Full-time contracts
Full-time contracts are for permanently employed staff who typically work 35 hours or more per week. The roles include full statutory rights and benefits.
Part-time contracts
As its name states part-time contracts are used for positions that are permanent but with fewer worked hours than full-time positions. Typically, part-time employees work between 1 and 25 hours per week.
Fixed-term contracts
Fixed-term contracts are used when the business needs to hire for specific periods of time or specific projects. The end date is agreed upon at the beginning of the contract. During that time, the employee is expected to deliver specific tasks or projects. Employees with fixed-term contracts receive the same treatment as permanent full-time employees.
How to write an employment contract
Below are some steps to follow as you compile your employment contract.
1. Title the employment contract
Give your employment contract a clear heading with a title that makes it easy to understand what the document is.
Example: ‘Employment Contract’ or ‘[Your Company] Employment Contract’
2. Clearly state the stakeholders
Employer and employee are usually identified early in the document. Consider including both parties, the employer and employee contact details, as well as their addresses.
At this stage, the contract usually clearly states the employee’s rights and obligations to ensure both parties understand the terms of the employment relationship.
Example: ‘This employment agreement is between [your company] (‘the employer’) and [employee full name] (‘the employee’)’
3. Include the terms and conditions
An employment contract comes with terms and conditions. These terms, which set the foundation for your working relationship, are part of the agreement. They usually include:
- The start date
- The job title and responsibilities of the new employee
- The salary details and payment frequency
- The working hours and location of the role
- The holiday entitlement and sick leave entitlement
- Any pension scheme
- The contract termination terms
- Any probationary period
It is recommended to highlight that the employee’s duties may change, and whether the role involves travel or relocation.
4. Outline the job responsibilities and any specifics
The contract of employment is an opportunity to be clear on the responsibilities of the role. To avoid ambiguity, provide a summary of the day-to-day tasks that the employee will be delivering.
Example:
- 40% managing client accounts
- 30% preparing sales reports
- 20% attending team meetings and training
- 10% liaising with suppliers
Being clear on the responsibilities of the role sets the expectations and reduces the risk of misunderstanding between both parties.
5. Outline compensation details
Salary and benefits should be part of the employment contract. Employers ensure that the pay rate complies with the current National Minimum Wage laws. This section ideally includes the following information:
- Basic pay and frequency of payment
- Any overtime and bonus arrangements
- How expenses will be handled
- Holiday pay, unpaid leave, and parental benefits
- Statutory deductions (tax and National Insurance contribution)
6. Include any additional contract terms
Your internal company policies might require you to add any additional contract terms to the employment agreement. This might be the case for sick leave, maternity leave, notice period, probation period or reference checks and right to work. Grievance and disciplinary procedures may also be added. These terms should be tailored to your business and to the role, if necessary.
Additionally, it is important to conduct verification checks on the employee’s legal rights to work in the UK. It is also of value to complete pre-employment checks prior to issuing the contract of employment.
7. Get legal advice
Employment contracts are legal documents, and as such, it is important to seek legal advice. Once your contract is drafted, get it reviewed by an employment solicitor or a qualified HR professional to ensure it complies with current employment law.
Employment contract best practices
When it comes to employment contracts, there are some best practices that can make a significant difference in the quality of the final output. Below are some recommendations.
Be specific: make sure you use clear, concise and specific language to avoid any confusion at a later stage.
Stay up-to-date: stay up-to-date with any changes to employment laws and any internal company policies.
Tailor to the role: personalise each employment contract to the role you are recruiting for.
Keep records: maintain accurate records of the document. These should be signed copies by both parties of the final employment contract. It helps employers create fair employment contracts that are transparent and sound.
Applying those best practices can help to establish successful working relationships between employers and employees from the beginning.
Common employment contract mistakes to avoid
Employment contracts can be complex and it is easy to miss key details. One common mistake is to not give employees a written statement of terms on or before the first day of work, which is a legal requirement. It’s also important to clearly define the type of employment. Whether the role is full-time, part-time or fixed-term, this is stated upfront to avoid misunderstandings.
As an employer avoid using generic templates as they may not include important details about your industry or the specific role. Another risk is to leave out statutory entitlements. Failing to include sick pay or holiday allowance can lead to disputes.
Finally, review and update your contracts. As roles or employment laws change, your documents reflect that.
Managing employment contracts
Employment contracts support both compliance and employee satisfaction. To achieve this, managing your employment contracts involves:
- Keeping all contracts and updates on file
- Tracking changes to job roles and ensuring contracts reflect them
- Monitoring pay, benefits and working hours against contract terms
- Communicating clearly with employees about any updates
- Having a process for ending contracts, including exit interviews and legal guidance if needed
By actively managing employment contracts, employers can support their business goals, protect employee rights and foster a productive working environment.
Employment agreement template
To help you tailor your own employment contract, here is a template that can be used as a base. As mentioned above, remember to adapt this document to your organisation and to the role you are crafting the contract for.
Title: Employment Contract
This employment contract (‘the contract’) is entered into on [date] in the year [year] between:
[Your company name] (‘the employer’), located [company address], referred to as ‘the employer’; and [employee full name] of [address], referred to as ‘the employee’. For guidance on drafting an employment verification letter, you can refer to this comprehensive article.
In consideration of this employment contract, the parties agree to the following terms and conditions:
- Employment
The employee agrees to carry out the responsibilities set out by this contract as per their job description. The employee or worker also agrees to comply with all company policies and procedures.
- Position
It is the duty of [position] to perform all essential job responsibilities. [Company name] may add other duties as needed within the scope of the employee’s or worker’s position.
- Compensation
The employee or worker will be paid [amount] [per hour/per year]. Payment will be made by automatic bank transfer or another method agreed between the employer and the employee or worker.
- Benefits
The employer offers the following benefits: [benefit 1], [benefit 2], [benefit 3]. Access to the benefits happens [immediately/after the probationary period].
- Paid time off
The employee or worker is offered the following holiday time after the probationary period: [length of holidays], [length of sick time], [bereavement time], [length of parental leave].
- Termination and notice period
This employment contract may be terminated by either party for any reason with proper written notice and with respect to the notice period of [length of notice period].
Employment contract templates for PDF & Word
Download these pdf and word templates for free to help you craft your own.
*Indeed provides this information as a courtesy to users of this site. Please note that we are not your recruiting or legal advisor, we are not responsible for the content of your job descriptions, and none of the information provided herein guarantees performance. This is a legal disclosure and is not part of the following template.
