Definition
A Contract of Employment is a legal agreement where an employee commits to perform specified duties under the supervision and control of an employer in exchange for a predetermined wage or salary. The contract may be written or oral, but under the Employment Rights Act 1996, employees must be provided with a written statement of the terms of employment. Contract also includes implied terms such as the employer’s obligation to ensure a safe working environment and the employee’s responsibility to execute their tasks competently.
Key Components:
- Duties and Responsibilities: Clearly outlines what the employee is expected to do.
- Wages or Salary: Specifies the payment details, including frequency and amount.
- Direction and Control: Describes the extent of the employer’s control over how tasks are completed.
- Implied Terms:
- Employer’s duty to protect the employee from health risks.
- Employee’s duty to perform work to the best of their ability.
Statutory Rights:
Employees continuously employed for specific minimum periods are entitled to statutory rights such as protection against unfair dismissal and redundancy benefits, which are not applicable to self-employed individuals. Self-employed workers operate under a contract for services with different obligations.
Termination and Remedies:
Terminating a Contract of Employment in violation of its terms constitutes wrongful dismissal, which is actionable under the law.
Examples
- Formal Written Contract: An agreement detailing job role, salary, work schedule, and other specific terms of employment between a corporation and a new marketing manager.
- Implied Contract: An arrangement where an IT technician, based on conformance to company policies and duration of employment, is assumed to have accepted standard employment terms despite a lack of a formal written contract.
- Employment Rights: An employee dismissed after 3 years of service may claim unfair dismissal if proper procedures weren’t followed, asserting rights afforded by statutes.
Frequently Asked Questions
What must a written contract of employment include under the Employment Rights Act 1996?
A written contract must include core terms such as job title, job description, wages, work hours, place of work, and conditions of employment.
What are implied terms in a Contract of Employment?
Implied terms include the employer’s duty to ensure a safe workplace and the employee’s obligation to perform duties to the best of their ability.
Who is entitled to statutory rights regarding unfair dismissal?
Employees who have been continuously employed by the same employer for the minimum period defined by statutory provisions are entitled to these rights.
How does a Contract of Employment differ from a Contract for Services?
A Contract of Employment binds an employee to work under the employer’s control and direction, while a Contract for Services involves a self-employed person agreeing to complete specific work without being under direct supervision.
Can an employment contract be verbal?
Yes, a contract of employment can be verbal, though it must be supported by written documentation specifying core terms as per the Employment Rights Act 1996.
Related Terms
- Employment Rights Act 1996: A UK legislation providing various employment protections.
- Wrongful Dismissal: Termination of an employment contract in violation of stated terms or implied rights.
- Unfair Dismissal: Termination without a fair process or reason, entitling employees to claim protection.
- Redundancy: Termination due to the role no longer being necessary, often involving redundancy payments.
- Contract for Services: An arrangement between a company and a self-employed individual for the delivery of specific services.
Online References
Suggested Books for Further Studies
- “Employment Law: An Introduction” by Stephen Taylor and Astra Emir
- “Understanding the Law of Employment: A Student’s Guide” by Amanda Coulthard
- “Human Resource Management” by Gary Dessler
- “The Employment Contract” by David Cabrelli
Accounting Basics: “Contract of Employment” Fundamentals Quiz
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