One person handing over an piece of paper to another person.

6 employment clauses to consider in an employment contract

As both an employer and an employee, employment contracts are probably one of the most common documents that you will have to look at. Of course, in the case of the former you will be creating the contract, whereas the latter will be reviewing it. While every contract of employment will inevitably contain clauses that are unique to the kind of work being done, as well as the wider industry and perhaps the company, there are several important clauses that should appear in most employment contracts. Find out more in the post below.

What is an employment contract?

A contract of employment is a legally binding agreement that exists between an employer and an employee. It can be agreed verbally or through written correspondence (letters, emails, etc). Under the Employment Rights Act 1966, anyone classed as an employee or worker has the legal right to a ‘written statement of employment particulars’. However, the rules that outline the relationship between an employee and their employer include far more than just a statement. Employment contracts can also include various other clauses, such as payment in lieu of notice provisions, garden leave, intellectual property protection, confidentiality, post-employment restrictions, and governing law and jurisdiction clauses to name but a few.

There are many different types of employment contract, some of which are more common than others in certain industries. These include:

Zero-hours contracts.
Full-time and part-time contracts.
Fixed-term contracts.
Contractors and freelancers.
Temporary staff.

The employment contract will bestow various provisions on employees, which employers need to be aware of to put the relevant measures in place. What’s more, some types of employment contract can contain clauses that other contracts don’t have and vice versa. Read ‘Do zero-hours contracts get holiday pay?’ for expert insights on this particular type of employment contract.

6 clauses that should be included in an employment contract

An employment contract should outline an employee’s duties, rights, responsibilities, and pay over a period of time. While these are relatively standard features, there are additional clauses which employers can include in an employment agreement. The following are clauses that we recommend considering.

An ‘entire agreement clause’ is designed to identify which parts of the contract are relevant to the terms of the agreement and which do not have contractual status. This can be useful for employment contracts that are subject to pre-signing negotiations, or contracts that are intended to replace an older employment contract. Including an entire agreement clause can therefore be a way for employers to protect themselves from liability for misrepresentation.

Confidentiality clauses expand the common law duty of confidentiality that is implied into every contract of employment. Employers can protect confidential information while the employee is employed. However, in the absence of an express provision, protection after termination will only extend to information which is so confidential as to amount to a trade secret.

Senior employees are often put on garden leave once they have given, or been given, notice of termination. The purpose of garden leave is to protect the employer’s business by keeping the employee out of the office so as to limit their contact with other employees and their access to confidential information and to prevent them working for another employer or setting up in a competing business on their own account until their notice period has expired. The aim is that, by the end of that period, any confidential information in the employee’s possession becomes out of date and the employee’s successor may establish themselves, particularly with customers, so as to protect the employer’s goodwill.

It can be useful for employers to have the option to lawfully make deductions from an employee’s wages. This may allow you to cover unforeseen costs caused by employee negligence, incurring of fines, or any sum of money they owe the business. Including a deductions clause in the employment contract enables these actions. Additionally, the presence of the clause can incentivise employees to avoid behaviour which could result in the business suffering losses.

This clause gives employers the opportunity to reduce staff levels without making employees redundant. Instead, they may be given reduced hours (short-time working) or no work at all (laid-off) but still be considered an employee. A lay-off and short-time working clause can allow the working arrangement between employers and employees to be flexible in the face of external factors.

Post-employment restriction clauses, or restrictive covenants as they are commonly referred to, are used by employers to protect their business by restricting an employee’s activities for a period of time after employment has terminated. In view of the limitations on the enforceability of restrictive covenants, they must be drafted carefully so that they reflect the employee’s role and the circumstances of the employer’s business and go no further than is necessary to protect the employer’s legitimate business interests. They should also be regularly reviewed to see if they need to be updated. The ELS team can help you put this in place, along with many other kinds of HR policies and procedures.

Contact law advice for employers

If you’re looking for employment contract solicitors, you’ll be hard pressed to find a more experienced firm than Employment Law Services Ltd (ELS). As our name suggests, the ELS team possesses knowledge on a wide range of areas within employment law. This means we are equipped to provide actionable advice that puts employers in favourable positions long term. Avoid unnecessary stress and contact us today. A member of our friendly team will discuss your situation.