Is it illegal for employees to work without an employment contract?
No, there is no legal requirement for an employer to provide a written employment contract to employees. However, section 1 of the Employment Rights Act 1996 (ERA 1996) does require employees (and workers) to be given a written statement of certain specified employment particulars (often known as a “section 1 statement”).
For those who started employment before 6 April 2020, the information in the section 1 statement could be given in instalments and at different times, provided it was all given within two months of starting employment (section 1(2), ERA 1996). Certain information had to be provided to the employee in a single document (the principal statement). Other information could be given either in the principal statement or a supplementary statement or statements, which together made up the section 1 statement. Some information did not have to be given in the section 1 statement itself but could be set out in another reasonably accessible document which was referred to in the section 1 statement. For those starting employment on or after 6 April 2020, these requirements have changed.
A section 1 statement is not necessarily a contract of employment in itself. It may simply be a statement of what has already been agreed orally or in writing. If there is no separate written contract, the section 1 statement will be persuasive evidence as to the terms of the contract of employment between the parties. If, however, there is a separate written contract, the section 1 statement cannot override a term recorded in that contract. The contract itself always takes precedence.
What does a statement of terms include?
We mentioned two examples above, but it’s essential for employers to know what they are required to include when providing a statement of terms to a new employee.
- The names of both the employer and employee
- Start date of employment
- The date the employee’s continuous employment starts
- Intervals for payment
- Method, rate, or scale for calculating remunerations
- Holiday entitlement and relevant working information for public holidays and holiday pay
- Terms and conditions for working hours e.g., normal working hours
- Provisions for sick pay and incapacity for work
- Pension and pension scheme details
- Duration of notice to be given to the employee or provided by them for employment termination
- Job title or a description of the role
- Disciplinary rules and procedures
Do you need an employment contract?
If you have already provided a statement of particulars to your new employee, you don’t have to supply an employment contract. However, it is advisable that you do so as it ensures the specific requirements of your business and industry are met, which will protect your business in the event that the employee acts in a way that breaches the contract of employment.
By only providing a standard statement you are leaving your business vulnerable to further issues in the future and from a legal standpoint you wouldn’t be in a strong position. In the event of a dispute for instance, a tribunal will treat the statement of terms or employment contract as strong evidence of what was agreed between both parties.
So, it is in an employer’s best interests to provide a contract of employment to support their interpretation of the agreement. Use our employment law helpline for employers if you need assistance with establishing a suitable employment contract for your employees.