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Employment Contracts

January 17th, 2010

Non-employment contracts

Not everyone who apparently works for an employer is an employee in the legal sense.

Other contracts include:-

· Agency Staff
· Self-employed contractors
· Self-Employed workers

Some people who are paid as if they were self employed might be deemed to be employees if in all other respects they are treated as employees. In other words the label “self employed” will be a meaningless label if the true nature of the basis under which they work is that of an employee.

People who work under either of the above arrangements might be classed as “workers,” this gives them some rights that employees have (e.g. the right to paid holiday leave, minimum wage, breaks and maximum working hours).

A worker is someone who works personally for someone who is more like a boss than a client or customer of a business. Many self employed individuals are totally dependent on one person or company who provides them with work full time, this is typical in the construction industry. Often they will have the status of “worker.”

Agency staff may be employees of the agency or, more commonly will have the status of “worker.”

Only employees have the right to minimum set notice periods, redundancy payments and the right not to be unfairly dismissed.

Employees, workers, agency staff and self employed contractors all have the right not to be unlawfully discriminated against.

ACAS guidance for agency workers


Employment Contracts

A contract is an agreement supported by some payment. It is not the same as a written document. Many employment contracts are recorded in writing but anyone who works as an employee has an “employment contract” even if it is only verbal.


Written contracts

An employer should provide an employee with written terms of employment after 2 months, these must cover the matters listed in section 1 of the Employment Rights Act 1996. If they don’t an employee can apply to an Employment Tribunal for an order requiring the employer to provide these or declaring what the terms of the contract are.


Terms incorporated by law

The law provides certain terms must be implied into a contract of employment whatever it says, so for example the law requires minimum notice periods for employers to give to employees, a minimum wage, paid holidays and maximum working hours.


Changing the contract

An employment contract can only be changed by agreement. An employer cannot impose changes on the employee against the employee’s will. However, if the employee continues working without protest to new terms and conditions, they will be taken to have accepted them by their actions.

An employer who insists on changes against the employee’s will risks the employee resigning and claiming constructive dismissal.

An employer who wishes to impose changes against an employee’s will must given lawful notice to terminate the employment and offer a new contract on new terms and conditions, this may or may not still be an unfair dismissal depending on the precise circumstances.


TUPE transfers

If an employee has joined the employer as a result of a transfer of undertakings, then they have the right to have their existing terms and conditions preserved. Any detrimental change to their terms and conditions which has been made by reason of the transfer will be void. This means even if they agree to the changes, if the changes are found to be due to the transfer they will be deemed not to take effect.

There is nothing preventing a transferred employee’s terms and conditions changing, as long as the change is not by reason of the transfer. However, harmonising terms and conditions of employees may in many cases be deemed to be by reason of the transfer, even if this takes palce some time after the transfer.

Click here for more information.


Restrictive Covenants

There are some terms of an employment contract which continue to operate after employment has come to an end.

There is an implied term of confidentiality in all contracts of employment which means that employees cannot take confidential information about the employer’s business with them after their employment comes to an end.

There can also be specific written terms of the contract which restrict what work an employee can do after the employment comes to an end. These are known as “restrictive covenants.” Usually they specify a period of time and often a geographic restriction on an employee setting up or working for a competing business, or poaching employees to come and work with them.

If an employee breaches a restrictive covenant or the implied duty of confidentiality, an employer can take an injunction out against them and claim compensation for loss of profits, and their legal costs.

However, if the Court finds that the restrictions go further than is necessary to protect the employer’s interests then the whole restriction becomes void. This could be disastrous for an employer who will be unable to prevent the old employee competing, and find that any other employees who leave may feel they can safely ignore the restrictions.

For this reason it is important that advice and careful thought is given when putting restrictive covenants into a contract to make sure they have the desired effect, without going too far.



ACAS guidance



Please note that the information on this page is intended to be a guideline and is therefore a summary of the law only and not a complete guide. Before taking any action based on this information you are strongly advised to take legal advice. Whilst every effort has been made to ensure that the information contained on this page is up to date and accurate, no guarantee can be given to this effect.

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