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Employment contracts

What is a contract of employment?

A 'contract of employment' is a legally binding agreement between an employer and an employee. It confers a number of rights and obligations on an employer and an employee.

Among other things, an employment contract involves an employee's responsibility to work for their employer and an employer's responsibility to pay their employee for all tasks and duties performed in the course and scope of their employment.

Contractual rights are in addition to legal rights. However, contractual terms cannot provide less protection than is afforded under the law. In other words, contractual terms cannot limit an employee's legal rights, such as the right not to be paid less than the National Minimum Wage.

A contract of employment is typically made up of 'express' and 'implied' terms. Express terms are contractual elements that are specifically mentioned orally or in writing, such as the rate of pay (including overtime and bonus pay).

Implied terms, by contrast, are not written into an employment contract but are nevertheless incorporated. An example of an implied term is a contractual provision that an employer will not disclose their confidential or sensitive information.

What is a contract for services?

A self-employed person provides a 'contract for services'.

A contract for services is also a legally binding agreement. However, it is not between an employer and an employee but rather between a self-employed person and another individual(s) to perform work for them (for example, residential refurbishment).

The self-employed person does not become an employer of the individual(s) who hired them - they merely provide them with a service.

If an individual can determine the following of their own accord, their employment status is considered to be self-employed:

  • when they work
  • who their work substitution is
  • what their sickness and holiday arrangements are
  • their payment of tax and National Insurance contributions.

What can an employee do if they have a problem with their employment contract?

If an employee has a problem with the contract or a term seems unfair to them, the first port of call is to discuss it with their employer with a view to resolving it - for example, by the employer amending or removing a term(s).

If the informal approach fails to solve the problem, an employee can contact the Advisory Conciliation and Arbitration Services (ACAS) for mediation assistance. Alternatively, an employee can ask a trade union official who may be able to help.

As a last resort, an employee can consult a solicitor or make a claim to an Employment Tribunal.

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