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Employee Contracts – Why Are They Important?

Employee Contracts

Employee contracts are the cornerstone of any employment relationship[

Employee contracts are legal documents between employer and employee, which defines the responsibilities, duties and benefits of both parties. The contract comes into play from the moment the job is accepted by the employee. It also outlines the employment rights of the employees. Most of these rights are valid from the moment the employees start working.

A contract of employment is usually structured in a way that it is divided into express terms and implied terms.

The express terms

The express comprise of the following:

  • Job title and description
  • Pay and benefits
  • Working hours (including overtime and working during weekends)
  • Start date
  • Holiday pay and the number of paid holidays the employee is allowed.
  • Sick pay
  • Length of the notice period to be given in case of termination of the contract (for both employee and employer).
  • Nature of the post, i.e. fixed-term or temporary (if temporary then end date).
  • Details of the company’s pension scheme

The implied terms within employee contracts

The implied terms within  employee contracts refer to the terms which are not particularly agreed upon by the employer and the employee, but are a part of the contract anyway, either by the law of the state or by virtue of custom and practice. Some examples are listed below:

  • The employee is obliged to obey any reasonable instructions and guidelines provided by the employer.
  • The employer should provide a safe and secure working environment.
  • The employee and employer should share a mutual trust. The employee should not steal the industrial secrets of the employee and likewise the employer must pay the due wages.


A verbal contract

A verbal contract  also qualifies as a valid legal contract. In this case as well, a contract of employment is initiated when the employee accepts the job. Any terms agreed upon verbally are legally binding. However the employer has to issue a Written Statement of Terms and Conditions of Employment within two months of the initiation of employment. This is required by the law and is also instrumental in building a strong and honest employer-employee relationship. This written statement comprises of similar information as employment contracts. However certain things like sick pay, grievance procedures and disciplinary rules are not a mandatory part of the written statement.

Employee contracts can be modified at any point of time, but only with agreement of both parties involved, i.e. the employee and the employer. In case of disagreement, the employer can impose the modifications (which might lead to the employee claiming breach of contract) or the employer can try to terminate the existing contract and draw a new contract altogether.


Breach of  employee contracts

Breach of employee contracts refers to a situation when one of the parties involved fails to follow one or more terms in an employee contract. It is irrelevant if the breach involves a trivial issue like not granting the entitled holidays or more extreme like not paying the pre-determined wages. In this case, the breach is first tried to be sorted informally by negotiation. If unsuccessful then a grievance is raised following the grievances policies and procedure outlined by the employer. As a last resort, the breach is taken to an employment tribunal.





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