It’s important to get this right, and this is a helpful blog post by our friends at Legislate…
An employment contract is a legally binding agreement between an employer and an employee. It sets out the terms under which an employee will be working for the employer, including their salary, holidays and the notice period that the employer or the employee must give before ending the contract.
This article will look at the legal requirements of employment contracts and how they are affected by the elements of contract law.
When is a contract legally binding?
Under the general principles of contract law, the following must be present in a contract of employment:
- An intention to create legal relations,
- Offer and acceptance,
- Consideration between parties,
- Capacity (in employment terms, more important restrictions apply to minors).
- Notice periods
Contracts can be expressed or implied, oral or in writing.
Does an employment contract need to be in writing?
Employment contracts are required to conform to these same principles as are other contracts.
As there is no legal requirement for an employment contract to be in writing, employers do not have to give employees written contracts of employment. However, whilst a written employment contract is not a necessary formality to be observed, section 1 of the Employment Rights Act 1996 (ERA 1996) requires employers to provide employees or workers with a “written statement of particulars of employment” (s.1(1) ERA 1996) (‘section 1 statement’). This right applies to all employees and workers.
If a section 1 statement is the only written agreement between the employee and the employer, it can be very important in court. On the other hand, if there is a separate written contract, the contract, and any terms within it, will take precedence over the section 1 statement (Robertson v British Gas Corp  ICR 351).
An employer will have met the obligation of providing a section 1 statement where all of the following apply:
- The employee is given a written document in the form of a contract or a letter of engagement;
- The document contracts information which meet the employment’s obligations under section 1 of the ERA 1996; and
- The document is given no later than the beginning of the employment.
How should an employment contract be signed?
Employment contracts are typically simple contracts, requiring a signature from the employer and a signature from the employee.
Although, there are occasions where an employment contract may need to be signed as a deed. Examples of when this might be necessary are:
- The contract contains a power of attorney
- If there are intellectual property rights the company wants to protect;
- To procure the transfer of shares or resignation of offices after termination;
- Where there has not been any consideration.
How to create lawyer-approved employment agreements?
Tailoring an employment contract from a template can be risky without the appropriate Legal expertise. Filtering your employment contracts post-signature by notice period or special term can be a challenging task if you are still working with pdfs. To create and manage lawyer-approved employment contracts which meet your requirements, sign up to Legislate today.
Legislate is a contracting platform where business owners can create contracts to help grow and develop their business. Legislate’s employment offer letters and contracts are key in protecting your IP and Legislate’s NDAs are crucial to ensure you can have conversations and partnerships to help develop your business and brand. Book a demo or sign up today to put the confidence back into contracting.