Contracts of Employment

What is a Contract of Employment?

A contract of employment is a legally binding agreement between an employer and employee. The terms of the contract can be either express or implied. Express terms are those that are explicitly agreed, either in writing or orally. Implied terms are those which have not been spelt out, but which the parties would assume to be part of the contract. Terms are often implied into contracts because they are too obvious to mention. For example, an employee will not steal from an employer, or that an employer will provide a safe working environment.

Although an employer does not need to provide an employee with a contract of employment, an employer must provide a written statement of employment particulars within two months of starting work. Whilst an employer is not required to set out in writing all the terms of the contract, it must provide the main terms and conditions of employment. For instance, job, details of pay, contractual hours and place of work.

If an employer fails to provide an employee with a written statement of employment particulars, an employee can bring a claim to an employment tribunal.

Can a Contract of Employment be varied?

An employer may wish to vary the terms of a contract because of changed economic circumstances or due to a re-organisation of the business. Sometimes, those changes can be to an employee's benefit, for instance, a pay increase. Other times, these changes may not. For instance, an employer may change an employee's job description.

A contract may contain express terms that allow an employer to make changes to an employment contract. These are known as "flexibility" clauses. The contract therefore, may have been drafted to allow reasonable changes to be made to the contract. In such circumstances, an employer will not be in breach of contract.

What happens if an employer varies the contract without an employee's consent?

If no flexibility clause exists in an employment contract, then if an employer varies an employee's contract of employment that fundamentally changes the original contract without obtaining the employees' consent then invariably, the employer will be in breach of contract.

In such circumstances, an employee can simply accept that change and work under the amended contract, or may treat that breach as a fundamental breach and resign. Subject to having the necessary qualifying period of service, currently one year, an employee can claim constructive dismissal before an employment tribunal.

Alternatively, an employee can continue to work within the varied contract but under protest, making it clear that s/he does not accept the varied contract and is treating the original contract as having been breached and a dismissal occurring from the original contract. In these circumstances, an employee will retain the right to seek damages from an employer for breach of contract and/or may seek a declaration from the courts that the employer must abide by the original contract.

An employment tribunal will consider whether the "new" contract is substantially different from the original contract and whether it is not a variation of the old one. Sometimes, determining this issue can be difficult and it is advisable that legal advice is sought.