Terms of an employment contract

EXAM TIP in exam we may have to amend/criticize a contract – must give reasons why

changing things ( Visit Notary public London today )

Advising an e/er before taking someone on:

1. References from former e/ers

2. Minimum wage

3. Holidays in contract (minimum of 20 days including 8 bank holidays = 12 min days)

4. Entering into a contractual agreement with potential e/ee

5. Everyone has a contract wither written or oral – bit of both ?

6. It’s easier to have contract in writing to prove the terms = better for e/er and e/ee

7. e/er must give s1 ERA written statement of terms to e/ee within 2 months of start of

employment if no written contract but there is an oral contract

8. if e/ee has written contract s1 state of terms not needed

Oral Contracts

The binding terms are those: terms implied by statute

Express terms agreed by the parties

Written Contract and s1 Statement of Terms

Should include all of those terms provided for in s1 statement see appendix A in RB 235


Duration clause – for indefinite contracts put in notice period required and

ALWAYS find out how long the contract is for

Fixed term contracts – before October 2002 any waiver of redundancy rights were

allowed. After this date they are invalid.

a. BREAK CLAUSE – can have a list of circs where it can be terminated – ie,


b. NOTICE BREAK CLAUSE – Break clause but where either party can give notice

to terminate (only usually get these in longer term

contracts such as 5 years)

c. WAIVER CLAUSES – saying e/ee wont claim R BUT as of October 2002 they are

INVALID (ERA 1999) Waiver clauses are still valid and

enforceable if your contract was entered into before October


Directors Service contracts Watch out for directors service contracts which have to be

approved by the board.

no notice period as both parties committed to it

Duties and mobility * Job definition needs to be stated and whether it can be


Time devoted to duties * Needs to be stated

* Also needs to be an express term to say whether they are

restricted in taking part in any other business during their



Qualification * If a qualification is needed it must be expressed in the


Place of work and mobility * s1 says that it needs to be stated

 Important in terms of redundancy situations

 Where there is no mobility clause a court unlikely to

imply one.

 The only term which is probably implied is that they

should be employed within a reasonable distance of his

home. Depends on how accessible the place is.

Remuneration, illness and These must be notified to employee

Holidays How is wage calculated

When is payment due ie weekly or monthly

Benefits which the employee is entitled to

Deductions from wages

a) can't make any deductions unless employer is authorised

by statute (PAYE and NI)

b) authorised in employees contract

c) worker has previously signified in writing his consent

s17 ERA 1996 for workers in retail for cash / stock shortages

recoupment must be provided for in the contract and must

not exceed 1/10 th of the employees gross wages.

Sick pay must be defined. What is the employer prepared to

pay and for how long.

SSP presently stands at £64.35 after 3 days off sick.

Holidays – minimum is 4 weeks which includes bank holiday.

Pension , car, gym Contract should specify whether one is available.

Inventions and discoveries Employers need to state whether any invention or discovery

which, is made in the course of employment belongs to the


Policies – ie, complaints (see below), drug/alcohol use/abuse,

health and safety, email abuse, phone calls, internet abuse,

dress code (beware discrimination), children on premises

(beware of injury)

– MUST balance with Article 8 HRA (right to family life)

when checking up on e/es – ie, phone abuse, e/ee may

need to contact family member very urgently

– E/ee needs to be able to locate these policies which can

be a problem if its an oral contract

– E/er needs to be reasonable

Complaints – Employee Act 2002 – from October 2004 all e/ers must have a

minimum grievance and complaint procedure whereas at the

moment e/ers only need one if they have more than 20 staff.

Problem re this is that if there is only 1 boss and an e/ee is not

happy, who do they complain to ?…. it is a grey area at the moment

and this new Act will hopefully resolve it


– Main details can be found in Encyclopaedia of Forms and


Written statement of terms

1. Must comply with s1 ERA (see Appendix A in RB 235)

2. If e/ers don’t comply the e/ee can apply to the ET to draw it up

3. The ET have the power under the Employee Act 2002 (largely into force in October

2004) to fine the e/er or order the e/er to pay 2-4 weeks pay to the e/ee

4. E/ee cannot ask for 2-4 weeks pay straight out, it will only be tagged on to a

substantive claim (such as UD)

5. If the employee doesn't receive one then there is no penalty but the employer is

vulnerable at a tribunal

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