HR & Employment Law Insights

Helping family businesses, start-ups, charities, social enterprises, and other growing or established businesses throughout the UK make sense of HR and Employment Law challenges.

20 Criteria That Should be on Any Employment Contract

A contract is more than just a document both you and your employee sign to memorialise your employment agreement. And, while there are bare minimums the law requires in any contract, you should never follow those minimums as guidance for your own program. Moreover, a bare statement of terms is never sufficient when you want to ensure you’re protected as an employer.

Rather, you should invest the time and resources in creating a comprehensive contract of employment. Doing so means employees will better understand their duties and responsibilities and, as an employer, means you’re protected should an employee dispute something you considered at the contracting stage. Moreover, an employment contract is a simple way to integrate policies from the Handbook into a binding document to offer employees better incentives to comply with all policies.

Below, we discuss 20 criteria – both basic and advanced – that you should include in any contract. While some may seem obvious, they’re worth mentioning to ensure nothing is left to chance.

1. Names of the Parties

This includes both your organisational details along with your employee’s full name and address.

2. Start Date

A start date is more than just the date an employee will begin with your program; it’s also indicative of their lack of rights with your organisation at the time. The exception to this is in instances where your organisation has taken over for another, meaning the employees were already employees of the previous company.

3. Job Title and Description

The job title and description should match the information you placed in your job advertisement.

4. Work Location

Specify where the employee is to work and leave open other options for work location in the future, if appropriate.

5. Work Hours

Most contracts set a number of minimum hours for an employee to work each week and reserve the right to request additional hours when appropriate. Of course, there are hour limitations imposed by Working Time Regulations, but you’ll always want to reserve the ability to request more hours.

6. Probationary Period

Many employers place new employees on a probationary period. This typically includes a short notice period so an employer may terminate the employee at the end of the trial, if necessary.

7. Salary

Salary will be gross income before tax and other deductions. Typically, the contract will also specify when payments are to be made.

8. Assessments

Putting an assessment schedule in the contract removes the guesswork and ensures employees know at what time and how frequently they’re to be evaluated.

9. Deductions

If you’re planning on making any deductions from an employee’s salary, you must define all the scenarios in which you’ll do so. Again, the idea is to be as transparent as possible in the process.

10. Expenses

Define which work-related expenses are covered and which the employee will need to pay out of pocket. This part of the contract should always require proof of payment for reimbursement.

11. Holidays

If your company has a busy time of the year, you should specify which holidays are “off limits” or otherwise restricted for time off. Typically, this clause also contains the maximum number of days any employee may take off during the year and how unused holiday time will work if it remains at the end of the year.

12. Sickness and Disability

This clause will detail your policies regarding sickness and disability, including information such as:

  • When doctor’s certificates are required for absences;
  • Whether the employee will receive pay and how pay will work; and
  • Procedures for notifying the employer of absences

You should create a separate, more comprehensive sickness and disability policy and disperse that to employees as well.

13. Pension

Pension provisions should include the pension scheme or whether a pension is available to an employee at all.

14. Notice Period

Should an employee wish to quit, it’s important you specify a procedure as to how it must happen. You should also specify which actions allow for dismissal without notice.

15. Discipline

Should an employee violate a policy or other provision set forth in his or her contract, you need a clear discipline policy that is fair and effective at preventing further bad behaviour.

16. Retirement

Define your standard retirement policy and the procedures an employee must follow when he or she wishes to begin retirement.

17. Severability

You need a standard paragraph – present in almost every contract – specifying that even if a section does not apply to an employee, the rest of the contract is binding.

18. Existing Agreements

Most contracts also contain a standard paragraph dismissing any existing agreements made prior to the employee contract. This protects the employer from liability should anything happen.

19. Jurisdiction

If there is a disagreement, the jurisdiction clause should set forth how and where the action should be brought.

20. Any Other Substantial Provision

Your organisation is unique. As such, you may have clauses that haven’t been named above. It’s important you evaluate your organisation and what you feel is important to memorialise in contracts with each employee.

If you’re struggling to determine what these provisions may include, The HR Booth can help. Our services for contracts of employment ensure nothing is left to chance and your company is protected.

To learn more or get your questions answered, contact us on 01383 695516.