Employment contracts – What are the fundamental clauses?

What is an employment contract?

A legally binding agreement between the employer and employee outlining the terms and conditions of employment is known as an employment contract. Implied terms and express (verbal or written) terms are both included in an employment contract. Your employer and you have expressly agreed to certain terms, such as how much you will be paid and how many hours you will work. You can find these in your contract, the job description, any correspondence you have with your employer, or in the company handbook.

Implied terms are employment requirements that are expected of you but are not expressly stated in your contract. Avoiding stealing from your job is an illustration of this.

What should be included in your contract?

According to the Employment Rights Act of 1996, specific written information must be provided within two months after your start date. This will transition to an entitlement to these details beginning on the first day of employment in April of this year.

While the written statement of employment particulars, also known as the written statement of employment terms, outlines some of the key terms and conditions, including the start date, the nature of your job, your pay, your vacation time, and the amount of notice you must give if you wish to terminate your employment, written contracts frequently also include more specific clauses that are not required by law, such as confidentiality and restrictive covenants.

We’ll give you a quick rundown of the important provisions in your contract so you can comprehend them better.

Key Clauses

Hours of work

Your typical working hours or patterns, including overtime, should be outlined in your contract. The Working Time Regulations of 1998 should not be violated by the working hours specified in your contract.

According to the Working Time Regulations of 1998, your working week should not be longer than 48 hours on average over a period of 17 weeks. By putting your signature on a formal agreement to the contrary, you can decide to forego this right.

Employees have the right to a minimum weekly rest period (which consists of 24 hours of uninterrupted time off) and a minimum daily rest period (which is a period of 11 hours in a 24-hour period) under the Working Time Regulations of 1998. Additionally, after working 6 hours or more, employees are entitled to a 20-minute in-work unpaid rest period.

Pay

Your contract should specify your pay schedule as well as your compensation information. Deductions from salary information may also be included in your contract. This section should specify the situations in which deductions may be made, such as if you owe money to your company or have taken an excessive number of vacation days.

Bonus or commission plans are frequently included in separate contracts that may not be contractual in character, giving an employer additional latitude to modify the conditions.

Holiday entitlement

You are legally entitled to paid holidays as an employee. According to the European Working Time Directive, each employee is entitled to a minimum of four weeks of vacation time annually. Your total holiday entitlement in the UK is 5.6 weeks because domestic law grants each full-time employee an additional 1.6 weeks of leave.

Your contract should state the dates that the holiday season will begin and end. This should also specify any times of the year that are off limits for vacations; for instance, if you work in hospitality, the Christmas season might be restricted. There is no mandated right to use some public holidays as paid yearly leave. Instead, your contract should specify whether or not bank holidays are part of your right.

Pension

The auto-enrolment mandate applies to all employers, and your contract should specify the specifics of your pension, or pension scheme, and the applicable contribution rates.

Some employers might want to direct you to additional documents; in such case, your contract should make mention of it and you should have access to it.

Confidentiality

Confidential information of an employer receives virtually little legal protection. As a result, the majority of employment contracts will include explicit terms to protect information learned about the company while employed.

Limiting agreements

To safeguard their company in the event that you depart, your employer could incorporate a restrictive covenant. This provision is meant to prevent you from engaging in particular activities for a while. Restrictive clauses come in the following varieties:

1. Non-compete agreements

These are designed to stop you from joining a rival company or starting a firm that competes with your former employer as soon as you leave;

2. provisions preventing solicitation

These prevent ex-employees from contacting former employers’ clients or customers in an effort to persuade them to change their business relationships with them;

3. Discrimination clauses

4. Non-poaching clauses, which forbid you from conducting business with any of your former employer’s clients or customers.

These are intended to prevent you from stealing or hiring employees from your prior employer.

Such restrictions may be unenforceable because they obstruct trade and are thus against public policy. However, if a court determines that the covenant is intended to safeguard your ex-legitimate employer’s business interests and that it is reasonably necessary to defend those interests, your ex-employer may be entitled to enforce them.

The application of rules

If an employee believes that their employer is not upholding the terms of their contract, they have a number of choices. An employer should have a grievance mechanism that enables complaints to be lodged and internally examined, but if this does not result in a settlement, recourse to the employment tribunal may be feasible, depending on the specific circumstance and conditions of the contract.