HM Insights

What are the key clauses in an employment contract?

The Key clauses in employment contracts are:

  • Hours of work 
  • Pay
  • Holiday entitlement 
  • Pension 
  • Confidentiality 
  • Restrictive covenants 
    • Non-compete clauses
    • Non-solicitation clauses
    • Non-dealing clauses
    • Non-poaching clauses

Key clauses in employment contracts

In a recent blog, we analysed the findings of the Resolution Foundation report on the labour market. A significant finding of this report was that many people did not know their rights in employment law.

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We've therefore taken a look at one of the fundamental aspects of employment law - the employment contract. It's a key part of the working relationship and the basis of many rights in law, as well as containing responsibilities of both employer and employee.

In this blog, we have outlined what an employment contract is, what needs to be included and highlighted some of the most important clauses.

 What is an employment contract?

An employment contract is a legally binding document agreed by both the employee and the employer that outlines the terms and conditions of employment.

An employment contract consists of express (written or verbal) terms and implied terms:

  • Express terms are explicitly agreed between you and your employer, for example how much you get paid and your hours of work. These can be found in your contract, the job advert, any letters between you and your employer or a company handbook.
  • Implied terms are conditions of employment that are not written into your contract but that are expected behaviours of you. An example of this is not stealing from your employer.

What should be included in your contract?

The Employment Rights Act 1996 provides that certain written details should be issued within two months of your start date. From April this year, this is to be changed to an entitlement to these details on day one of employment.

Whilst this document, known as a written statement of employment particulars, covers some of the main terms and conditions, such as start date, your job role, how much you will be paid, your holiday entitlement and how much notice you should give if you are to leave, often written contracts will also contain more detailed provisions not required by law, such as confidentiality and restrictive covenants.

To better understand the key clauses of your contract we will provide a brief outline of what these are below.

Key Clauses

Hours of work

Your contract should set out your normal working hours or working patterns, including overtime. The hours of work outlined in your contract should not be in breach of the provisions of the Working Time Regulations 1998.

The Working Time Regulations 1998 states that your working week should not exceed more than 48 hours, on average over a 17 week period. You can choose to opt out of this right by signing a written agreement to that effect.

The Working Time Regulations 1998 also give employees the right to a minimum daily rest period between each working day or shift (this is a period of 11 hours in a 24 hour period) and to a minimum weekly rest period (being 24 hours of uninterrupted time off work every week). Lastly, employees are also entitled to an in-work unpaid rest break of 20 minutes after working 6 hours or more.

Pay

Details of your salary should be included in your contract, along with the date that you will be paid. Your contract may also include information relating to deductions from pay. This clause should outline the circumstances that may arise in which deductions may be made, for example if you owe money to your employer or have taken too many holidays. 

Often there are separate documents to cover bonus or commission schemes, which may not be contractual in nature, allowing an employer more flexibility to make changes to their terms.  

Holiday entitlement

As an employee, you have a statutory entitlement to paid holiday. The European Working Time Directive, states that each employee is allowed to take a minimum of 4 weeks holiday per year. In the UK, an additional entitlement of 1.6 weeks is granted to each full-time worker under domestic legislation, therefore your overall holiday entitlement is 5.6 weeks.

Your contract should specify when the holiday year will run from and to. This should also outline any periods of the year that are unavailable for holidays, for example if you work in hospitality then the Christmas period may be off limits.

There is no statutory right to take public holidays as paid annual leave on certain days. Instead, your contract should confirm if bank holidays are included in your entitlement or if they are additional.

Pension

All employers are subject to the auto-enrolment duty and your contract should outline the particulars of your pension, or pension scheme and relevant contribution rates.

Some employers may wish to refer you to other documentation, if they do, the relevant documentation should be referred to in your contract and it should be made available to you.

Confidentiality

In law, there is very limited protection for an employer's confidential information. Therefore, most employment contracts will contain express clauses to protect information gained about the business during employment.  

Restrictive covenants

Your employer may include a restrictive covenant to protect their business when you leave. This clause is designed to restrict you from doing certain activities for a period of time. The types of restrictive clauses that you may find are:

1. Non-compete clauses

These are to prevent you from joining a competitor or from setting up a business in competition with your old employer, directly after you leave;

2. Non- solicitation clauses

These are to avoid ex-employees from contacting customers or clients of their former employer in order to encourage them to change their dealings with their former employer;

3. Non- dealing clauses

This clause is to prevent you from doing business with any of your former employer's customers or clients; and

4. Non- poaching clauses 

These are designed to stop you from poaching or employing members of staff from your previous workplace.

These types of clauses can be void as they restrict trade and are therefore contrary to public policy. However, your ex-employer may be able to enforce them if it is held by a court that the covenant is designed to protect their legitimate business interests and that it is reasonably necessary to protect those interests.

Enforcement of terms

There are a number of options that an employee has if they feel that their employer is not abiding by the terms of their contract. An employer should have a grievance procedure allowing a complaint to be made and investigated internally, but if this does not lead to a resolution, recourse to the employment tribunal may be possible, depending on the particular situation and terms of the contract.

Get in touch

Our team of specialist employment lawyers can assist in the negotiation of employment contracts and acting for employees in any disputes that might arise. Please just contact us on 0131 247 2534 to discuss further.

Useful links

EMPLOYMENT LAW FOR EMPLOYEes

EMPLOYMENT LAW FOR EMPLOYERS