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Your Employment Contracts Explained – a handy FAQ here

Settlement Agreements

Employment law is a wide-ranging area of law with cross overs in commercial law, data protection, privacy, health and safety to name a few.  We have set out commonly asked questions and answers to assist in understanding the legal position when it comes to contracts in employment law

Otherwise known as: a Statement of Terms and Conditions, an Employment Contract, a Written Statement of Particulars

What is an employment contract?

An employment contract is the document which sets out the rights and obligations (known as the terms) that that the parties agree to be bound by.  They can be express terms (written down), implied (xx) or incorporated from other sources, such as terms from a Handbook or company policies.  It is a contract for personal service by the individual so it cannot be assigned from one employer to another without the individual’s consent (with the exception being transfers under the Transfer of Undertaking (Protection of Employment) Regulations ‘TUPE’).

When should a contract of employment be issued?

From day one.  It used to be the case that a contract could be issued within the first two months of employment but now that is no longer the case.  An offer letter can be sent with the initial headline terms but a full contract of employment or written statement of terms needs to be provided from the start of employment.

Is an employment contract legally binding if it is not signed?

It depends on the time that has passed since the employment relationship was due to have started.  Acceptance can take place without the contract being signed as it can be accepted by conduct.  Therefore, if an employment contract is issued and not signed, then months or even years later the parties seek to argue the contract is not legally binding, it will be given the time that has passed and the parties having worked in accordance with the terms (i.e. the individual reports for work, carries out their duties and in return the employer pays their salary etc) without any expression that the terms are not accepted or the individual is working under protest.

If however it is very early in the relationship, or the individual’s start date has not commenced then there would/could be a greater scope to rely on the contract not being legally binding as there is no acceptance.  Acceptance has to be communicated to the offeror to be effective.

Can you sue someone for breach of an employment contract?

Yes where there are binding terms of a contract.  If both parties have signed to accept the terms, or if acceptance can be shown by conduct, then if one party commits a breach of those terms, the other could decide to pursue a claim for breach of contract.  It is possible for an individual to remain employed and sue for breach of contract, however, there is limited scope for where such a claim can be presented.  An Employment Tribunal can only consider breach of contract claims where the contract has been terminated.  Equally as a contract is a two way agreement between the parties, if an individual breaches the terms, the employer can pursue a breach of contract claim against them; this would tend to be in a County Court in the majority of cases although if there is a contract claim in the Employment Tribunal by an individual, the employer can counter sue in the Employment Tribunal up to a maximum amount.

What law covers employment contracts?

The main statute (a written law passed by legislation) that governs employment contracts is the Employment Rights Act 1996, however, there are several statutes which apply to employment law and therefore impact an employment contract.

Are employment contracts enforceable in the UK?

Yes if they are employment contracts governed by the laws of England and Wales, or Scotland or Northern Ireland as each has its own courts and tribunals.  If the individual is working in the UK but their place of work is outside of the UK, then unless the contract says otherwise, it would generally be enforceable in the individual’s country of work.  Equally, if someone lives outside the UK working remotely, however their place of work is the UK, then it would be expected that the contract is governed by the relevant country within the UK and therefore enforceable in the relevant jurisdiction for that contract.

Can you pull out of a job after signing a contract?

In short yes but it will depend on what the contract says in respect of the notice period.  There is an element commercially on whether the employment relationship has actually started.  If, for example, the individual is a day into their new role and decide it is the wrong role for them, they can resign and they will need to provide notice of termination giving the employer the relevant notice period shown in the contract.  Most of the time (but not always) there is a probation period and it is common for notice in the probation period to be a week; the employment contract will confirm what the notice is.

If the individual signs the contract in advance of the role commencing and then receives a better offer from another company, as there is a legally binding employment contract in place, technically the individual should still give notice as provided in the contract.  If the individual fails to give notice, the employer could sue for breach of contract but it would be a commercial decision for the employer subject to what costs they have incurred and whether it is worth the hassle of pursing a claim.  Factor in that it takes time and cost for an employer to recruit so the notice period provides the employer with an opportunity to then find a replacement individual.

Swan Craig Solicitors are a locally trusted and thoroughly regulated law firm, housing qualified solicitors and experienced legal professionals well-versed in UK employment law. With the knowledge, training and expertise to advise you on issues with your employer or working environment, we are authorised and insured to give you legal guidance. With over 18 years of experience, our dedicated team are available at your convenience, so simply contact us today, on everything from disciplinaries to changes in contract.

Our blogs and articles are prepared for general interest and it is important to obtain professional advice on specific issues. Swan Craig believe the information contained in these blogs and articles to be correct at the time of publication. While all possible care is taken in the preparation of these blogs and articles, no responsibility or liability for loss occasioned by any person acting or refraining from acting as a result of the material contained herein can be accepted by Swan Craig, the author, or the publisher.

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