Employment Contract Templates

Think of it not only as a legal requirement but also as the foundation on which to build your future relationship with each new employee.

In this article, we’ll explain what you need to cover in your basic employment contract. Should you require a free to use employment contract template or advice on contracts and documentation, call your dedicated ICAEW advice line today on 0800 022 3820

What is an employment contract?

Legally, new employees are entitled to a written statement of the main terms from their first day of employment. This is different from an employment contract but still contains some of the same terms.

Your employment contract will cover the employee's rights, responsibilities and obligations. This will go into detail about the different procedures your business has in place, for example, grievance procedures, probationary period, holiday pay and statutory sick pay.

An employment contract is also a handy way for you to inform your new employee/s of the benefits you offer. For example, an employee assistance programme (EAP), contractual sick pay and health insurance.

Why are employment contracts essential?

There is no legal requirement for an employer to offer their employees a physical employment contract.

You could decide to have a verbal employment contract, but this can be hard to maintain long-term. Verbal contracts can cause confusion later and prevent you or your employee from proving a clause was in the employment contract.

It’s considered best practice to offer a physical copy. This will help you create a record of documents for your employee and make it easier later if you have a document to refer back to.

Having a physical employment contract helps if you are taken to an employment tribunal, as you have proof of the full employment terms and agreement.

Types of employment

There are different types of employment contract depending on the employment status of your new employee (i.e. employee, worker, full-time, part-time). Here are some examples below:

Permanent full-time contract

This is one of the common types of employment contracts an employer can offer.

A permanent full-time employment contract doesn't have a termination date or an end date, the employment terminates when the employee either leaves, is made redundant or is dismissed.

Employees on full-time employment contracts are entitled to benefits such as holidays, training and pensions.

Permanent part-time contract

These are very similar to permanent full-time employment contracts, but they are for employees who work less than thirty-five hours per week.

The number of hours they are contracted to work will be outlined in their contracts.

They have the same rights as a full-time employee, these can include holiday, pension, and training. Part-time employees may be expected to work overtime without pay, but an employer may choose to give the employee time of in lieu (TOIL). Full-time employees may be also entitled to overtime pay if their employer decides to offer it.

Fixed-term contract

A fixed-term employment contract states when the predetermined end date to terminate employment is. More often than not, employees who are on fixed-term contracts are hired for a temporary period such as maternity cover or for a specific business project.

Zero-hour contracts

A zero-hour employment contract is where you don't have to give your employees a minimum number of working hours per week. As they are an employee and not a worker, they have a mutuality of obligation meaning they should be accepting the work provided unless booked as a holiday or taken as a sickness absence.

Employees on a zero-hour employment contract are entitled to paid holidays, rest breaks, minimum wage and protection from discrimination.

This type of contract is typically used in certain sectors such as.

• Delivery drivers.
• Hospitality work.
• Care work.
• Gig economy work.

How to write a basic employment contract

No business has a “one template fits all” employment contract, for a very good reason. You aim to hire employees that are a great fit for each role, at each level of seniority. It comes as a given that you provide them with the right type of document.

Remember that you need to cover the minimum legal requirements.

Start with this downloadable employment contract template, which outlines four fundamental types of information:

1. Capability procedures
2. Disciplinary procedures
3. Whistle-blower policies
4. General policies & procedures

We have put this simple template together to encompass the main aspects recommended by ACAS.

What to include

At first glance, the list below might look overwhelming. Consider each item as a building block that, once fixed in its place, will fulfil its function. You won’t need to go over it again any time soon.

1. The employee's name
2. The employee.
3. The start date (the day the employee starts work)
4. The date that ‘continuous employment’ started for an employee
5. Job title.
6. The employer’s address
7. The places or addresses where the employee or worker will work
8. Pay, including how often and when
9. Working hours, including which days the employee must work and if they can change
10. Holiday & holiday pay, plus an explanation of how its calculated if the employee leaves
11. The amount of sick leave and pay
12. The notice period either side must give when employment ends
13. Any probation period, including its conditions and how long it is
14. Training that the employee or worker must complete, including training the employer does not pay for

You can add other terms later, in instalments when the necessity arises, such as:

1. Disciplinary rules & procedures
2. Grievance rules & procedures
3. Right-to-work checks
4. Statutory types of paid leave as per the Government’s Good Work Plan 2020.

Restrictive covenants

You can add restrictive covenants to your as an addendum to the employment agreement, these will stop employees from acting in a particular way.

Confidentiality clause

A confidentiality clause will stop your employees from sharing any of your company's confidential information. This clause can be used when an employee has access to sensitive information or proprietary data that is owned by the company.

Non-solicitation clause

This clause stops an employee from poaching and recruiting your current employees after they've left.

Non-competition clause

This can be also called an 'exclusivity clause'. This clause is there to stop employees from competing for work against their employer.

This clause can be used while the employee is working with the company and for a set period after they've left the business.

These clauses typically stop employees from doing the following,

• Providing advice and skilled labour.
• Working as a business owner, sole proprietor, or partner to compete for work.

Employment contract template - dos and don’ts

We have listed above the terms to include, and this should give you a good start. However, we did not include further details about how to work out the best mutually beneficial terms. Such terms vary with each role and each specific type of employment contract.

The wording is up to you, if you keep in mind there are some dos and don’ts.

Perhaps one of the most critical points to be aware of is that you need to stick to the wording.

For example, if the contract states that an employee’s probationary period is due to last three months, you shouldn’t extend it to six months without good reason and appropriate written notice.

Doing so puts you and your business at risk.

Remember, the below employment contract template is a sample only. You will need to alter it to fit your business needs and the role you are hiring for.

For further support on employment contracts, speak to one of our documentation team today on 0800 022 3820