Our HR guru Giles O’Halloran highlights some key points regarding employment contracts...
Wherever you work in the world, you will usually be offered a contract of employment when you secure a job. This is a legal document that covers the obligations that you and your employer will adhere to as a binding agreement during that period of employment.
Contracts will differ across the globe, but it is important that you understand what is expected of you and your contractual obligations. This article will look at some of the key things you need to be aware of so that it makes the whole experience a little easier when signing or agreeing a contract.
Please also be aware that some of the more specific information shared below will relate to UK contracts - it is therefore advised you seek specialist and qualified legal advice if you need help regarding foreign contracts.
Types of Contract
There are many different types of contract dependent on the nature of employment being offered. The most common type of contract is the permanent contract. This can be for a full or part-time role with a single entity or employer. However, you can get Fixed Term Contracts (often called FTCs) that usually cover a contracted period of time for an interim position, seasonal work or a specific project.
There are also Zero Hour Contracts, much maligned in the media due to employer poor practices, can actually be a great way to manage flexible working for both employers and employees, if done the right way – both ethically and commercially.
Each of these different types of contract may have many similarities, but each will differ due to the nature of the duration or type of employment. So, it is worth understanding the kind of work you are looking to do and considering the kind of contract that this would entail.
Things to Remember
There are some key things you need to remember regarding contracts, and here are a few for starters:
- Contracts are at least bipartite: this means that there is a minimum of two signatories to an agreement that is binding. Both parties have obligations and rights under that contract. It should also have a shared element of control and one party should not have all the rights and benefits. It is essential you check this as once it is signed it is binding
- There are statutory, express and implied terms in a contract: statutory terms are required by the law of that country or region. Express terms are agreed specifically in the contract between employer and employee. Implied terms are not set out in the contract but binding nonetheless. These might be deemed more ‘common sense’ points such as when a company car is part of a regional sales role the individual should have a valid driving license, or something as simple as an employee will not steal from the employer. You need to consider the terms and their implications when you accept or sign a contract
- Exclusivity of services: it is worth remembering that unless stated (or unless it is a zero hour contract), you are usually being contracted to provide your services, skills and capabilities to a single employer. This means they are paying for your services and time exclusively. However, it may be that you are not working full-time or the role is project-based and you could work for multiple employers. You therefore need to check whether this is covered in the terms of your contract, how you declare this and ensure there is no conflict of interest. If you don’t do this, you could be at risk of being in breach of your contract
- Contracts need to be agreed: once you put a signature to a document (and possibly have it witnessed) that is the end of the negotiation and terms are deemed agreed. However, if there are clauses or points you would like to negotiate prior to signature, you should have that conversation. A minor change could be agreed by both parties with initialling any change in the margin or by re-issuing the entire contract. However, you have the right to discuss the terms and to ensure they are understood or appropriate prior to signature
- Every country has its own legal framework: it is therefore essential that you understand what is required in that country as a basic framework, and it is advised you seek qualified or legal advice when working abroad to ensure you remain protected. This is not just in terms of employment rights and obligations, but also any tax implications
What should be in a contract?
A very good question. What a contract should contain will differ according to where the role is based and these will often differ from country to country. The employment contracts you find in the UK will differ from the US, and even employment terms will differ between different states in the US. However, from a UK perspective, your employer has certain obligations under UK Employment Law.
A UK contract must contain the following information:
• The business name and registered address;
• The employee’s name, job title or work description and start date;
• The pay or salary level that the employee will receive and pay dates;
• The working hours and whether overtime is appropriate;
• The holiday entitlement the employee is due (and if that figure includes public holidays);
• The base location of the employee, other possible working locations and whether relocation could be necessary.
If appropriate, the following statements or terms will also need to be included:
• Whether continuous service or previous service is taken into account;
• Probation periods, if they are part of the terms of employment;
• Length of employment if it is not a permanent contract and the relevant contractual end dates;
• The notice period expected;
• Whether any collective agreements are current;
• What an employee can do and who to contact when it comes to a disciplinary, grievance or dismissal procedure.
It is also worth remembering that the following points are not required to be part of the terms but an employer needs to tell you where to find them:
- Company sick and pay procedures
- The disciplinary, dismissal and grievance procedures
- Hopefully these will help you as a starter list to check everything is appropriate, but you should also remember that the employer has an obligation to issue you with a contract of employment within two months of you starting your employment. If they do not or have not, they are breaking the law in the UK
A move to Mobility Clauses
Due to the modern nature of business and work changing so quickly these days, many employers are protecting themselves by adding what are called Mobility Clauses. These usually state that if the nature of work changes, employees are expected to move with the company when it is both reasonable and possible. These clauses should indicate a reasonable distance or radius. This is becoming common practice but can be a double edged sword as it allows more flexibility with work, but could also lead to potential redundancy or maybe a breach of contract if the business changes and an employee is unwilling to move. It is therefore wise to check these in any contract you are issued and to consider the implications.
Realising Restrictive Clauses
Some contracts will also have restrictive clauses. These often relate to individuals in senior or specialist roles, whereby an organisation will try to minimise the potential impact to their business or operations if an employee moves to a competitor. These clauses should be abided by, as they are contractual, but also be mindful that if they are too onerous (such as preventing someone from working in the sector or for a competitor for 12 months) or too nebulous (just using a blanket clause with little detail), these are less likely to be enforceable. It would therefore be wise to read through and understand any potential restrictive clauses and what they could mean for you.
Working out the Working Time Directive
This is something most employees do not really understand and they simply sign the ‘opt out’ clause as part of their offer pack. The fact is that you as an employee have certain rights that restrict the amount of hours an employer can ask you to work, without relevant rest and holidays. A lot of companies will have an addendum to the contract of employment that asks you to sign an ‘opt out’ of the directive. This is very much a personal choice, but you have no obligation to sign this document and an employer cannot force you to sign it either. So it is worth looking into what the directive would mean to you before you consider signing.
There is a great deal of information around employment contracts and we cannot cover it all within the bounds of this article. However, this piece will hopefully have provided you with some pointers and will get you thinking about any current or future employment contract you may have or receive. Do please check online as there is lots of information and advice that is freely available from both legal professionals and government sources.
About The Author
Giles is an experienced HR and Recruitment professional who works as a freelance consultant, strategist, writer and coach. He started his HR career with IBM after first reading Modern Languages at Warwick University and becoming a successful technology recruiter He has since worked in other senior HR roles across Europe, advised at Board level, and implemented both strategic and operational HR business solutions. He also spent 12 years as a reservist with the UK's Reserve Forces, serving first with the TA and later with the RAuxAF.
Giles is a columnist with a leading, MoD sponsored, international career transition publication, and has also written blogs for a number of websites and organisations on employment and the changing nature of work. He is passionate about technology, the value of networks and the future of work.
Giles focuses on career transition support for individuals (CVs/Resumes, LinkedIn, Interviews, Networking etc.), and effective people solutions for organisations (HR strategy, Talent, HR Technology, Digital HR, HR Mentoring/Business Partnering and Outplacement services) and has worked across a wider variety of diverse sectors.