Contracts of employment
It is very important to find out what your employment status is. Many employment rights, such as the right not to be unfairly dismissed, and the right to redundancy pay, rely on you being an employee.
It is common for an employer to call someone self-employed, or a ‘casual worker’ or a ‘trainee’, when that person is really an employee. Employers do this in order to avoid having to pay tax and national insurance for their employees and to try to avoid them having employment rights. It is irrelevant what your employer calls you, whether you are known, for example, as self employed, an agency worker, or a casual worker. In addition, just because you pay tax and national insurance as a ‘self-employed’ person, it does not automatically follow that you are actually self-employed rather than an employee. What matters is what happens in practice about how you work, who decides what work you do and what you are expected to do by your employer.
The following factors will all help you decide whether you are an employee or self-employed when you want to find out what your employment rights are:-
- does your employer tell you what work to do and how to do it (even if you are left alone to actually carry out the work). Does your employer provide you with work, or do you have to go out and find your own work to do. If your employer controls the work to be done and provides the work, you will be an employee
- how you are paid. If you are paid a regular amount of pay at regular intervals, rather than being paid per job done, this indicates you are an employee
- who is responsible for getting the work done. If you have to find someone else, such as a sub-contractor or a friend, to do the work if you are unable to, this would indicate you are self-employed. If your employer finds someone else to do the work if, for example, you are off sick, this would indicate you are an employee
- who provides tools and materials to do the work. If your employer is responsible for supplying main tools and machinery and materials, with you responsible for supplying only a few of your own tools, you are likely to be an employee.
If, after reading through the factors under the heading How to tell if you are an employee or not, you think you are an employee, you will have a contract of employment. This does not have to be written down. A contract of employment is agreed between the employer and the employee and can be a verbal contract. See below.
If you are still not sure whether or not you are an employee, you should speak to an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.
If you want to know whether you're an employee or self-employed in order to work out how much tax or national insurance to pay, the rules are slightly different to the ones described here. For more information about these rules, go to the HM Revenue and Customs website at: www.hmrc.gov.uk.
If you are getting work through an agency, you may be:
- treated as an employee of the agency (although this is unlikely), or
- self-employed, or
- employed by the organisation you work for.
There are special rules about how agency workers pay tax and national insurance contributions and about how to decide if they are employees or self-employed.
If you have any queries about being an agency employee, you should consult an experienced adviser, for example, a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.
If your employer asks you to sign a new contract which says that you are self-employed rather than an employee, signing the contract does not mean that you then become self-employed. This is because, regardless of what your employer says, whether or not you are an employee or self-employed depends on what happens in practice and the relationship between you and your employer – see under the heading How to tell if someone is an employee or not.
If you are being asked by your employer to sign a new contract, you should consult an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.
There is always a contract between an employee and employer. You may not have anything in writing, but a contract will still exist. This is because your agreement to work for your employer and your employer’s agreement to pay you for your work forms a contract. Your employer does have to give you a written statement within two months of you starting work. The statement must contain certain terms and conditions.
A contract gives both you and your employer certain rights and obligations. The most common example is that you have a right to be paid for the work you do. Your employer has a right to give reasonable instructions to you and for you to work at your job. These rights and obligations are called contractual terms.
The rights that you have under your contract of employment are in addition to the rights you have under law, such as, for example, the right to a national minimum wage and the right to paid holidays.
Generally, you and your employer can agree to whatever terms you wish to be in the contract, but you cannot agree to a contractual term which gives you less rights than you have under law (see under heading How the rights in an employee’s contract relate to rights in law).
A contract of employment will usually be made up of two types of contractual terms. These are:
- express terms
- implied terms.
Express contractual terms
Express terms in an employment contract are those that are explicitly agreed between you and your employer and can include:
- amount of wages, including any overtime or bonus pay
- hours of work, including overtime hours (there is a legal limit for most employees on the maximum number of hours they can work per week)
- holiday pay, including how much time off you are entitled to (nearly all full-time workers are entitled by law to 28 days' paid holiday - they may be entitled to more under their contract. Part-time workers are entitled to a pro rata amount)
- sick pay
- redundancy pay
- how much warning (notice) the employer must give you if you are dismissed.
The express contractual terms may not be in one written document, but may be in a number of different documents. They may not be written at all. The express terms may be found in:
- the job advertisement
- a written statement of main terms and conditions (see under heading Employee’s right to written details about the employment contract)
- any letters sent by your employer to you before you started work
- anything you were asked to sign when or since you started work
- instructions or announcements made by your employer on a notice board at work
- an office manual or staff handbook
You may not have possession of all the relevant papers. You may be able to get copies from your Personnel Department, foreman, or trade union representative.
You should always keep any papers given to you by your employer.
Because a contract will still exist even if there is nothing written down, anything which was said to you by your employer about your rights, and anything which you agreed verbally, should be recorded.
If you are an employee who does not have a written contract, you should consult an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.
Implied contractual terms
Implied terms in an employment contract are those which are not specifically agreed between the employer and employee.
Implied terms are:
- general terms which are implied into most contracts of employment
- terms implied by custom and practice
- terms from agreements made with the employer by a trade union or staff association.
General implied terms
The following duties and obligations will usually be implied into any contract of employment:-
- the employee and employer have a duty of trust to each other. This means, for example, that if you give your employer’s industrial secrets to a competitor, you will have broken an implied contractual term of trust
- the employer and employee have a duty of care towards each other and other employees. This means, for example, that the employer should provide a safe working environment for the employee and that the employee should use machinery safely
- the employee has a duty to obey any reasonable instructions given by the employer. There is no legal definition of reasonable, but it would not be reasonable to tell an employee to do something unlawful, for example, a lorry driver should not be told to drive an uninsured or untaxed vehicle
- your employer has a duty to pay your wages and provide work. As long as you are willing to work, your employer must pay your wages even if no work is available, unless your contract says otherwise.
Terms implied by custom and practice
When dealing with a particular employment problem, there may be no express contractual term covering the matter. In such a case, it is helpful to look at what has happened to other employees in the workplace. This is because if other employees have been given this right, you can argue that you also have the right under ‘custom and practice’.
Trying to show that you have a right through ‘custom and practice’ can be complicated and you should consult an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.
A contract may be broken if either you or your employer does not follow a term in the contract. This is known as a breach of contract. For example, if your employer doesn't pay you in lieu of notice which you are entitled to under your contract, this would be a breach of contract.
If your employer breaks your contract, you should try and sort the matter out with them informally first.
If this doesn't work, you could try raising a grievance against your employer. There are special procedures you may need to follow if you want to take out a grievance against your employer.
For more information about taking out a grievance against your employer, in England, Wales and Scotland see Sorting out problems at work and in Northern Ireland, see Dealing with grievances, dismissal and disciplinary action at work.
If you think your employer has broken your contract of employment, you should get advice about what action to take from an experienced employment adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.
Find out what you can do if your employer doesn't pay you what you're owed.
If you're offered a job and the offer is then withdrawn
Whether you can take any action will depend on whether the job offer was made subject to any conditions.
If the job offer was subject to conditions - like satisfactory references or passing a medical - you won't be able to claim compensation if these were unsatisfactory. This is because there was never any contract of employment. There was only a conditional offer of a job and the conditions haven't been met.
If your job offer was unconditional, it's a breach of contract. It's a breach of contract because there's a contract of employment as soon as an unconditional job offer has been made and accepted. You might be able to claim compensation for breach of contract in an employment tribunal or county court (sheriff court or Court of Session in Scotland).
Unconditional job offers are unusual.
If the employer then withdraws the job offer, this will be dismissal and a breach of contract. You can claim pay for the notice period the contract says the new employer should have given you. If you don’t have have a right to contractual notice, you won’t be able to claim anything as you need to work for a month before you can get statutory notice.
If an employer withdraws a conditional job offer even though all the conditions were met, you might also be able to claim compensation.
If you think that the job offer has been withdrawn because of discrimination, you could consider making a discrimination claim to an employment tribunal. You'd first need to check if you have a strong discrimination case.
All employees, regardless of the number of hours they work per week, are entitled to receive a written statement from their employer within two months of starting work. The statement should describe the main terms of the contract of employment. You are entitled to the statement even if your job finishes before the initial two months, as long as the job was supposed to last for more than one month and you have worked for at least a month.
An employee who wants a written statement may request one verbally or in writing. It is usually best to request the statement in writing and keep a copy of the letter, so that you can prove you asked for the statement.
What written details must be given
The written statement must include by law:
- the names of you and your employer
- the date you started work
- the amount of pay and how often you will be paid, for example, weekly or monthly
- the hours of work
- your holiday entitlement, including how many days off you are entitled to and what your holiday pay will be, if any
- how much warning (notice) you are entitled to if you are dismissed and how much warning you must give the employer if you want to leave the job
- the title of the job
- where the job is based, for example, whether you will have to work in more than one location
- what the disciplinary, dismissal and grievance procedures are in the workplace
- what sick pay you are entitled to
- whether you can join the employer’s occupational pension scheme, if there is one.
The above information does not have to be included in the written statement of terms and conditions. It can be given in, for example, a staff handbook which all the employees can have access to.
An employer may try to dismiss you for asking for the written terms and conditions of your job, even though you are entitled to this information by law.
If you think that your employer may dismiss you if you ask for the written statement of terms and conditions, you should consult an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.
Most employees have rights given by law. These are called statutory rights. They are in addition to any rights you have under your employment contract. Statutory rights which you may have include:
- a right to a written statement of the terms of employment
- a right to an itemised pay statement
- a right to maternity leave
- a right to pay in compensation for being made redundant
- a right not to be unfairly dismissed.
Generally, you and your employer can agree any terms in the employment contract. However, you cannot agree to a contractual term which gives you fewer rights than your statutory rights. If you have agreed to a contractual term that gives you fewer rights than your statutory rights, for example, you have agreed that you will not take maternity leave, your employer will not be able to enforce the contractual term. You will still have a legal right to maternity leave.
There are particular rules regarding health and safety at work. For example, if you believe that a piece of equipment or a process may be dangerous, you may have a right to refuse to work with it and insist that your employer takes adequate safety measures.
If your employer is trying to enforce a contractual term which gives you less than your statutory rights, you should consult an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.
People on fixed term contracts
There are special rules about employees who are on fixed term employment contracts, which means the contract contains a date when it will end.
If you are an employee who is on a fixed term contract you should consult an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.
It is common for employers to treat new employees as being in a ‘probationary’ period when they first start work. The employer may then argue that you can be dismissed while you are in this probationary period with no warning (notice). Employers also often argue that employees do not have usual employment rights to, for example, pay or holidays, during this ‘probationary’ period.
There is no such thing in law as a ‘probationary’ period. Once you have started work, the number of weeks you have worked begin on the day you start, not from some time when a ‘probationary’ period is over. Your full contractual rights also start from the first day of work, unless your contract says otherwise.
Your contract could, however, contain terms which only apply during your probationary period and which are less favourable than those which apply when your probationary period has ended. These terms must not take away your statutory rights.
Your employer can extend your probationary period, as long as your contract says they can do this. For example, your employer may want to extend your probationary period in order to have more time to assess your performance. However, they can only do this if your contract has a term which says your probationary period can be extended under these circumstances.
Employees employed on a series of short term contracts
Some of your statutory employment rights only come into effect after you have worked for an employer for a certain period of time. This must be a continuous period of employment. Some employers will employ you on a series of short-term contracts in order to try and prevent you from gaining your statutory rights.
If you have been employed by the same employer on a series of short-term contracts, there are certain circumstances where the contracts may be added together to provide continuity of employment. This means that you may then qualify for statutory rights.
If you have been employed on a series of short term contracts, you should consult an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.
If your employer calls you a casual worker
Some employers call their workers casual workers in order to avoid having to give them what they are entitled to under employment law. Even if your employer says you are a casual worker, this doesn't mean that you are.
To find out what rights you have if your employer says you are a casual worker, you should consult an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.
If your employer calls you a trainee
Your employer may call you trainee in your employment contract, to try to prevent you from having your statutory rights.
However, this does not necessarily make you a trainee. It is important to look at the working relationship between you and your employer and what is in your employment contract to see whether you are actually a trainee or whether you have the same rights as other employees - see under the heading How to tell if you are an employee or not.
For example, you have been on a Work Based Learning scheme for young people but have now completed the scheme and have been taken on as an employee. You will have the same statutory rights as any other employee. These rights will apply to you from the first day that you became an employee, unless your employment contract says otherwise.
Your contract could, however, contain terms which only apply for a certain period of time and which are less favourable than those which apply once this period has come to an end. These terms cannot take away your statutory rights.
To find out what rights you have if your employer calls you a trainee, you should consult an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.
You will be an employee shareholder if:
- you agree with your employer that you are one
- you receive between £2,000 and £50,000 worth of shares in the company (the first £2,000 is free of income tax and national insurance contributions)
- the company gives you a written statement of the particulars of employee shareholder status and of the rights attached to the shares
- you do not give any consideration other than entering into the agreement.
In exchange, you give up the right to:
- claim unfair dismissal (except when the dismissal is automatically unfair or discriminatory)
- claim a statutory redundancy payment
- request flexible working or time off for study or training
You also have to give 16 weeks' notice if you want to return early from maternity, paternity or adoption leave (instead of eight weeks' notice for other employees).
You must receive independent legal advice after receiving the written statement and you must be allowed a seven-day cooling off period before the agreement is finalised. Your employer is to pay the reasonable cost of that advice.
If your current employer wants to move you to employee shareholder status, you must not be subjected to detriment if you refuse to do so. It is also automatically unfair for them to dismiss you for refusing to move to that status.
If you are claiming jobseeker's allowance (JSA),you will not be forced to apply for employee shareholder status jobs, so your JSA will not be reduced or stopped if you refuse to apply for such a job.
There is more information about employee shareholder status on the GOV.UK website at www.gov.uk. More information about tax and employee shareholder status is available on the HM Revenue and Customs website at www.hmrc.gov.uk.
You may have a problem at work because your employer wants to change the contract. In effect it is a proposal to change the contract of employment if, for example, your employer wants to:
- change the type of work that you do
- change your place of work
- cut your pay
- change the number of hours you work.
In theory, your employer cannot change a term in your contract without you agreeing to the change. In practice, you may be faced with the choice of accepting the change or losing the job. However, you may be able to take some action against the employer if you disagree with the change.
Before you can decide what your rights may be regarding a proposed change to your contract, it is essential to discover what the existing contract says on the issue. You should look carefully at your copy of any written contract and/or the written statement of terms and conditions of employment (see under heading Employee’s right to written details about the employment contract). If you do not already have one, it may be advisable to ask the employer for a written statement of terms and conditions.
It is important to remember that taking action against an employer over a change in the contract may mean that you could lose your job. You should therefore consult an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.
Find out your rights if your employer wants to change your contract.
Zero hours and key time contracts
‘Zero hours contracts’ are contracts of employment which do not specify any number of hours that the employee will be required to work. They are common for shop workers. The contract says that instead of working a specific number of hours per week, you must be ready to work whenever you are asked.
Doing other work while on a zero hours contract
In the past, if you were on a zero hours contract, your employer could prevent you from doing other work by including an ‘exclusivity clause’. This clause was banned from 26 May 2015, so if you're on this type of contract, your employer can no longer ban you from doing other work.
Key time contracts are those where you are guaranteed some work, but are not guaranteed regular hours each week.
The problem with zero and key time contracts is that you are only paid for the time you work, so even if you have to wait on work premises or be at home waiting by the phone, you may not be paid for this waiting time. However, legally, if you're on a zero hours contract, you are entitled to be paid for any time you have to be on work premises waiting for work to come up, unless your contract of employment says otherwise. You should be paid your normal hourly rate or, at the very least, the National Minimum wage.
For more information about the National Minimum Wage, see Getting paid less than minimum wage.
What if the contract does not give the number of hours which you must work
It is a legal requirement that all employees must be given a written statement of their terms and conditions of employment (see under heading Employee’s right to written details about the employment contract). This must include terms and conditions about hours of work, including normal weekly hours, any overtime requirements, the rate of pay and how often it is paid. This statement is not your contract but it shows that you do have one and part of what it includes.
Even if your contract does not give details of the number of hours which you must work each week, but only says that ‘hours of work will vary each week’, it is still a legal contract.
If your contract states that you have no set hours of work and that you must be available to work, but what actually happens is that you work the same number of hours each day/week, then it may become an implied term of your contract (see under heading What is a contract of employment) that you do have a set number of hours to work each day/week. If you are willing to work this number of hours but are given no work to do you may be entitled to be paid your normal wage for these hours.
If you are an employee in this position, you should consult a specialist employment adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.
Get more information on how many hours a week you work.
You won’t usually be able to make a claim to enforce your rights at work if you have an illegal contract of employment.
Your contract of employment is likely to be illegal if you don’t have the right to work in the UK. You can check what you’ll need to show your employer to prove your right to work.
You’ll also have an illegal contract of employment if you and your employer agree you’ll be paid in cash to avoid paying tax or national insurance. It won’t be an illegal contract if you don’t know they’re not being paid or you can’t object to them not being paid - like if you’d lose your job if you did.
A contract will also be illegal if it is for an immoral or illegal act.
If a contract tries to remove or give you less than your statutory rights, it's not an illegal contract. A contract can’t take away your statutory rights. If a term in your contract seems to do that, it’s treated as if it doesn’t exist by courts and tribunals (see under the heading How the rights in the employee’s contract relate to rights in law).
If you suspect you might have an illegal contract of employment, you should consult an experienced adviser, for example, at a local Citizens Advice Bureau. Find your nearest Citizens Advice.
A fidelity bond or indemnity bond is a type of insurance policy that employers take out to insure themselves against their employees behaving dishonestly. The information which will be required about the employee will vary from one insurance company to another, and will depend on the type of policy the employer has taken out. Sometimes your employer will just have to supply your name to the insurance company, sometimes you will have to sign a statement saying that you have no previous criminal convictions. If a conviction is spent under the Rehabilitation of Offenders Act, you do not have to declare it.
If the information about you is held by the insurance company on a computer, then you have the right to see it under the Data Protection Act.