The contract of employment is at the core of the employment relationship. If a term of this contract is broken this has potentially serious consequences for the employment relationship. We explain the law.
Contract of employment
The law requires that certain terms of the contract must be provided by you to the employee in writing in a document called, a “written statement of particulars”. They are entitled to this statement within 2 months of commencing employment with the company. The statement must set out the major terms of the employment including:
- their job title
- their hours of work
- your rate of pay
- their holiday entitlement
- any entitlement to sick pay
- the periods of notice required from you and your employee
- their place of work
There may be other express terms of the contract of employment. Although these terms are not required to be in writing, it is makes life easier if they are - and if they are in one document. However, very often, there are terms of the contract in different documents, such as a letter of offer of employment or a letter issued following a promotion. Sometimes terms of the employment are incorporated from a workforce agreement or other document.
The law also automatically implies some terms into a contract of employment because they are necessary to make the contract work. This means that they are terms of your contract even though they are not set out in writing. For example, the employee must use reasonable skill in doing their job and they must not do anything to disrupt your business. You have an implied obligation to take reasonable care and reasonable steps in order to ensure your employees’ safety whilst they are at work. There is also an implied term in your employment contract that neither party will do anything to destroy the essential mutual trust and confidence that is necessary to maintain the employment relationship.
Breach of contract
If you break a term of your contract of employment, a breach of contract occurs. This entitles the employee to resign, please see constructive dismissal. If the breach of contract is that you have failed to give notice, a claim for wrongful dismissal may arise.
If your employee suffers financial loss as a result of your breach of contract, they may be able to bring a claim for breach of contract in an employment tribunal or in the High Court or County Court. Claims can be brought to the employment tribunal only if the employment has terminated and the amount of the claim does not exceed £25,000. Claims for breach of contract must be brought to the employment tribunal within 3 months of the termination of the employment. All other breach of contract claims are brought to the courts and the time limits for commencing claims are much longer.
If your employee breaks the contract, for example by not serving notice, you may be able to recover compensation for the losses incurred.
Our solicitors can advise your company on all areas of employment contracts.