Employment Contract Basics - What do you need to know?

Employment contracts – what do employers need to provide?

Employers must provide their workers and employees with a written statement of their basic terms of employment on day one of their employment. This basic outline of terms is required under section 1 of the Employment Rights Act 1996 and as a result is commonly known as a “Section 1 Statement”. A detailed employment contract would often contain much more than this basic mandatory information, but legally, this is the minimum that should be provided.

What changed in 2020?

From 6 April 2020, all workers, not just employees had the right to written statements of employment and it became a “day 1” right. In other words a basic contract or written statement must now be provided no later than the beginning of employment. There is some information which can be provided at a later stage, which are mentioned below.

Written statements from 6 April 2020 also require more information to be provided to the employee than previously. So if you issued an employment contract prior to this date, it may be sensible to check it complies with current legal requirements. 

What should be provided?

There is a differentiation between information that must be contained in a single document, given at the start of employment and particulars which can be provided in a supplementary statement.  

In the single document, employers should provide key information such as:

·         the employer’s name

·         how much the employee will be paid

·         hours / days of work,

·         holiday entitlement

·         the length of any probationary period.

For the full list, please check the government guidance here.

Sick leave entitlement, sick pay, any other types of leave and notice period information can be contained in a separate document, and given on the first day of employment. If provided separately, the employee or worker should have reasonable access to it.

Finally, within 2 months of an employee or workers start date, a wider written statement should be provided. This should cover off information on pensions, policies and any right to non-compulsory training.  The government website also contains further information on the wider written statement.

What to do as an employer

There are implications for employers who fail to put in place Section 1 Statements - In the event of an employment tribunal, if a business is found to have not issued a contract to an employee, then it could be fined up to a month’s pay per employee.

Employers can ensure that they comply with Section 1 Statement requirements by issuing all new employees and workers with a clear written statement of particulars on or before their first day of employment. It would also be practical to provide a staff handbook containing basic policies and procedures covering matters such as sickness absence, disciplinary and grievances and equal opportunities.

To assist new business owners or any companies requiring help complying with Section 1 Statement requirements, we offer a fixed-fee Employers’ Toolkit. For more information about this, please do get in touch with us.