Employment contracts

All employees have an employment contract with their employer, although it might not
be in writing. If you don’t have a written employment contract, your contract would have
automatically been created when you started to work for your employer.

What is an employment contract?

An employment contract, or ‘contract of employment’, is an agreement between an employer and an
employee which sets out their employment rights, responsibilities and duties. These are called the ‘terms' of
the contract.
Your employment contract doesn’t have to be in writing. However, you are entitled to a written statement of
your main employment terms within two months of starting work.
The employment contract is made as soon as you accept a job offer. If you start work it will show that you
accepted the job on the terms offered by the employer, even if you don’t know what they are. Having a
written contract could cut out disputes with your employer at a later date, and will help you understand your
employment rights.
You and your employer are bound to the employment contract until it ends (usually by giving notice) or until
the terms are changed (usually in an agreement between you and your employer).

Terms of an employment contract

The terms of your employment contract could be of several different types, some of which do not need to be
written down. You should be aware of what the terms of your employment contract are, so that
you understand some of your employment rights.

Written statement of employment particulars

If you are an employee who has been working for your employer for longer than one month, you have the
right to receive a written statement of employment particulars. This must be provided by your employer
within two months of you starting, even if you are going to work for them for less than two months. The
written statement will set out some of your main employment rights.

Contract to provide services

If you have a ‘contract to provide services’ or a 'contract for services' with someone, then this is different
from an employment contract and generally means you are self employed.
A contract to provide services is an agreement between you and another person to undertake some work for
them (for example paint their house). You do not become an ‘employee’ for this person - you just provide
them with a service.
If you are a temporary agency worker you may be contracted with your agency under a 'contract for
services'. Your agency, as an employment business, will be obliged to provide you with a written contract.

What to do if you have a problem

If you have a problem you should first try to sort out the problem with your employer. You could contact the
Advisory, Conciliation and Arbitration Services (Acas) for help, or visit the employment useful contacts
section for other contacts. If you have an employee representative, such as a trade union official, they may
be able to help.
If you cannot resolve the problem with your employer you may be able to make a claim to an Employment
Tribunal

Employment contract terms

The terms of an employment contract set out what you and your employer can expect of
each other. There are several different types and some do not need to be written down in
your employment contract.

Where do contract terms come from?

Contract terms can come from a number of different sources; for example they could be:

• verbally agreed
• in a written contract, or similar document
• in an employee handbook or on a company notice board

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 • in an offer letter from your employer
• required by law, for example, your employer must pay you at least the minimum wage
• in collective agreements (see below)
• implied terms (see below)

If there's anything in your contract that you're unsure about, or which is confusing, ask your employer to
explain it to you.
It should be made clear what is a legally binding part of your contract and what is not. The legal parts of a
contract are known as 'terms'.
If either you or your employer breaks a term of the contract, the other is entitled to sue for breach of
contract.

Collective agreements
Employers sometimes make agreements with a trade union or staff association. These are know as
'collective agreements'. Your contract should make it clear which agreements apply to you and who can
negotiate on your behalf. These agreements can apply to you even if you're not a member of the trade
union or staff association.

Implied contract terms

Implied terms aren't written down anywhere, but are understood to exist. If there's nothing clearly agreed
between you and your employer about a particular matter, then it may be covered by an implied term.
Terms are implied into a contract for a number of reasons.

Terms that are necessary to make the contract work

Terms can also be implied because they are necessary to make the contract work. The most important of
these is the 'duty of mutual trust and confidence'. This means that you and your employer rely on each
other to be honest and respectful. For example, your employer trusts you not to destroy company property,
and you trust your employer not to bully you.

Terms that are obvious or assumed

Some terms are included either because they are so obvious that it is not felt necessary to write them down,
or because it will be assumed that such a term exists.
An example of this might be where a contract provides for sick pay without saying how long it will be paid. It
will be assumed that it is not intended to be paid forever.

Terms implied by custom and practice

These are specific to an employer or kind of work. They are arrangements that have never been clearly
agreed but over time have become part of the contract.
For example, you might get a Christmas bonus every year, or the business might close early on particular
days.
If a company practice has become a part of your contract then your employer must stick to it, and cannot
normally change it without your agreement.
Whether a particular practice has become a part of the contract can be very difficult to decide. There is no
fixed time limit after which something is definitely part of the contract.
Among other things, it depends on:

• how seriously it has been treated (has the employer acted like they have a choice?)
• how clear it is (has the employer treated the matter differently each time?)
• how long it has been in place

Changes to employment contracts

Sometimes it's necessary to change the terms and conditions of an employment contract.
Find out why your contract might be changed, what your rights are and how to avoid or
resolve problems in making these changes.

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 What or who can change a contract of employment?
Either you or your employer might want to change your employment contract. However, neither you or your
employer can change your employment contract without each other's agreement. Changes should normally
be made after negotiation and agreement.

Changes to employment contracts could be made by:

• agreement between you and your employer

• collective agreement - this is a negotiation between your employer and a trade union or staff
association
• implication - that is through a change in long standing custom and practice (for example if your
employer allows all employees a day off each year for New Year's Eve)

If a collective agreement makes a change to employment contracts, the change will still apply to you even
if you are not a member of the trade union or staff association.

Reasons for changing an employment contract

An employer's need

An employer sometimes needs to make changes to working practice because of economic circumstances.
The business may need to be reorganised, moved to a new location, or there may need to be changes
because of new laws or regulations. Things that might change include:

• rates of pay
• working time (for example, longer or shorter hours, different days)
• your duties and responsibilities
• the duties and responsibilities of your immediate boss
• the location of where you work

Your employer might need to make a change to correct a mistake in drawing up the contract. Depending on
the situation, it might be in your best interests to allow the mistake to be corrected.

In some circumstances, action like a demotion or a pay cut might be authorised as a disciplinary measure.

Employees' need

Employees might also ask to change the terms of their contract. For example, you might want:

• better pay (you don’t have an automatic right to a pay rise, unless it’s in your contract)
• improved working conditions
• more holiday
• different working hours
• to work flexible hours
• to work part-time

Flexibility clauses
Your employment contract may include 'flexibility clauses'. These give your employer the right to change
certain conditions (for example, shift patterns) or there may be a 'mobility clause', allowing changes to your
job location.
A flexibility clause that is vaguely worded - for example, 'the employer reserves the right to change terms
from time to time' - cannot be used to bring in completely unreasonable changes. This is because there's an
'implied term of mutual trust and confidence' in all contracts that requires the employer not to act
completely unreasonably. There is more information about implied terms in the 'Employment contract terms
article'.

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 Do changes have to be in writing?
Agreed changes don't necessarily have to be in writing. However if they alter the terms in your 'written
statement of employment particulars', your employer must give you another written statement showing
what has changed within a month of the change.

What to do if you want to change your contract

If you want to make a change, speak to your employer and explain why. You can't insist on making changes
unless they're covered by a statutory right (for example, opting out of Sunday working or the 48-hour
week). You might be able to apply to change your hours under flexible working rights.

If your employer wants to change your contract

If your employer wants to make changes, they should

• consult you or your representative (for example, a trade union official)

• explain the reasons why
• listen to alternative ideas

Changes can be agreed directly between you and your employer, or through a 'collective agreement'
between your employer and a trade union. This might be allowed by your contract even if you're not a union
member.

Changes to your employer

If your employer changes, you are normally entitled to receive a new full written statement of employment
particulars within two months of the change. You would not be entitled to this if:

• your employer’s name changes without any change to who your employer is (for example if the
company is renamed)
• your employer changes, but your job continues unaffected (such as during protected business
transfers, also known as TUPE)

In these circumstances, you are entitled to be given individual written notice of the change at your
employer’s earliest opportunity. This must be no later than one month from the date of the change.

Breach of contract
Both employers and employees can be in breach of a contract of employment - so it's
important to know what this is and what you should do if either you or your employer
breaches your contract.

What is a breach of contract?

A contract of employment is a legally binding agreement between you and your employer. A breach of
contract happens when either you or your employer breaks one of the terms (for example, if your employer
doesn't pay your wages, or you don't work the agreed hours).
Not all the terms of a contract are written down. A breach may be of a verbally agreed term, a written term,
or an 'implied' term of a contract.
Your pay has special extra protection and in some situations your employer may be prevented from taking
money out of your pay even if this wouldn't be breaching the contract.

Breach of contract by your employer

If you think there's been a breach of contract, check the terms of your contract to make sure. If there has,
you should try to sort out the problem directly with your employer first of all.

Mediation
Before taking legal action, you could try other ways of resolving the dispute if your employer agrees. For
example, you might try mediation through Acas (or the Labour Relations Agency if you work in Northern
Ireland).

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Legal action
If you can't sort out the problem with your employer, you can decide to take legal action. Think carefully
before taking any legal action against your employer. Ask yourself what you want to achieve and how much
it will cost.

Remember that you'll only get compensation (called 'damages') if you can prove real financial loss (for
example, if your employer doesn't pay your wages) - there's no compensation for distress or hurt feelings.
Also remember that taking legal action might prompt your employer to take out a counter-claim against you
if they feel they have one.

If you are a member of a trade union, it would be a good idea to speak with them before taking any legal
action, as some unions provide a legal advice service for their members. Otherwise, you could talk to a
solicitor, or discuss your case with an Acas advisor.

Employment Tribunal
If you do decide to take legal action, it can either be through an Employment Tribunal (Industrial Tribunal in
Northern Ireland) or through a civil court.
To make a breach of contract claim through an Employment Tribunal, your employment must have ended.
There are restrictions on the types of claim that can be made (for example, you cannot make a personal
injury claim through the Employment Tribunal).
Employment Tribunals are cheaper and often quicker than the civil courts.

Civil courts
To make a claim while you are still employed you will normally go through the small claims track of the
county court or other civil court.
The time limit for making your claim to a civil court is longer than the time limit for complaining to an
Employment Tribunal. The award that a civil court could make is unlimited.

Breach of contract by an employee

If you breach your contract, your employer should try to settle the matter with you informally. If your
employer suffers a financial loss because of your breach, they could make a complaint for damages against
you.
Your employer would normally use a county court for a breach of contract claim. The only way your
employer would be able to make an application to an Employment Tribunal is in response to a breach of
contract claim that you have made.
Damages are only awarded for financial loss. For example, if you don't give enough notice your employer
could claim for damages from the extra cost of hiring temporary staff to do your work, or for lost revenue.
You would still have the right to wages you earned before you left, plus pay for untaken statutory holiday.
The most common breaches of contract by an employee are when you quit without giving (or working)
proper notice, or when you go to work for a competitor when your contract doesn't allow it.

Questions about breaches of contract

Most questions about breaches of contract can be answered by checking the terms of your contract.

Is it breach of contract to dock your pay for being persistently late?

You won't necessarily get paid for time that you're not at work, but your employer should be careful about
imposing extra penalties on top of this. If there's nothing in your contract that allows your employer to do
so, they must pay you what you've earned. They should then decide whether to sue for any money they've
lost because of your lateness.

Your employer always pays you late - is this breach of contract?

Not paying at the agreed time will often be a breach of contract. If you can prove you suffered a financial
loss (for example, having to pay overdraft fees), you can claim this back as damages. Talk to your employer
first. If it keeps happening, you could try to get a court injunction to stop them repeating this breach.

What is wrongful dismissal?

This is a breach of contract in the way you were dismissed (for example, without being given proper notice
or without following the procedures in your contract). You can take action in the same way as for any breach
of contract.

Is it breach of contract to withdraw a job offer, or to turn it down, after it has been accepted?

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Yes. The contract is made as soon as you accept the offer, and both sides are bound by the terms until the
contract is terminated.