Understanding Employment Contracts in the UK

Employment contracts form the foundation of the relationship between employers and employees. They set out the terms of work, including pay, hours, duties, and rights. While contracts can be written, verbal, or implied, having clear written terms protects both parties and helps avoid misunderstandings.

Why Contracts Matter

Contracts provide certainty for both sides. Employees get clarity on their rights, such as paid holiday, sick pay (depending on status), and protection from unfair dismissal once they reach qualifying service. Employers have a framework to manage their workforce fairly and lawfully.

Types of Employment Contracts

1. Permanent Contracts

• Ongoing employment with no set end date.
• Used where consistent work is available.
• Employees have statutory rights including notice, redundancy pay, and protection from unfair dismissal (after qualifying periods).

2. Fixed-Term Contracts

• Employment for a defined period or project.
• Common for seasonal work, maternity cover, or specific projects.
• Fixed-term employees have the same statutory rights as permanent staff. Treating someone less favourably just because they are fixed-term is unlawful.

3. Casual Contracts

• Work offered occasionally, with no guaranteed hours.
• Typical in events, hospitality, or ad-hoc cover roles.
• Usually classed as “workers,” entitled to holiday pay, National Minimum Wage, and rest breaks. They can legally refuse work offered, though contracts may set expectations around availability.

4. Zero-Hours Contracts

• No guaranteed hours; work offered as needed.
• Useful where demand fluctuates, such as retail, care, or hospitality.
• Workers are entitled to holiday pay, rest breaks, and minimum wage. Some zero-hours arrangements may create employee status if there is an expectation to accept shifts.

Getting it Right Matters

Using the wrong type of contract can create legal risk. For example, offering guaranteed hours under a zero-hours contract could give the worker full employee rights, including notice and redundancy. Clear contracts help protect both parties and avoid disputes.

Key Points to Remember

• Written Statement: Employees should receive written terms on or before their first day.
• Custom & Practice: Long-standing practices can become contractual rights if consistent and reasonable.
• Minimum Rights: All workers are entitled to holiday pay, National Minimum Wage, and protection from discrimination.
• Employment Status: Whether someone is an employee, worker, or self-employed affects their rights.
• Equal Treatment: Fixed-term and part-time employees must not be treated less favourably than permanent staff.

How can HPC Help?

At HPC, we understand that employment contracts are the foundation of a strong employer-employee relationship. We provide expert support to help businesses create, review, and manage contracts that are legally sound, clear, and tailored to their operational needs.

To find out more information or for support with your employment contracts, please get in contact with our team of experts.

T: 0330 107 1037

E: contact@hpc.uk.com

LinkedIn: High Performance Consultancy