contract of employment’, is an agreement between an employer and an employee which sets out their employment rights, responsibilities and duties. These are called the ”˜terms’ of the contract.

Your employment contract doesn’t have to be in writing. However, you are entitled to a written statement of your main employment terms within two months of starting work.

The employment contract is made as soon as you accept a job offer. If you start work it will show that you accepted the job on the terms offered by the employer, even if you don’t know what they are. Having a written contract could cut out disputes with your employer at a later date, and will help you understand your employment rights.

You and your employer are bound to the employment contract until it ends (usually by giving notice) or until the terms are changed (usually in an agreement between you and your employer).

TERMS OF A CONTRACT

The terms of an employment contract set out what you and your employer can expect of each other. There are several different types and some do not need to be written down in your employment contract.

WHERE DO CONTRACT TERMS COME FROM?

Contract terms can come from a number of different sources; for example they could be:

• verbally agreed
• in a written contract, or similar document
• in an employee handbook or on a company notice board
• in an offer letter from your employer
• required by law, for example, your employer must pay you at least the minimum wage
• in collective agreements (see below)
• implied terms (see below)

If there’s anything in your contract that you’re unsure about, or which is confusing, ask your employer to explain it to you.

It should be made clear what is a legally binding part of your contract and what is not. The legal parts of a contract are known as ’terms’.

If either you or your employer breaks a term of the contract, the other is entitled to sue for breach of contract.

BREACH OF CONTRACT

Both employers and employees can be in breach of a contract of employment – so it’s important to know what this is and what you should do if either you or your employer breaches your contract.

WHAT IS A BREACH OF CONTRACT?

A contract of employment is a legally binding agreement between you and your employer. A breach of contract happens when either you or your employer breaks one of the terms. For example, if your employer doesn’t pay your wages, or you don’t work the agreed hours.

Not all the terms of a contract are written down. A breach may be of a verbally agreed term, a written term, or an ’implied’ term of a contract.

Your pay has special extra protection and in some situations your employer may be prevented from taking money out of your pay even if this wouldn’t be breaching the contract.

• Being paid and payslips

• Employment contract terms

BREACH OF CONTRACT BY YOUR EMPLOYER

If you think there’s been a breach of contract, check the terms of your contract to make sure. If there has, you should try to sort out the problem directly with your employer first of all.

Mediation

Before taking legal action, you could try other ways of resolving the dispute if your employer agrees. For example, you might try mediation through Acas (the Advisory, Conciliation and Arbitration Service).

Legal action

If you can’t sort out the problem with your employer, you could decide to take legal action. Think carefully before taking any legal action against your employer. Ask yourself what you want to achieve and how much it will cost.

Remember that you will only get compensation (called ’damages’) if you can prove real financial loss, for example, if your employer doesn’t pay your wages – there’s no compensation for distress or hurt feelings.

Also remember that taking legal action might prompt your employer to take out a counter-claim against you if they feel they have one.

If you are a member of a trade union, it would be good to speak with them before taking any legal action, as some unions provide a legal advice service for their members. Otherwise, you could talk to a solicitor, or discuss your case with an Acas adviser.

Employment Tribunals

If you do decide to take legal action, it can either be through an Employment Tribunal or through a civil court.

To make a breach of contract claim through an Employment Tribunal, your employment must have ended. There are restrictions on the types of claim that can be made, for example you cannot make a personal injury claim through the Employment Tribunal.

Employment Tribunals are cheaper and often quicker than the civil courts.

Civil courts

To make a claim while you are still employed you will normally go through the small claims track of the county court or other civil court.

The time limit for making your claim to a civil court is longer than the time limit for complaining to an Employment Tribunal. The award that a civil court could make is unlimited.

Collective agreements

Employers sometimes make agreements with a trade union or staff association. These are know as ’collective agreements’. Your contract should make it clear which agreements apply to you and who can negotiate on your behalf. These agreements can apply to you even if you’re not a member of the trade union or staff association.

Implied contract terms

Implied terms aren’t written down anywhere, but are understood to exist. If there’s nothing clearly agreed between you and your employer about a particular matter, then it may be covered by an implied term. Terms are implied into a contract for a number of reasons.

Terms that are necessary to make the contract work

Terms can also be implied because they are necessary to make the contract work. The most important of these is the ’duty of mutual trust and confidence’. This means that you and your employer rely on each other to be honest and respectful. For example, your employer trusts you not to destroy company property, and you trust your employer not to bully you.

Terms that are obvious or assumed

Some terms are included either because they are so obvious that it is not felt necessary to write them down, or because it will be assumed that such a term exists.

An example of this might be where a contract provides for sick pay without saying how long it will be paid. It will be assumed that it is not intended to be paid forever.

Terms implied by custom and practice

These are specific to an employer or kind of work. They are arrangements that have never been clearly agreed but over time have become part of the contract.

For example, you might get a Christmas bonus every year, or the business might close early on particular days.

If a company practice has become a part of your contract then your employer must stick to it, and cannot normally change it without your agreement.

Whether a particular practice has become a part of the contract can be very difficult to decide. There is no fixed time limit after which something is definitely part of the contract.

Among other things, it depends on:

• how seriously it has been treated (has the employer acted like they have a choice?)
• how clear it is (has the employer treated the matter differently each time?)
• how long it has been in place

Can your employer change the terms of your contract?

Generally there must be agreement between you and your employer in order to change a contract.

If your employer is bought by another company, or moves to a new location, your existing terms and conditions should continue. However, the new owners should give you an amended written statement in their name.

Terms of an employment contract

The terms of your employment contract could be of several different types, some of which do not need to be written down. You should be aware of what the terms of your employment contract are, so that you understand some of your employment rights.

Written statement of employment particulars

If you are an employee who has been working for your employer for longer than one month, you have the right to receive a written statement of employment particulars. This must be provided by your employer within two months of you starting, even if you are going to work for them for less than two months. The written statement will set out some of your main employment rights.

Contract to provide services

If you have a ‘contract to provide services’ or a ’contract for services’ with someone, then this is different from an employment contract and generally means you are self employed.

A contract to provide services is an agreement between you and another person to undertake some work for them (for example paint their house). You do not become an ’employee’ for this person – you just provide them with a service.

If you are a temporary agency worker you may be contracted with your agency under a ’contract for services’.  Your agency, as an employment business, will be obliged to provide you with a written contract.

What to do if you have a problem

If you have a problem you should first try to sort out the problem with your employer. You could contact the Advisory, Conciliation and Arbitration Services (Acas) for help, or visit the employment useful contacts section for other contacts. If you have an employee representative, such as a trade union official, they may be able to help.

If you cannot resolve the problem with your employer you may be able to make a claim to an Employment Tribunal (Industrial Tribunal in Northern Ireland).