Over the years there has been much confusion regarding employment contracts and written and verbal contractual arrangements between employers and employees. The legal position is simple, as soon as you accept an offer of employment, there is a contractual arrangement between the two parties. In exchange for agreeing to work for your employer your employer agrees a level of remuneration. Hey presto, contract agreed!
The next stage of this legal arrangement is a written employment contract, supplied by your employer, within two months of starting work. This arrangement must include the terms previously agreed as well as making clear statutory obligations, rights and responsibilities. This will be the basis of your working relationship going forward.
- Contractual terms
- What is custom and practice?
- What happens if an employment contract is broken?
- Do you have rights if a job offer is withdrawn?
- Requesting a written employment contract
- How do your statutory rights sit with your contract terms?
- Rights with a probationary period
- Rights with a fixed term contract
- Rights with zero hours contracts
A traditional contract of employment will contain a range of information such as:-
- Negotiated terms of your employment
- Common understandings
At this point it is important to note that any negotiations regarding your contract cannot reduce the rights you currently have under employment law. These rights can only be enhanced, increased and new benefits brought in. Under no circumstances can your employment contract reduce your basic employment rights.
The elements of an employment contract are often referred to as:-
- Express terms
- Implied terms
We will now take a look at what you should expect from these two different elements of your contract.
What are express contract terms?
Express terms are the element of your employment contract which is to a certain extent negotiable. These include issues such as:-
This is obviously a very important part of your employment contract, the level of basic pay, overtime or any bonus payments. Under no circumstances can any element of your remuneration agreement break employment law. This covers issues such as the national minimum wage.
- Working hours
While there is room for negotiation with regard to your weekly working hours, it is important that these are set out at an early stage. For example, what level of working hours would constitute an element of overtime? The majority of employees have legal protection regarding the maximum number of hours they can work per week and working too many hours.
- Holiday pay
Holiday pay is a relatively straightforward negotiation. There are numerous public holidays and a statutory requirement for additional paid holidays. Some industries/companies will enhance the number of additional paid holidays to attract the best staff. Some companies will increase your holiday entitlement in line with your years of service – this is not statutory.
- Sick pay
This has been an area of controversy in recent years with many companies, quite legally, introducing an element of unpaid time off. For example, in some industries you will not be paid for your first three days off work due to illness. It is important to be aware of the specifics of your sick pay contractual arrangement.
- Redundancy pay
At the moment you are only entitled to redundancy if you have worked for your employer for two years or more. The statutory terms for redundancy payments are as follows:-
- Half a week’s pay for each full year in employment when you were under 22 years of age
- From aged 22 to 41, you will receive one week’s pay for each full year in employment
- From age 41 you are entitled to 1.5 week’s pay for each full year in employment
The length of service calculation is capped at 20 years, and your average weekly pay is calculated over the 12 week period prior to your redundancy notice.
- Notice period
While some employers may give an enhanced notice period, your statutory rights are as follows:-
- One week’s notice period if you have worked for more than one month but less than two years for the company
- Where you have worked for a company for at least two years you are entitled to a two week notice period plus one week for every additional year of employment, up to a maximum of 12 weeks
It is important to be aware of your statutory rights and any negotiation should enhance these terms. Under no circumstances can your statutory entitlements be reduced. Even if a reduction in your statutory protection was fraudulently included in your employment contract, this would be null and void in a court of law.
In a perfect world all of your contractual express terms would be listed in one employment document. Unfortunately, we don’t live in a perfect world. As a consequence, your contractual express terms could be part of one of more of the following:-
- The initial job advertisement
- A separate written statement of core terms and conditions
- Correspondence from your employer prior to starting employment
- Additional documentation signed and agreed when/since you began work
- Staff handbook
- Office handbook
- Noticeboard displaying workforce wide express terms
If you are unsure about any express terms in your verbal/written contract of employment, there should be a process by which you can clarify these. Larger firms tend to have a human resources department although smaller firms must also have a clearly defined process for their employees. It is also important to note that verbal contractual agreements are still legally binding.
What are implied contract terms?
The best way to describe an implied contract term of employment is one which involves a degree of “common sense”. For example:-
- An employer is legally obliged to provide a safe working environment for all of their employees
- Employers and employees must at all times maintain a relationship of mutual trust and confidence
- An employee has a duty to carry out any “reasonable” instructions given by their employer
The term “reasonable” instruction is an interesting one, because it is not often clarified in writing. However, there is a legal definition of “reasonable” instructions which a court would rule upon if required.
In summary, employers and employees have a legal and moral obligation to ensure the well-being and safety of each other. If an employee was injured while at work, they may be able to claim personal injury compensation. This would depend upon whether the employer had failed to fulfil their legal obligations to protect employees, in effect been negligent.
What is custom and practice?
Where no express term has been agreed, you may be able to imply a term by “custom and practice”. For example, if you had worked above and beyond your agreed working hours for the last 10 years, say you worked 37 hours a week instead of 35, you would have no legal right to work 37 hours a week. Your standard working week would always remain at 35 hours, unless there was an additional verbal/contractual agreement with your employer for a 37 hour week.
What happens if an employment contract is broken?
Before we go into detail about the breaking of a contract/breach of contract, it is important to note this relates to verbal, written and implied contract terms. Just because a contract term has not been written down it does not mean it can’t be broken. So, what happens if a contract is breached?
A contract can be breached by an:-
Each party has equal protection when it comes to the breaching of contracts, and action which they can take. For example, an employer may breach your employment contract by not paying your wages on time. An employee could breach a contract by failing to carry out work allocated to them. A breach of an “implied” term might be something like the employer failing to provide a safe environment for their employees.
Breach of contract by an employer
If you believe that your employer is in breach of contract, you should:-
- Identify the particular contractual term/implied term in your contract
It is important to be able to identify the specific contract term which was breached. It may well be that your employer was not aware they had acted illegally.
- Seek mediation
While legal action is open to any party which has been subject to a breach of contract, this can be expensive and time-consuming. It is therefore sensible to seek mediation through the array of different panels available.
- Consider legal action
When considering legal action, you need to review the potential ramifications. Your employer may counter sue and lodge a claim against you. It is highly likely this action would sour your relationship forever. However, there are occasions where taking legal action is the only path open, especially where the employee has suffered financially.
Breach of contract by an employee
It is only fair that employers have as much legal protection from breach of contract as that afforded to employees. Upon breach of contract by an employee, an employer may:-
- Seek a negotiated settlement
Where for example an employee has given insufficient notice when leaving the company, this could lead to additional expenses such as taking on short-term agency staff. A negotiated agreement could see the employee remaining with the company for an extended period.
- Sue for damages
Where the employer has been hit with additional costs as a consequence of a breach of contract, they can sue for damages through the court. Damages are only awarded for financial loss as opposed to loss of reputation, etc. If on the losing side of court action, the employee may be hit with additional legal costs incurred by the employer. These can be significant!
Do you have rights if a job offer is withdrawn?
The key to your rights, upon the withdrawal of a job offer, will often relate to a verbal agreement. There are two particular scenarios to take into consideration:-
- Conditional offer of employment
Whether written or verbal, if you fail to satisfy the conditions discussed in relation to an offer of employment, there is nothing you can do. You may be able to challenge the decision if you believe there was a degree of discrimination or glowing references, as one example, were deemed not sufficient.
- Unconditional offer of employment
Whether there is a verbal, written or implied unconditional offer of employment, you have a very strong chance of claiming compensation. If there was no “contractual notice period” you will be able to claim a minimum one week’s notice. Unless you believe there was an element of discrimination, it is unlikely you would be able to claim any additional compensation.
There is always a degree of risk when moving employers. However, this can be mitigated to a certain extent by asking for a written employment offer/contract. That said, verbal and implied terms are both legally enforceable and will hold up in a court of law. As things can often become a little complicated, it is probably best to take professional advice.
Requesting a written employment contract
All employers are legally obliged to provide their employees with a written contract within two months of starting work. Even if you leave employment before the two month period is up, if the job was advertised as more than one month in duration then you still have a right to see a written contract.
Earlier in this article we discussed verbal and implied terms, which are perfectly reasonable. However, if you are forced to request a written employment contract from your employer, it is probably best to do this in writing or via email. That way you have a record of when the request was made, in the event that your employer is not forthcoming with the information.
Sometimes referred to as a written statement, a contract should include basic information such as:-
- Your name/employers name
- Start date
- Job title
- Hours of work
- Holiday entitlement
- Notice period
- Location of employment and any variations
- Disciplinary, dismissal and grievance procedures
- Sick pay entitlement
- Details of employer’s occupational pension scheme
On occasion we have seen some employers attempt a form of constructive dismissal when employees ask for details of their employment. This would trigger an immediate claim for unfair dismissal.
How do your statutory rights sit with your contract terms?
As we mentioned at a relatively early stage in this article, every employee has statutory rights under employment law. While various elements of these rights can be negotiated, they can only enhance your statutory rights as these cannot be lowered below the legal threshold. If you were to inadvertently sign a contract which reduced one or more of your statutory rights, this would not be enforceable in a court of law. Indeed, it would be illegal and could prompt legal action against your employer.
Some of the more common statutory rights include:-
- Maternity leave
- Itemised pay statement
- Written statement/contract confirming terms of employment
- Entitlement to no less than the minimum wage
- Paid holidays
- Redundancy compensation
- Protection against unfair dismissal
There have been numerous occasions where employees have been bullied into signing substandard contracts by their employers. It is important to be aware of your statutory rights as well as the contractual terms of your arrangement. There is legal protection out there and you should take the relevant advice upon a breach of your rights.
Rights with a probationary period
In years gone by, prior to the recent reform of employment laws, there was such a term as a “probationary period”. Nowadays, from a legal perspective there is no such arrangement. Your first day of employment is the day that you begin working for your employer. It matters not whether there is a contractual probationary period as you have the same statutory rights from day one.
It may be that your contractual rights will be “diminished” within the probationary period, with the idea of enhancing them at a later date. Unfortunately, if for example the option to extend your probationary period was written into your initial contract, there is nothing you can do about this.
Rights with a fixed term contract
Many companies now operate on fixed term contracts which can on occasion suit both parties. Despite the fact you may be on a relatively short-term fixed term contract; your employer is legally obliged to treat you in the same manner as a permanent member of staff. You will have the same statutory rights from day one, but certain statutory employment rights only become relevant after a certain period of time.
This continuous period of employment bring us to a very interesting scenario. If you have constantly been employed by the company on relatively short term fixed contracts, constantly renewed, these are classed as “continuity of employment”. This can have an impact on some time sensitive statutory employment rights. While it may seem akin to “small print” this can have a significant impact on your legal protection.
Rights with zero hours contracts
Zero hours contracts have been an extremely controversial subject for many years. In many ways they were a by-product of EU legislation brought in to protect employees. Unfortunately, if you are employed on a zero hours contract your employer does not have to specify how many hours you will work each week. On the flipside of the coin, you are not exclusive to the employer, can look elsewhere and accept alternative offers. For the avoidance of confusion, exclusive zero hours contracts were outlawed via new legislation in 2015.
There is no doubt that the subject of employment rights is fairly complicated. It would appear that many people are not aware that they are protected by not only written agreements but also verbal and implied terms. We can only imagine the number of people who fail to realise this and have been subject to what is in effect illegal action by employers.
When it comes to employment contracts it’s important to know your rights, your responsibilities, obligations, and how you can seek recompense where applicable.