A Guide to Our Employment Contract Template

by Kate Mcormack - Solicitor

A guide to our employment contract template.

A Guide to Our Employment Contract Template

This Employment Contract Template constitutes a formal contract of employment for use by an employer to set out the terms of employment of permanent, temporary, full time or part time employees. This Employment Contract contains all the clauses necessary to satisfy the legal requirements for an employer to provide a written statement of the terms and conditions of employment to an employee within two months of their commencement of employment.

All standard variable matters such as rate of pay, hours to be worked, holiday entitlement and termination of employment can be customised to suit your requirements, within the legal framework. So you can provide for any rate of pay provided that it meets the national minimum wage and you can provide for any notice period that is over the minimum length required by law.

Clauses in this Employment Contract Template

Cover page - you will need to insert the names of party 1 (the Employer) and party 2 (the Employee).

Between –you need to insert the details of the Employer company that the Employee will work for here, including the company name and registered number and registered office or trading address and also the name and address of the employee. If the Employer is not a limited company, you can change the Employer details to state the name and address of a business or individual.

Commencement and Continuation of Employment – you should insert the Employee’s start date here. Clause 1.2 refers to continuation of employment. This is the length of time that an employee has worked for the same employer without a break. However, some breaks will not affect continuity of employment, such as periods of sick leave of up to 26 weeks. Continuity is important as it determines when the Employee will be able to benefit from certain legal rights such as the right to take action for unfair dismissal. Previous employment should usually be stated to count under clause 1.2 unless the Employer worked for someone else between periods of working for you or only worked for you previously on an ad hoc or self-employed basis.

Period of Probation – you can change the length of the probation period to any reasonable period that you require. During this period, you can terminate the Employee’s employment on one week’s written notice.

Job Title – you should insert the Employee’s job title and the name of the supervisor or line manager that they will report to, if relevant to your business.

Job Description – you should attach a job description to the contract. This should specify all the duties that the Employee is expected to carry out. Any material amendment to these duties will constitute a change in their terms and conditions of employment, to which they must consent.

Location – here you should enter the address of the main place of work of the Employee. It is a good idea to complete the second part of clause 5.1 and clause 5.2 if the Employee may have to work elsewhere at all during their employment as otherwise making them do so may constitute a change in their terms and conditions to which they must consent.

Salary – the Employee’s gross annual salary should be entered here and the date of its payment each month. You can amend or delete clauses 6.2 - 6.4 as appropriate to your business.

Expenses – you can amend this to state reasonable expenses if you wish or specify which particular expenses will be reimbursed.

Working Hours – when stating the Employee’s working hours, you should have regard to the Working Time Regulations. Clause 8.3 does not enable you to require the Employee to work for longer than the maximum period allowed under the Regulations. This will depend on the nature of the work but for most employees it is not more than 48 hours a week on average. An Employee can contract out of the maximum limit. Such agreement must state expressly that they are contracting out of the Regulations and must be in writing in the employment contract or elsewhere and signed by the Employee.

Other Employment – this clause is designed to prevent the Employee from working for a competitor without your consent, whilst employed by you. You can amend it as you see fit.

Holidays – full time employees have a minimum entitlement to 5.6 weeks’ paid holiday under employment law. You can offer them more than this if you wish to. The minimum entitlement can be inclusive of bank and public holidays or you may wish to offer these in addition. You can control when and how employees take their holiday and can add additional clauses to the contract to deal with this.

Absence/Sickness – these clauses are standard and designed to ensure that you are kept well informed about the Employee’s absences/sickness.

Sick Pay – under employment law Employees are entitled to statutory sick pay (SSP) for up to 28 weeks’ of sick leave. Clause 13.2 also provides for the Employee to receive company sick pay for up to 20 days once they have completed their probation. Company sick pay can be any amount in excess of the statutory minimum (SSP) entitlement. You do not have to offer a company sick pay scheme so can delete this clause if you wish or amend it to offer a different rate of pay or length of entitlement. If you do not offer company sick pay, SSP must be paid. The current standard weekly rate of SSP can be found on the Directgov website.

Pensions – this clause leaves it to you to enter details of your company pension scheme. At present, employers must offer their employees access to either a stakeholder pension scheme or the company’s occupation pension scheme. You should state which applies in this clause.
From 2012, the Pensions Act of 2008 requires employers to automatically enrol any employees who are over 22, who earn over a basic amount and who are not already in one, into a Qualifying Workplace Pension. This is a scheme that involves compulsory employer’s contributions equal to or in excess of a minimum percentage of the employees’ earnings. If you do not operate such a scheme, you must enrol your employees into the Government’s default scheme.

Private Medical Expenses Insurance - you do not have to offer an employee private medical expenses insurance but can enter the details here if you do offer such benefits.

Notice of Termination – employment law sets out minimum periods of notice that must be given to employees depending on how long they have been working for the employer. The legal minimum is one week for between one month and two years’ of continuous employment and one additional week for each year of employment after that, up to a maximum of 12 weeks’ notice. You can provide for longer than the statutory minimum. This clause provides for the usual period of 4 weeks’ notice on either side.

Summary Termination – summary termination can occur where an employee has committed a fundamental breach of their terms and conditions of employment. It means that you can terminate their employment immediately upon written notice, without having to provide the notice period in clause 16. You can only summarily terminate an employee’s employment if the breach is serious enough. This clause specifies some examples of serious misconduct that may permit summary termination, for the Employee’s information but it is not exhaustive. You should take legal advice before summarily terminating an employee’s employment.

Grievance – you should set out details of your company’s grievance procedure in your staff handbook and provide the Employee with a copy along with their employment contract.

Disciplinary - you should set out details of your company’s disciplinary policy and procedure in your staff handbook and provide the Employee with a copy along with their employment contract.

Confidentiality – this clause is designed to protect your company’s confidential information. It is recommended that you include a comprehensive confidentiality policy in your staff handbook and ask the Employee to sign a confidentiality agreement if the Employee will have access to personal data under the Data Protection Act or other highly sensitive information during the course of their employment.

Working Outside the UK – as with clause 5, you should state whether the Employee will be required to work abroad during the course of their employment.

Data Protection – this clause provides the requisite consent needed under the Data Protection Act for you to handle and process any personal data about the Employee such as their sickness records.

Contracts (Rights of Third Parties) - this clause excludes the Contracts (Rights of Third Parties) Act 1999 from applying to the Agreement so that only the parties to the Agreement can enforce it.

Governing Law - Governing Law and Jurisdiction - if you are based abroad, you may wish to change the jurisdiction clause to reflect this and/or make it non-exclusive. Where the parties based in the UK, the jurisdiction should be exclusively that of England and Wales.

Signature clause – this clause makes the Agreement enforceable. You need to insert the names of both parties and the officers signing on your company/business’ behalf here and on the Acknowledgement slip. Both parties need to sign the Agreement here. Once both parties have signed the Agreement, it should be dated on the Cover Page and also at the top of Page 1. This is the date that the Agreement will commence. Both parties should keep a copy of the signed Agreement and the Employer should keep the Employee’s signed Acknowledgement slip.