November 14, 2018

What is an employment contract?

In accordance with employment law, an employment contract is a legally binding agreement between an employer and their employee, which states the conditions of employment.

All employment contracts vary depending on the specific occupation of the employee, which are usually drawn up, agreed and signed before employment commences.

An employment contract does not legally have to be written down, however it is preferable if they are, as in the case of court proceedings a written contract can provide evidence of legitimacy or negligence.

What is the purpose of an employment contract for an employee?

The main reason why employees are required to sign an employment contract is to provide them with information on their employment, as well as security and protection whilst working for their respective company.

The majority of employees are legally entitled to receive a written statement detailing their conditions of employment before starting work. These conditions include:

  • The name and address of both parties.
  • Start date and end date, only if you are offered a fixed-term contract.
  • Job Title and description.
  • Working hours, which must adhere to the Working Time Regulations.
  • Probation period, if an employer requires a trial period.
  • Salary before tax, including national insurance details and the date of payment.
  • Pension scheme conditions.
  • Any work-related expenses, which would involve an employee being reimbursed.
  • Holiday entitlement.
  • Sickness and Absence policy.
  • Grievance and disciplinary procedures.
  • Notice period, which is required by an employee when leaving a company, and also required when an employee dismisses a staff member, unless an employer rules on gross misconduct which dismisses any need for notice.
  • Retirement policy.

What is the purpose of an employment contract for an employer?

Employers must draw up employment contracts for all their staff members, in order to establish the conditions of employment as well as laying out their obligations to the employee.

There are also a number of contract conditions which are in place to protect the employer. This includes the sickness and absence policy, which allows an employer to state the notice period needed when an employee is sick or absent, which can prevent a cost burden. Employers are encouraged to draw up a more detailed sickness and absence policy separate from the employment contract.

Employment contracts also protect employers under the condition of restrictive covenants, which protect a company’s intellectual property and clientele, which prevents current employers from setting up a competitive business. If an employee does decide to start up \a competitor business, then employers are entitled to seek legal redress and gain any damages they may have lost.

What happens when an employment contract is not adhered to?

If at least one of the parties fails to adhere to the conditions of the employment contract, then this is known as a breach of contract.

A breach of contract can be settled within the workplace, however if the two parties cannot come to an agreement, then the matter must be settled in a civil court or at an Employment Tribunal.

Employees claiming for breach of contract

An employee can claim for breach of contract or unfair dismissal by taking their employer to an employment tribunal, where they are not required to pay any court fees, however they cannot be awarded more than £25,000 in damages. Any employee wishing to make a claim must no longer work for the company and must make a claim within three months of the grievance.

If an employee decides to take their employer to a civil court, they can be awarded more than £25,000, however this is a more expensive process as it could cost up to £10,000 to take them to court for breach of contract.

Employers claims for breach of contract

An employer can claim for breach of contract in the County Court if they believe their employee has caused them financial loss, as a result of their lack of adherence to the conditions of the agreed contract.

How can Prosperity Law help?

Our expert employment solicitors can assist you in making a claim, if you are an employee, we can represent you in an Employment Tribunal or in a civil court case, if you believe you have been wrongly dismissed or you employer has breached their terms of your agreed contract.

Here at Prosperity Law, our specialist employment lawyers in Manchester and Liverpool  offer a personalised service for all aspects of employment law including breach of contract and additional services.

For further information on our employment law services, request a free employment law consultation or please contact us on 0161 667 3686.

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