What is an employee and what is a worker?
For the purposes of the Employment Rights Act 1996 (ERA 1996):
(a) an ‘Employee’ is an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment; and
(b) a ‘Worker’ is an individual who has entered into or works under (or, where the employment has ceased, worked under) either (i) a contract of employment; or (ii) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.
Employers have obligations in relation to employees and workers.
What is an employment contract?
A contract of employment is a contract of service (or apprenticeship) between an employer and an employee. It may be express or implied, oral or in writing. The main purpose of an employment contract is to regulate the relationship between the employer and the employee, who are parties to the contract.
For the most part, general contractual principles apply to employment contracts in the same way that they apply to any other types of contracts. Accordingly, the parties must have the capacity to enter into a contract and there must be an offer, an acceptance, consideration, an intention to create legal relations and certainty. However, principally as a consequence of their personal nature, there are some important differences between employment contracts and other commercial contracts.
Must every employee have a written employment contract?
In general terms, there are no particular formalities that have to be observed for entering into an employment contract. There is no legal requirement for an employee to have a written contract of employment and, accordingly, there is no strict requirement for a contract to be signed by either or both parties.
It is usually in the interests of the parties to enter into a formal written employment contract as otherwise it may be difficult and time-consuming to establish the terms of the contract where this is required.
Section 1 statements
Whilst there is no legal requirement for an employee to have a written contract of employment, section 1 of ERA 1996 requires an employer to provide:
(a) an employee with a written statement of the main terms of their employment contract, and
(b) a worker with a written statement of the main terms of their contract.
For employees commencing employment on or after 6 April 2020, the majority of written particulars must be provided on or before the employee starts work.
Where there is no written employment contract between the parties, a section 1 statement may be persuasive evidence of the whole or part of what has been agreed between them. However, it does not necessarily constitute the contract of employment or even form part of it. It will only do so if it can be shown that the parties intended it to do so.
The terms of any written employment contract will override the section 1 statement in the event of a conflict. However, employers should prepare their employment contracts to comply with the requirements of section 1 of ERA 1996, thereby avoiding the need to issue a separate section 1 statement. Accordingly, conflicts are rare.
If you would like more information about employment contracts or would like to discuss a potential or existing employment contract, please email us at email@example.com complete an Enquiry Form or call us.