Employment contracts are simple agreements between an employer and an employee that the majority of us, who have been an employee, will have received at some point.
This article will discuss the elements of contract law in the context of employment contracts, and the legal requirements surrounding written contracts of employment between employers and employees.
What must an employment contract include?
Under the general principles of contract law, the following must be present:
An intention to create legal relations,
Offer and acceptance,
Consideration between parties,
Capacity (in employment terms, more important restrictions apply to minors).
These principles apply to employment contracts in the same way as any other contract. But, does a contract actually need to be in writing?
Does an employment contract need to be put in writing?
Contracts can be express or implied, oral or in writing.
This means that there is no actual legal requirement for a contract to be in writing. An employer does not have to give an employee a written employment contract.
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.
A Section 1 statement is not necessarily an employment contract, it can be a statement of what has already been agreed orally or in writing. If the section 1 statement is the only written document relating to the employment (i.e. there is no separate written employment contract), it will be significant evidence of the terms of the employment between the parties.
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*.
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How should an employment contract be signed?
Employment contracts are typically simple contracts, meaning it will only need simple signatures - namely one for the employer and one for 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.
*NOTE: If the employment commenced before 6 April 2020, the section 1 statement was required within the first two months of employment. After 6 April 2020, the majority of particulars must be given on or before the date that employment commences.*
How can I create an employment contract with Legislate?
Legislate is an end-to-end contracting management software for the unlawyered. To find out more about creating your employment contracts on Legislate, take a look at our tutorial, or you can book a live demo to learn more about the platform.
Download our Employment Agreement Guide for free!