Employment Contract - Fixed Term - Junior/Mid Level Employee

Why is an Employment Contract important and why should you use an Employment Contract?

Having a written employment contract is important because:

1. The employer has complied with their legal obligation to provide a written statement of particulars of employment.

2. There is no uncertainty or dispute about what terms have been agreed. Without a written employment contract in place, it is far more likely that there will be a dispute between the employer and employee either during the employment or after the employment ends about what the employer and employer agreed i.e. what terms and conditions applied, particularly where verbal discussions have taken place over a period of time. Just because there is no written employment contract doesn’t mean there is no employment contract - employment law means that a contract still exists, it is just not written down. Having a written agreement that clearly explains the parties’ rights, obligations and responsibilities reduces confusion, avoids ambiguity or uncertainty and gives everyone clarity and peace of mind.

3. The employer is adequately protected. For example, the contract contains obligations on the employee to keep information that they obtain during their employment confidential (which go beyond the common law duties on an employee), and it enables the employer to terminate the employment by making a payment in lieu of notice rather than having the employee working their notice period.

4. It encourages good relationships between the employer and employee. It puts a new employee at ease and gives them confidence in their employer. This is especially important in early-stage startups, where there may already be some uncertainty and where the structures and processes seen in larger companies may not be present.

The employer and employee should sign the employment contract before the employment begins. If the employee does not receive the written employment contract on or before their first day of employment, they could be awarded up to 2 weeks pay by an Employment Tribunal.

What are the common pitfalls of an Employment Contract?

1.  Not having a written employment contract
   Whilst there is no legal requirement for an employee to have a written contract of employment, as explained above, employees must be given a written statement of particulars of employment on or before their first day of employment that sets out certain key information about their employment. Having a written employment contract in place avoids uncertainty and disputes, and protects the employer.
   
   

2. Using a series of successive fixed term contracts
   Any employee on a series of successive fixed term contracts for 4 or more years will automatically become a permanent employee, unless the employer can show there is a good business reason not to do so. Fixed term contracts should therefore regularly be reviewed and consideration given to replacing the contract with a permanent contract where appropriate.
   
   Employers should also be aware that if a fixed term contract is not renewed, this is considered to be a dismissal by law, and if the employee has 2 years’ service the employer needs to show that there’s a “fair” reason for not renewing the contract After 2 years’ service, employees  have the right:
   - not to be unfairly dismissed
   - to a written statement of reasons for not renewing the contract
   - to statutory redundancy payments if the reason for not renewing the contract is redundancy.
   
   

3. Not updating the contract during the employment
   When there is a change in terms and conditions of employment (including, for example, when an employee is promoted) it may be necessary to update the employment contract and ensure that both parties sign the updated version. It is good practice to review and update existing employees’ contracts on an annual basis, to ensure that they remain fit for purpose and legally compliant. This is particularly important for fixed term contracts.
   
   

4. Treating fixed term employees less favourably than permanent staff
   Employers must not treat employees on fixed term contracts less favourably than permanent employees doing the same or largely the same job, unless the employer can show that there is a good business reason to do so (known as “objective justification”).
   This means that employers need to ensure that fixed term employees are given:
   - the same pay and conditions as permanent staff
   - the same or equivalent benefits package
   - information about permanent vacancies in the company
   - the same protection against redundancy or dismissal
   
   

5. Losing the signed copy
   Without a signed copy of the employment contract, there is no evidence of what the agreed terms and conditions of the employment are. Signed contracts can quickly and easily be saved on the PocketLaw platform so that they are securely stored.
   
   

6. Not having the other documents you need
   This template refers to, but does not include, a disciplinary procedure and a grievance procedure.