Employment Contracts in the UK: Key Terms, Employee Rights and Employer Obligations

Employment Contracts in the UK: Key Terms, Employee Rights and Employer Obligations

Quick Answer: An employment contract sets out the legal terms governing the relationship between an employer and employee. It can include express terms concerning salary, working hours, duties, holiday, notice and benefits, while other rights and obligations may arise from legislation, common law and implied contractual terms. UK employers also have statutory obligations to provide employees with written information about key employment terms.

An employment contract is more than a document signed on the first day of work.

It establishes the legal framework within which the employment relationship operates.

Contractual terms can determine:

• How much an employee is paid.
• When and where the employee works.
• Holiday entitlement.
• Notice periods.
• Benefits.
• Confidentiality obligations.
• Intellectual property rights.
• Restrictions after employment ends.
• Procedures and obligations relating to termination.

However, not every employment right needs to appear expressly in the contract.

Statutory employment rights can apply regardless of what the contract says, while certain terms may be implied into the employment relationship.

This makes it important to understand the difference between contractual terms, statutory rights and workplace policies.

This article explains employment contracts in the UK, including written particulars, express and implied terms, pay, working hours, holidays, notice periods, probation, confidentiality, restrictive covenants, variation of contracts, breach of contract and employee remedies.

Legal disclaimer: This article provides general educational information only. It is not legal advice and does not create a solicitor-client relationship. Employment rights depend on the contract, employment status, jurisdiction, circumstances and applicable legislation.

Key Takeaways

• An employment contract governs the legal relationship between employer and employee.
• A contract can contain express terms and implied terms.
• Employers must provide employees with specified written information about employment terms.
• Statutory employment rights can apply even where they are not expressly written into the contract.
• The contract should be checked carefully before signing.
• Pay, hours, holiday and notice provisions are particularly important.
• Probation does not mean that an employee has no legal rights.
• An employer cannot necessarily change a contractual term unilaterally.
• Restrictive covenants can affect what an employee can do after leaving employment.
• Employment policies are not necessarily contractual.
• A breach of contract can potentially give rise to legal remedies.
• Employees should retain a copy of their contract and subsequent amendments.

What Is an Employment Contract?

Quick Answer: An employment contract is an agreement governing the employment relationship between an employer and employee.

It can contain terms concerning:

• Salary.
• Working hours.
• Job duties.
• Holiday.
• Benefits.
• Notice.
• Confidentiality.
• Termination.

The contract can be written, oral or partly written and partly oral, although employers have statutory obligations concerning written employment particulars.

Does an Employment Contract Have to Be in Writing?

Quick Answer: The employment relationship can exist without a traditional signed contract, but employers must provide qualifying workers and employees with specified written information about key employment terms.

The written statement is not necessarily the entire employment contract.

What Is a Written Statement of Employment Particulars?

Quick Answer: A written statement provides employees and workers with specified information about important terms of their employment or engagement.

Depending on the applicable statutory requirements, information can include:

• Employer identity.
• Place of work.
• Job title or description.
• Date employment began.
• Pay.
• Working hours.
• Holiday entitlement.
• Notice periods.
• Probation arrangements.
• Training provisions.

The precise statutory requirements should be checked for the relevant employment relationship.

When Should I Receive My Employment Contract or Written Terms?

Quick Answer: Certain key employment information must generally be provided from the beginning of employment, subject to the applicable statutory requirements.

Employees should not have to rely on informal promises to understand fundamental employment terms.

What Should an Employment Contract Contain?

A comprehensive employment contract commonly addresses:

• Employer and employee details.
• Job title.
• Place of work.
• Start date.
• Salary.
• Working hours.
• Overtime.
• Holiday.
• Sick leave.
• Benefits.
• Probation.
• Notice.
• Termination.
• Confidentiality.
• Intellectual property.
• Disciplinary and grievance procedures.
• Restrictive covenants.

What Is an Express Contractual Term?

Quick Answer: An express term is a term specifically agreed between the employer and employee, whether orally or in writing.

Examples include:

• Annual salary.
• Working hours.
• Notice period.
• Job title.
• Place of work.
• Bonus arrangements.

What Is an Implied Term?

Quick Answer: An implied term is a contractual obligation that arises even though it may not be expressly written in the contract.

Implied terms can arise through:

• Common law.
• Necessity.
• Established custom and practice.
• The nature of the employment relationship.
• Other recognised legal principles.

What Are Common Implied Terms in Employment?

Potential implied obligations can include:

• The employee's duty to obey lawful and reasonable instructions.
• The employee's duty of fidelity.
• The employer's duty to provide work in certain circumstances.
• The implied term of mutual trust and confidence.
• The employer's obligation to pay agreed wages.

The precise scope of an implied term depends on the circumstances.

What Is the Implied Duty of Mutual Trust and Confidence?

Quick Answer: The implied duty of mutual trust and confidence generally prevents an employer or employee from acting, without reasonable and proper cause, in a manner likely to seriously damage or destroy the relationship of trust and confidence.

Serious breaches can have significant consequences, including potentially supporting a constructive dismissal claim.

Can an Employer Put Anything in an Employment Contract?

Quick Answer: No. Contractual terms cannot simply remove statutory employment rights where legislation prevents such exclusion.

Examples of statutory protections can include:

• National Minimum Wage rights.
• Working time protections.
• Paid holiday rights.
• Equality rights.
• Whistleblowing protection.
• Family-related employment rights.

Can an Employment Contract Remove My Statutory Rights?

Quick Answer: Generally, employers cannot contract out of statutory employment protections where legislation prohibits such exclusion.

A contractual provision attempting to remove a statutory right may be unenforceable or ineffective.

What Is the Difference Between Contractual and Statutory Rights?

Quick Answer: Contractual rights arise from the employment agreement, while statutory rights arise from legislation.

For example:

• A contract may provide 30 days of annual leave.
• Statutory law provides a minimum level of paid holiday for qualifying workers.

The contractual entitlement may therefore exceed the statutory minimum.

Can My Employer Pay Me Less Than the Contract Says?

Quick Answer: Generally, an employer must pay the remuneration contractually agreed unless there is a lawful basis for the change.

An unauthorised reduction in pay can potentially amount to a breach of contract and may also raise statutory wage issues.

Can an Employer Change My Salary Without My Consent?

Quick Answer: Not necessarily. If salary is a contractual term, unilateral reduction can potentially constitute a breach of contract.

The contract should be examined for any variation clause and the circumstances of the proposed change.

Can My Employer Change My Working Hours?

Quick Answer: It depends on the contract and circumstances.

Relevant considerations can include:

• The wording of the contract.
• Any flexibility clause.
• Custom and practice.
• The extent of the proposed change.
• Whether the employee agreed to the change.

Can an Employer Change My Place of Work?

Quick Answer: The answer depends heavily on the contractual wording.

A contract may contain a mobility clause, but the scope and reasonableness of the clause can matter.

What Is a Mobility Clause?

Quick Answer: A mobility clause is a contractual provision allowing an employer to require an employee to work at another location within specified limits.

Its enforceability depends on its wording and how it is exercised.

Can an Employer Change My Job Role?

Quick Answer: Potentially, but substantial changes to contractual duties can raise contractual issues.

Employers should consider the existing contract and whether the proposed change falls within the employee's contractual duties.

Can My Employer Change My Contract Without Consent?

Quick Answer: An employer cannot necessarily unilaterally change a contractual term simply because it wants to do so.

Possible legal routes can include:

• Obtaining employee agreement.
• Relying on an existing contractual variation clause.
• Terminating the existing contract and offering new terms in appropriate circumstances.

The third option can create significant legal risks and may potentially result in unfair dismissal or other claims.

What Happens If I Refuse a Contract Change?

Quick Answer: Refusing a contractual variation does not automatically mean that the employer can impose the change.

The consequences depend on:

• The contractual terms.
• The nature of the proposed change.
• Whether consultation occurred.
• Whether dismissal and re-engagement is contemplated.

Can an Employer Dismiss Me for Refusing a New Contract?

Quick Answer: Potentially, but dismissal following refusal of new contractual terms can create significant unfair dismissal and contractual issues.

The employer's reason, process and circumstances must be examined.

What Is Dismissal and Re-Engagement?

Quick Answer: Dismissal and re-engagement generally involves terminating an employee's existing contract and offering continued employment on new terms.

This can have serious legal consequences and should not be treated as an ordinary contractual amendment.

What Is a Probation Period?

Quick Answer: A probation period is an initial period during which an employer assesses an employee's suitability for the role.

A probation clause may specify:

• Duration.
• Performance expectations.
• Review arrangements.
• Shorter notice periods.
• Conditions for confirmation of employment.

Does Probation Mean I Have No Employment Rights?

Quick Answer: No. Employees on probation still have employment rights.

Depending on the circumstances, this can include protection concerning:

• Wages.
• Working time.
• Holiday.
• Discrimination.
• Health and safety.
• Other statutory rights.

Can I Be Dismissed During Probation?

Quick Answer: Potentially, subject to the contract and applicable employment law.

Probation does not create an automatic right to dismiss without contractual or statutory consequences.

Can I Be Dismissed Without Notice During Probation?

Quick Answer: Only if the contract or applicable law permits it.

Probationary notice provisions should be checked carefully.

What Is a Notice Period?

Quick Answer: A notice period is the period between termination being communicated and employment ending, unless lawful summary dismissal applies.

The contract should specify the applicable notice period or explain how it is calculated.

Can My Contract Have a Longer Notice Period Than the Statutory Minimum?

Quick Answer: Yes. A contract can provide greater notice than the statutory minimum.

The contractual entitlement will generally govern where it provides more favourable terms.

What Happens If My Contract Does Not State a Notice Period?

Quick Answer: Statutory minimum notice provisions and potentially implied contractual terms can become relevant.

The employee's length of service can affect statutory notice entitlement.

What Is a Garden Leave Clause?

Quick Answer: A garden leave clause permits an employer, in appropriate circumstances, to require an employee to remain employed and receive contractual remuneration while being excluded from normal duties during the notice period.

What Is a Payment in Lieu of Notice Clause?

Quick Answer: A PILON clause gives an employer a contractual right, subject to its wording, to terminate employment immediately while making a specified payment instead of requiring the employee to work the notice period.

What Is a Bonus Clause?

Quick Answer: A bonus clause sets out an employee's entitlement or potential entitlement to additional remuneration.

It may be:

• Contractual.
• Discretionary.
• Performance-based.
• Subject to business conditions.
• Subject to continued employment.

The wording matters significantly.

Can My Employer Refuse to Pay My Bonus?

Quick Answer: It depends on the contractual terms and bonus scheme.

A genuinely discretionary bonus can operate differently from a contractual entitlement.

What Is a Discretionary Bonus?

Quick Answer: A discretionary bonus is one where the employer retains discretion concerning whether and potentially how much to award, subject to the legal limits governing that discretion.

Discretion does not necessarily mean unlimited discretion.

What Is a Commission Clause?

Quick Answer: A commission clause establishes how an employee earns commission and when it becomes payable.

It may specify:

• Sales thresholds.
• Commission rates.
• Payment dates.
• Clawback provisions.
• Termination consequences.

Can My Employer Change My Commission Structure?

Quick Answer: It depends on whether the commission scheme is contractual and whether the contract gives the employer a right to make changes.

Unilateral changes can potentially amount to breach of contract.

What Is a Confidentiality Clause?

Quick Answer: A confidentiality clause protects specified confidential business information from unauthorised disclosure.

It can cover:

• Trade secrets.
• Customer information.
• Commercial strategies.
• Financial information.
• Internal business information.

Confidentiality obligations can continue after employment ends depending on their nature and legal basis.

Can My Employer Stop Me From Using My Skills After Leaving?

Quick Answer: Generally, employment contracts cannot simply prevent an individual from using their general skills and experience.

However, enforceable post-termination restrictions can protect legitimate business interests in appropriate circumstances.

What Is a Restrictive Covenant?

Quick Answer: A restrictive covenant is a contractual restriction intended to limit specified activities after employment ends.

Common examples include restrictions concerning:

• Soliciting clients.
• Dealing with customers.
• Poaching employees.
• Competing with the former employer.

Are Restrictive Covenants Enforceable in the UK?

Quick Answer: Potentially. Post-termination restrictions are generally enforceable only where they protect a legitimate business interest and go no further than reasonably necessary.

The precise wording, duration, geographical scope and business context matter.

Can My Employer Ban Me From Working for a Competitor?

Quick Answer: Potentially, but a non-compete clause must satisfy the applicable legal requirements.

The employer generally needs to demonstrate a legitimate business interest requiring protection.

How Long Can a Non-Compete Clause Last?

Quick Answer: There is no universal period that automatically makes every non-compete clause enforceable or unenforceable.

The duration must be assessed in the context of the legitimate interest being protected.

What Is an Intellectual Property Clause?

Quick Answer: An intellectual property clause addresses ownership and use of intellectual property created during employment.

It can cover:

• Copyright.
• Inventions.
• Designs.
• Software.
• Business materials.

Employees should understand whether intellectual property created during employment belongs to the employer.

Who Owns Work Created by an Employee?

Quick Answer: Ownership can depend on the type of intellectual property, applicable legislation, the employment relationship and contractual terms.

Employment contracts often contain detailed intellectual property provisions.

What Is an Employee Handbook?

Quick Answer: An employee handbook is a collection of workplace policies and procedures.

It can cover:

• Discipline.
• Grievances.
• Equality.
• Health and safety.
• Remote working.
• IT use.
• Leave.

Is an Employee Handbook Legally Binding?

Quick Answer: Not necessarily.

Some handbook provisions can be contractual while others may be expressly non-contractual.

The wording of the handbook and employment contract should be examined.

Can an Employer Change Its Workplace Policies?

Quick Answer: Potentially, particularly where the policy is expressly non-contractual.

However, an employer cannot use a policy change to circumvent contractual rights.

What Is a Disciplinary Procedure?

Quick Answer: A disciplinary procedure sets out how an employer deals with alleged misconduct or performance issues.

It may include:

• Investigation.
• Disciplinary hearing.
• Decision.
• Sanction.
• Appeal.

Is Following the Disciplinary Procedure a Contractual Requirement?

Quick Answer: It depends on the wording of the employment contract and policy.

Some procedures are contractual, while others are expressly non-contractual.

What Is a Grievance Procedure?

Quick Answer: A grievance procedure provides a framework for employees to raise workplace concerns.

Issues can include:

• Bullying.
• Harassment.
• Pay disputes.
• Working conditions.
• Discrimination.
• Contractual disputes.

Can I Raise a Grievance About a Breach of Contract?

Quick Answer: Yes. An employee can generally use an internal grievance procedure to raise contractual concerns where the procedure applies.

However, internal procedures should not cause an employee to miss any external legal deadline.

Can an Employer Deduct Money From My Salary?

Quick Answer: Employers generally need a lawful basis to make deductions from wages.

A deduction can potentially be authorised by:

• Law.
• The employment contract.
• The employee's prior written agreement.

Special rules apply to certain deductions.

Can My Employer Deduct Training Costs From My Final Pay?

Quick Answer: Potentially, but the employer generally needs a lawful basis for the deduction.

Training repayment clauses should be examined carefully.

Can My Employer Make Me Repay a Training Course?

Quick Answer: Potentially. A contractual training repayment clause may permit recovery of specified costs, subject to its wording and applicable law.

What Is a Flexible Working Clause?

Quick Answer: A flexible working clause can establish contractual arrangements concerning working hours, location or patterns of work.

This should be distinguished from the statutory right to request flexible working.

Can Remote Working Be a Contractual Right?

Quick Answer: Potentially. Remote working can become a contractual term if expressly agreed or established in circumstances giving rise to contractual rights.

Not every long-standing working arrangement automatically becomes contractual.

Can My Employer Require Me to Return to the Office?

Quick Answer: It depends on the employment contract, established working arrangements and any applicable workplace policies.

The contractual place of work is particularly important.

What Happens If My Employer Breaches My Employment Contract?

Quick Answer: A serious contractual breach can potentially give the employee a claim for damages or other appropriate remedies.

Depending on the circumstances, a breach can also potentially support a constructive dismissal claim.

Can I Sue My Employer for Breach of Contract?

Quick Answer: Potentially. Contractual employment claims can potentially be brought through the Employment Tribunal in certain circumstances or through the civil courts.

The appropriate forum depends on the nature and value of the claim.

Can I Claim Breach of Contract After Leaving My Job?

Quick Answer: Potentially. Employees can pursue certain contractual claims after employment ends.

Limitation and jurisdiction should be checked promptly.

Can an Employer Sue an Employee for Breach of Contract?

Quick Answer: Potentially. Employers can bring contractual claims where an employee breaches contractual obligations.

Examples can include:

• Confidentiality breaches.
• Failure to give contractual notice.
• Breach of intellectual property obligations.
• Unauthorised use of company property.
• Breach of restrictive covenants.

Can I Leave Without Giving Notice?

Quick Answer: Leaving employment without giving the required notice can potentially amount to breach of contract.

The consequences depend on the contract and circumstances.

Can My Employer Sue Me for Leaving Without Notice?

Quick Answer: Potentially. An employer may have contractual remedies where an employee fails to provide required notice.

The employer's actual financial loss and contractual rights can become relevant.

Can an Employer Withhold My Final Salary Because I Left Without Notice?

Quick Answer: An employer cannot simply withhold wages without a lawful basis.

Any deduction must comply with applicable wage and contractual rules.

Can an Employment Contract Include a Non-Solicitation Clause?

Quick Answer: Potentially. A non-solicitation clause can restrict an employee from soliciting specified clients or customers after employment ends.

Its enforceability depends on the wording and circumstances.

Can an Employment Contract Include a Non-Dealing Clause?

Quick Answer: Potentially. A non-dealing clause can restrict dealings with specified customers or business contacts after employment.

It must satisfy the applicable principles governing post-termination restrictions.

Can an Employment Contract Include a Non-Poaching Clause?

Quick Answer: Potentially. Such clauses can seek to prevent former employees from recruiting specified employees of the former employer.

Reasonableness and legitimate business interests are important considerations.

What Should I Check Before Signing an Employment Contract?

• ☐ Job title.
• ☐ Salary.
• ☐ Bonus.
• ☐ Commission.
• ☐ Working hours.
• ☐ Place of work.
• ☐ Holiday.
• ☐ Sick pay.
• ☐ Notice period.
• ☐ Probation.
• ☐ Pension.
• ☐ Benefits.
• ☐ Confidentiality.
• ☐ Intellectual property.
• ☐ Restrictive covenants.
• ☐ Disciplinary provisions.
• ☐ Grievance provisions.
• ☐ Variation clauses.

Should I Sign an Employment Contract Without Reading It?

Quick Answer: No. Employees should read and understand important contractual terms before signing.

Particular attention should be given to:

• Notice.
• Pay.
• Working hours.
• Termination.
• Restrictive covenants.
• Bonus conditions.
• Intellectual property.

Can I Negotiate My Employment Contract?

Quick Answer: Yes. Employment contracts are often negotiated before employment begins.

Potential negotiation points include:

• Salary.
• Bonus.
• Notice period.
• Holiday.
• Remote working.
• Working hours.
• Restrictive covenants.
• Benefits.

Can I Negotiate a Contract After Starting Work?

Quick Answer: Potentially. Employer and employee can agree to vary contractual terms.

Any variation should preferably be documented clearly.

What If My Contract Conflicts With My Offer Letter?

Quick Answer: The relationship between the documents depends on their wording and the circumstances in which they were agreed.

The documents should be read together to determine which terms govern.

What If My Employer Promised Something Verbally?

Quick Answer: An oral agreement can potentially form part of the employment contract, but proving the existence and content of an oral term can be difficult.

Written evidence is therefore valuable.

Can an Email Form Part of an Employment Contract?

Quick Answer: Potentially. Emails can provide evidence of agreed contractual terms depending on the circumstances.

What If My Employer Never Gave Me a Contract?

Quick Answer: The absence of a traditional written contract does not mean that no employment contract exists.

However, the employer may have breached its statutory obligation to provide required written employment particulars.

Employment Contract Checklist

• ☐ Keep a signed copy of the contract.
• ☐ Keep the written statement of employment particulars.
• ☐ Save subsequent amendments.
• ☐ Keep bonus and commission documents.
• ☐ Review restrictive covenants.
• ☐ Check notice provisions.
• ☐ Check holiday entitlement.
• ☐ Understand working hours and place of work.
• ☐ Review confidentiality obligations.
• ☐ Check intellectual property provisions.
• ☐ Understand disciplinary and grievance procedures.
• ☐ Check any variation clause.

Frequently Asked Questions

What is an employment contract?

An employment contract establishes the legal terms governing the relationship between an employer and employee.

Does an employment contract have to be written?

The employment relationship can exist without a traditional written contract, but employers have statutory obligations to provide specified written employment information.

What is an express term?

An express term is a contractual term specifically agreed by the parties, whether orally or in writing.

What is an implied term?

An implied term is a contractual obligation that arises through law, common law, custom, necessity or the nature of the employment relationship.

Can my employer change my contract?

Potentially, but an employer cannot necessarily unilaterally change contractual terms. The contract and circumstances should be examined.

Can my employer reduce my salary?

Not necessarily. A contractual reduction in salary generally requires a lawful contractual basis or employee agreement.

Does probation mean I have no employment rights?

No. Employees on probation continue to have statutory and contractual employment rights.

Can my employer stop me working for a competitor?

Potentially, if a properly drafted restrictive covenant is enforceable under the applicable legal principles.

Can I leave without notice?

Leaving without required notice can potentially constitute a breach of contract.

Can my employer deduct money from my wages?

Deductions generally require a lawful basis, such as legislation, contractual authority or the employee's prior written agreement.

What happens if my employer breaches my contract?

The employee may potentially have a contractual claim and, in serious circumstances, a breach may support a constructive dismissal claim.

Should I get legal advice before signing a contract?

Professional advice can be particularly useful where the contract contains significant restrictive covenants, complex bonus arrangements, unusual termination provisions or other terms with substantial legal consequences.

What This Means for You

Your employment contract should not be treated as routine paperwork.

It can determine important rights throughout your employment and after you leave.

Before signing, examine the provisions dealing with salary, working hours, holiday, notice, probation, bonus, commission and benefits.

Then look beyond the basic employment terms.

Confidentiality clauses, intellectual property provisions and restrictive covenants can have significant consequences after employment ends.

Employees should also distinguish contractual terms from workplace policies.

A policy may describe how an employer normally operates without necessarily creating a contractual right.

Similarly, an employer's ability to change a policy can be different from its ability to change a contractual term.

If an employer proposes a significant contractual change, do not assume that the change automatically takes effect.

Consider the wording of the contract, any variation clause, the nature of the proposed change and whether agreement has been obtained.

If employment ends, the contract becomes equally important.

Notice, payment in lieu, holiday pay, bonus, commission and contractual benefits can all affect the employee's final entitlement.

Finally, retain your documents.

Keep the original contract, written particulars, amendments, offer letter, bonus scheme, employee handbook and important correspondence.

Conclusion

An employment contract forms the foundation of the legal relationship between an employer and employee.

It can establish express contractual rights concerning:

• Salary.
• Working hours.
• Holiday.
• Benefits.
• Notice.
• Termination.
• Confidentiality.
• Intellectual property.
• Post-termination restrictions.

But employment rights do not come exclusively from the contract.

Statutory employment legislation can provide minimum protections, while common law can supply implied contractual obligations.

This means that a contractual term should always be considered alongside the applicable statutory framework.

Employers also have obligations to provide written information about specified employment terms.

Employees should carefully review their contracts before signing and pay particular attention to notice provisions, bonus arrangements, restrictive covenants, variation clauses and termination rights.

Where an employer proposes a contractual change, the employee should establish whether the relevant term is contractual, whether a variation clause applies and whether consent is required.

Where a dispute arises, the employment contract can be the central evidence in determining the parties' rights.

Ultimately, understanding an employment contract is not simply about knowing what salary an employee will receive. It is about understanding the complete legal framework governing the employment relationship.

Legal Disclaimer

This article is provided for general educational and informational purposes only. It is not legal advice and does not create a solicitor-client relationship. Employment contract law can depend on the wording of the agreement, employment status, jurisdiction, statutory rights and the circumstances of the dispute. Always obtain appropriate professional advice for a specific employment matter.