Contracts of employment form the foundation of the employment relationship. Ensuring that your contracts are compliant, clear, and up to date is essential for every employer in managing risk, meeting legal obligations, and maintaining good working relationships.
In this article, we outline the key elements of a legally compliant contract, the importance of written particulars, and what employers should be aware of ahead of anticipated changes in 2027.
What is a Contract of Employment
A contract of employment is a legally binding agreement between an employer and an employee. Importantly, a contract does not need to be in writing to exist – an agreement to perform work in return for pay is sufficient to create contractual obligations.
Contracts typically consist of two types of terms: Express Terms and Implied Terms.
Express Terms
These are terms that are explicitly agreed between the employer and employee and may be contained in various documents, not just one formal contract. They commonly include:
- the rate of pay (including overtime and bonuses);
- hours of work, including overtime hours;
- holiday entitlement and pay;
- sick pay;
- redundancy terms; and
- notice provisions.
Express terms can also be derived from job offers, staff handbooks, or written communications issued before or during employment.
Implied Terms
In addition to express terms, all employment contracts include implied obligations, such as:
- mutual trust and confidence;
- a duty of care; and
- an obligation on employees to follow reasonable instructions from their employer.
These implied terms are often critical in employment disputes, particularly where conduct or behaviour is in question.
Written Statement of Employment Particulars
Employees are legally required to provide eligible workers with a written statement of employment particulars from day one of employment, in accordance with the Employment Rights Act 1996.
What must be included?
The written statement must include key information such as:
- names of the employer and employee
- start date and continuous employment date
- job title or role description
- place of work
- pay and frequency of payment
- hours and days of work (including variable arrangements)
- holiday entitlement and holiday pay
- notice periods
- details of any probationary period
- information on benefits and training requirements
Additional information, such as sick pay and pension details, can be provided in separate documents, for example a staff handbook.
Why this matters
The written statement provides written evidence of the contractual terms of employment that exist between the parties should there be a dispute, and therefore protects both sides.
Failure to provide a compliant statement can also result in additional compensation of up to four weeks’ pay if an employee brings a successful Employment Tribunal claim alongside another substantive complaint.
Statutory Rights vs Contractual Terms
It is important to remember that contractual terms operate in addition to statutory employment rights.
Employees are entitled to minimum protections including:
- paid annual leave
- National Minimum Wage / National Living Wage
- statutory maternity rights
- redundancy pay
- protection from unfair dismissal
Employers cannot contract out of these rights or include terms that are less favourable than the statutory minimum.
Changing Employment Terms
Where changes are made of terms that must be included in the written statement, employers must notify employees in writing within one month of the change.
Even where contracts include flexibility or variation clauses, employers should:
- consult with employees before implementing changes;
- avoid imposing changes unilaterally; and
- seek agreement wherever possible.
Failure to follow a fair process may give rise to claims, including breach of contract or constructive dismissal.
Looking ahead: Key changes from January 2027
Within the Employment Rights Act (ERA) 2025 there are changes impacting eligibility for various employment protections, which are expected to come into force in January 2027, and will significantly impacting how probationary periods operate.
In this regard Section 25 of the ERA 2025 reduces the qualifying period for employees to claim ‘ordinary’ unfair dismissal to six months’ service, replacing the current two-year qualifying period.
What this means for Employers
These changes will present a fundamental shift in risk management:
- employers will no longer be able to rely on the relative flexibility of dismissing employees within the first two years with more limited risk;
- well-drafted probationary clauses will become critical, including clear provisions on:
- length of probation period (which employers may wish to consider reflecting the reduced qualifying period, including any probation extension);
- review processes;
- notice periods during probation;
- the scope to extend probation
- employers will need to identify early performance management processes and documentation, as decisions made during probation may be subject to greater scrutiny.
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Practical steps to take now
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To prepare for these changes, employers should:
- review and update contract templates (particularly probation clauses);
- ensure onboarding and probation review processes are robust and documented;
- audit HR practices to ensure consistency and fairness;
- seek legal advice on implementing compliant probation frameworks ahead of 2027.
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How we can help
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Ensuring your contracts of employment are legally compliant and fit for purpose is essential – particularly in light of upcoming legislative change.
Our Employment Law team at Sweeney Miller can assist with:
- reviewing existing contracts and written terms of employment;
- updating and drafting new documentation;
- advising on contract variations and implementation;
- preparing for the new Employment Law reforms.
- This article is for general guidance and reference purposes only and should not be relied upon as legal advice.
If you need tailored advice on how these changes may affect your business, or support with reviewing and updating your employment contracts, policies or procedures, we are here to help.
Speak to our specialist employment law team. Email Paul.Lott@sweeneymiller.co.uk or call 0191 568 2057.
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