In the UK, it is a legal requirement that employers must give their employees a Written Statement of Employment Particulars. Although this isn’t technically an employment contract, it’s a piece of documentation that sets out the main conditions of employment.
Employment contracts can be valuable pieces of paper that ensure the employer and employee understand what is expected and each other’s rights, should they need to use them.
So, if you’re looking to create a new employer contract or updating existing ones, Lovedays Solicitors, specialist solicitors in Matlock, share their insight into the essential components of an employment contract.
Basic details
An employment contract must set out the basics of who is employed by whom and in what capacity. This means that employment contracts must contain the following details:
- The employer’s full name and registered business address.
- The employee’s full name and registered business address.
- The employee’s job role, job location(s) and hours of work
- Whether the employment contract is ongoing or for a defined period
- The employee’s compensation and schedule of payment
- The employee’s benefits including holidays
- The employer’s policy on sick pay and sick leave
- The process for resolving disputes between the employer and the employee
- The process for ending the contract
- Any other specific requirements or restrictive covenants.
Specific requirements and restrictive covenants
It is advisable to reference these in the employment contract itself. If they are fairly simple, then you might include all the relevant details in the contract. If, however, they are more complex, then it’s perfectly reasonable just to refer to them and specify the document in which they are detailed.
Here are some common examples of restrictive covenants used in employment contracts.
Confidentiality and privacy agreements
It is an employer’s right to insist that information meant for internal use is kept confidential and private. It is, however, an employer’s responsibility to ensure that the employee is clear about how to identify such information.
One common way to do this is to give documents a classification so it’s clear what information can be shared externally. If you do this, you can detail the classification system in your covenant. You should, however, also make sure that the employee is trained in it and that the training is refreshed periodically.
Non-compete agreements
Non-compete agreements prohibit employees from working for competitors. They usually cover the period of employment and an agreed length of time after the person’s employment ends. In and of themselves, non-compete agreements are perfectly legal. As is often the case, however, details matter.
The extent of the non-compete agreement must be proportionate to the potential threat to the employer. Also, the employer must be able to demonstrate that the employee fully understood the nature of the non-compete agreement and the penalties for breaking it. If the employer fails to prove either of these points, then the non-compete agreement may be unenforceable.
Non-solicitation agreements
Non-solicitation agreements are similar to non-compete agreements. They prohibit an employee from trying to persuade other employees and/or customers to work for/give their custom to their new company.
As with non-compete agreements, the extent and length of the agreement have to be proportionate to the risk. Also, the employer has to be able to demonstrate that the employee fully understood the nature of the agreement (and the relevant sanctions).
Employment contracts versus employment handbooks
In principle, employment contracts should be reviewed regularly to be sure that they always reflect what the employee is actually doing. Job roles can and often do change significantly over time. If a person’s working practices move too far away from what their contract says, their contract can end up being invalidated.
In practice, few employers have the resources to update contracts every time there is a change in their working practices. Many employers square this circle by having employment contracts refer employees to the most up-to-date information in the employee handbook. Employee handbooks are generally far easier to change than employment contracts.