Employment Contract - Fixed Term - Senior Employee

What is an Employment Contract?

An employment contract is an agreement between an employer and employee that sets out the terms that apply to the employment, including their rights, their duties, their responsibilities and potential liabilities. 

Employment contracts are also sometimes referred to as employment agreements, terms and conditions of employment, or particulars of employment.

You should use this employment contract for a senior employee (full time or part time) who is employed on a fixed term basis, i.e. who is not a permanent member of staff. This means that their contract ends automatically on a certain date without the need for notice to be given.

When should you use an Employment Contract?

In the UK, it is a legal requirement that employees are given a written document summarising the main terms of their employment. This is known as the “written statement of particulars of employment” (or sometimes the “section 1 statement”, as it is required under section 1 of the Employment Rights Act 1996). There is some key information that must be included in a written statement of particulars of employment, for example information relating to salary, benefits, place of work, hours of work, leave entitlements, training opportunities, probationary period and notice period, among others. The written statement of particulars of employment must be given to the employee by no later than their first day of work.

Usually, an employer will want to include additional terms beyond what the law says must be in the written statement of particulars of employment, which is why an employment contract is normally used. This template employment contract incorporates (and goes beyond) what is required to be included in the written statement, and it provides a number of additional protections for the employer. 

As explained above, you should use this employment contract for a senior employee (full time or part time) who is employed on a fixed term basis i.e. for a fixed period of time, where you want the employment to end automatically on a certain date without the need for notice to be given. An example of when such a contract should be used is where an employee is employed for a particular project only, or where they are employed to cover a period of maternity leave. 

Why is an Employment Contract important and why should you use it?

Having a written employment contract is important because:

1. The employer has complied with their legal obligation to provide a written statement of particulars of employment.

2. There is no uncertainty or dispute about what terms have been agreed. 

3. The employer is adequately protected. 

4. It encourages good relationships between the employer and employee.
   
   The employer and employee should sign the employment contract before the employment begins. If the employee does not receive the written employment contract on or before their first day of employment, they could be awarded up to 2 weeks pay by an Employment Tribunal.

What are the common pitfalls of an Employment Contract?

1. Not having a written employment contract
   Whilst there is no legal requirement for an employee to have a written contract of employment, as explained above, employees must be given a written statement of particulars of employment on or before their first day of employment that sets out certain key information about their employment. Having a written employment contract in place avoids uncertainty and disputes, and protects the employer.
   
   
   

2. Using the wrong contract
   This contract is suitable for a senior employee (full time or part time) who is employed on a fixed term basis. If the employee will be permanent rather than fixed term, you should use the Employment Contract - PocketLaw Standard (if you want a market standard employment contract for a permanent employee) or the Employment Contract - Indefinite Term - Senior Employee (for more senior members of staff and statutory directors).
   
   
   

3. Using a series of successive fixed term contracts
   Any employee on a series of successive fixed term contracts for 4 or more years will automatically become a permanent employee, unless the employer can show there is a good business reason not to do so. Fixed term contracts should therefore regularly be reviewed and consideration given to replacing the contract with a permanent contract where appropriate.
   
   Employers should also be aware that if a fixed term contract is not renewed, this is considered to be a dismissal by law, and if the employee has 2 years’ service the employer needs to show that there’s a “fair” reason for not renewing the contract. After 2 years’ service, employees  have the right:
   
   

   • not to be unfairly dismissed 

   • to a written statement of reasons for not renewing the contract 

   • to statutory redundancy payments if the reason for not renewing the contract is redundancy.
     
     
     

4. Using an out of date contract
   Employment law in the UK changes frequently. For example, the law on employment contracts changed significantly in 2020, and contracts must now contain information about the probationary period, types of paid leave other than sickness and holiday, benefits and training. Using a PocketLaw template ensures that an employer remains legally compliant when changes to the law happen.
   
   
   

5. Treating fixed term employees less favourably than permanent staff
   Employers must not treat employees on fixed term contracts less favourably than permanent employees doing the same or largely the same job, unless the employer can show that there is a good business reason to do so (known as “objective justification”). This means that employers need to ensure that fixed term employees are given:
   
   

   • the same pay and conditions as permanent staff

   • the same or equivalent benefits package 

   • information about permanent vacancies in the company 

   • the same protection against redundancy or dismissal 

6. Losing the signed copy
   Without a signed copy of the employment contract, there is no evidence of what the agreed terms and conditions of the employment are. Signed contracts can quickly and easily be saved on the PocketLaw platform so that they are securely stored.

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