Employment Contract Template
Employment contracts are a legal requirement, but more importantly, they are a vital document that can help businesses effectively manage their teams, as well as protect the interests of both parties if any issues arise. But how can you make sure you're covering all your bases?
Factorial's employment contract template can guide you to everything you need to include in a standard employment contract. It can help you build the basic structure of your employment agreement so that you can feel confident in tailoring it to the particular needs of your business and your employees.
Our free template will enable you to quickly and easily create your contract and ensure you won't miss out on any key information.
What does our template include?
Employment contracts differ from business to business and often between employees working in the same business, but they are all based on the same core framework. Our free employment contract template is a helpful tool that can help get you started. It contains all the information you need to include in your employment contract and offers the basis for building a template that will work for your business.
Our employment contract template includes:
- Employment Overview
- Roles & Responsibilities
- Term of Employment
- Compensation - including base salary, overtime and additional compensation
- Employee Benefits - including paid time off and holiday allowances
- Probationary Period
- Pay
- Termination
- Ownership of Intellectual Property
- Confidentiality and Non-Competition
- Entirety
- Legal Authorisation
- Severability
What is an employment contract?
An employment contract is a legally binding agreement between an employer and employee and forms the basis of employment - it can be as simple as accepting an offer of work in exchange for payment.
It sets out the rights, responsibilities and terms and conditions of employment, which include salary, working hours, job descriptions, and benefits.
The employment contract is in force as soon as the offer of employment is accepted, regardless of whether it has been signed. However, although employment contracts are usually written documentation, it's essential to understand that they can be verbally agreed upon through conversation.
Parts of an employment contract can also be decided through conduct, which means people's actions show an agreement, even though they have not written it down or spoken about it. The problem with unwritten agreements is that they are often more ambiguous and open to interpretation.
What is in a contract of employment?
The core part of an employment contract is the written statement - it is part of the legal responsibilities of any employer. New employees are legally entitled to a principal statement of work on or before their first day.
The written statement or statement of work has been a requirement of the Employment Rights Act since April 2020. It states the main employment terms and represents the minimum that must be agreed between the employer and the employee. This includes:
General Information:
- Full name and address of the employer
- Full name and address of the employee
Details of the Role:
- Place of work: Where it's the office or remote, or where there is no central place of work, the contract should include a statement stating that there are various places or the employee is free to set their place of work.
- Key dates: The date the employment started; if the role is not a continuous employment contract and is temporary or a fixed-term contract, then the expected duration of the contract and predetermined end date should be included, too.
- Roles and responsibilities: The employee's job title, description, and essential job functions.
- Details of payment: This should include the rate or method of calculating pay - whether it's an annual salary, hourly wage or per day - and the ‘pay reference period’ - whether the employee is paid weekly, fortnightly or monthly.
- Work schedule: The expected length of the working day and week; for example, full-time employees might work eight hours a day, five days a week. You should also include what will happen should the employee work more.
Other Terms of Employment
These terms will be more specific to your organisation, but here are some examples of what you might include:
- Details of the probation period
- Length of the notice period.
- Overtime policy.
- Intellectual property rights.
- Confidential information policies.
Other required terms and employment policies
Employers must also share several other policies and terms with new employees on their first day. These don't have to be included in your written contract but must be readily accessible to all employees - for example, on the company intranet.
- Sick leave and pay: Details of statutory sick pay, sick leave entitlement, and the rules for using sick pay.
- Any other paid leave: Policies on maternity, paternity, and adoption leave, as well as shared parental leave policies, time off for family dependents, time off for public duties, bereavement leave and bank holidays.
- Length of notice of termination: This can vary from business to business; the average notice period in the UK is one month, but it can be anything from a week's notice to three months. You must also stipulate whether verbal or written notice is required.
- Dress code: If you have a formal dress code, this should also be available to new employees from their first day.
Employers must also provide details on several other policies within two months of the employee's start date. These include:
- Pensions and pension schemes
- Details of any collective agreements (made with a trade union or other representative body)
- Non-compulsory training entitlements
- The disciplinary and grievance procedure
Employment contract types
There are many different employment contract types, and you should try to ensure you're familiar with the nuances of each. It is also necessary to make sure that the type of contract is clear to the employee. These are the most common types of contracts used:
- Full-time contracts
- Part-time contracts
- Fixed-term contracts
- Temporary contacts
- Internships
- Apprentice agreements
- Freelancer contracts
- Zero-hours contracts
Benefits of using a contract template
Job security and certainty
Using a template to draw up consistent employment contracts provides certainty for you as the employer and your new employee. This allows you to plan your resources effectively and lets employees know exactly what is expected of them and what will happen if they don't meet those expectations.
Reduces any risk
A template can protect your business reputation through solid policies and clearly adhering to your employees' rights. It also reduces the chances that one party will take legal action later and protects sensitive information.
Saves time and money
By clearly and consistently managing holiday entitlement and overtime pay through an employment contract template, your business can better forecast costs and ensure you don't run over budget.
Things to remember when writing an employment contract
Here are a few key things to keep in mind when creating your contract.
1. Title the employment contract.
Clearly stipulate what the document is so the employee knows what they're signing. For example, if it's a zero-hours or fixed-term contract, make sure that's clear.
2. Identify the parties correctly.
Make sure your business and the employee's names are clearly and correctly written on the contract, and state how they will be referred to in the contract.
For example: ‘This employment agreement is between Factorial. (‘the Employer’) and Laura Warren (‘the Employee’).’
3. Use the correct terminology.
This is another way employment contract templates can be handy because terminology is crucial in legal documentation. Make sure you always use clear and specific language so it can't be disputed at a late date. Including a glossary of terms can be helpful if there is any complex language in your contract.