Contracts of employment
Welcome to these learning resources on contracts of employment. In the audio clip (to the right) your HR tutor Andrew gives an overview of topic and its relevance, and below is a summary of how this fits with the CIPD units.
1. What is a contract of employment and how is it established?
As stated by acas (2020), an employment contract is a legal relationship between an employer and an employee. This is not necessarily a full written document – it can be a simple offer letter and acceptance, or even an oral agreement (more on that later).
When seeking to establish if a contract of employment is in place there are three simple questions:
- Has an offer been made and accepted?
- Does consideration exist? This means that the employee agrees to perform the job and the employer agrees to make payment in the form of wages.
- Is there an intention to create legal relations?
Express and Implied Terms
Once a contract of employment exists, both parties owe certain duties to one another that are enforceable by law. A contract of employment will usually be made up of two types of contractual terms. These are:
- express terms
- implied terms
Express terms are those which are actually stated in writing or given verbally. Written express terms are not restricted to written employment contracts but can include a number of other documents, such as the job advertisement, instructions or announcements made by an employer on a notice board at work and an office manual or staff handbook. Express terms might include, for example:
- amount of wages, including any overtime or bonus pay
- hours of work, including overtime hours
- holiday entitlement
- notice periods.
The terms must meet minimum legal standards in many areas, such as the right to paid holidays and the right to daily and weekly rest breaks.
Implied terms are held to exist by courts even though neither party has formally agreed to them. These can be:
- Common law implied terms
- Result of custom and practice.
Most employers will provide evidence in writing of both the existence of the contract and its main terms – to put the relationship on an open, clear footing from the start.
acas (2020) What an employment contract is, https://www.acas.org.uk/what-an-employment-contract-is, accessed 10 August 2020.
2. What does the law require?
On the right is a link to acas information on employment contracts. Review this, and the related pages, and make a note of key points in the following areas:
- What must a new employee be issued with and when?
- What minimum information should this contain?
- Have there been any recent changes to the law in this area?
Once you’ve completed this, listen to Andrew’s summary.
3. The significance of a contract of employment
Having established the legal requirements you might be wondering why all of this is significant or relevant. An organisation may have working for it full time and part time employees, agency workers and/or sub-contractors who are either self employed or are employees or another company. The rights of the individuals, and therefore the responsibilities of the organisation towards them, will differ.
Below you will find a worksheet and to the right a link to a CIPD resource on employment status (you will need your CIPD membership for this one). Use the resource, including the Q&As, to complete the relevant fields on the worksheet.