A contract of employment is the legal basis of the employment relationship. It sets out those matters on which you wish your employee to be legally bound and matters on which you, as an employer, will be legally bound.
The law gives an employee the right to a “written statement of particulars of employment” in which certain details must be set out in writing. There is no specific legal requirement for the statement to be signed by the employee (or employer). However, if you want the right to make certain deductions from an employee’s wages then a signature is essential. On balance it is good practice for the document to be signed. In any event you will want to have evidence that it was given to the employee.
From April 2020 you will be at fault merely for failing to give that written statement, at the time the employee starts work.
What happens if you don’t provide that statement?
Your employee can apply to an Employment Tribunal. That would be likely to cause you disproportionate difficulties. In certain circumstances it could cost you four weeks of the employee’s pay.
Furthermore, failing to have a statement does not protect you at all. A contract will take effect simply if an employee reports for work in response to an offer of work. It is no protection for you that nothing is in writing. This faulty assumption has tripped up more than one employer. Typically it happens when the employee reporting proves to have a “protected characteristic”. The employer had not realised at the time of making the offer that the employee had the characteristic. The employer then dismisses the employee without taking advice. It is unlawful to dismiss (or even fail to select) a person by reason of a protected characteristic such as pregnancy or a disability. It can cost an employer dear.
Templates from Employer Solutions are designed to ensure you provide all the essential information, and they go further. Employers can add legal terms to the contract that work in their favour. They can also provide policies and procedures in an Employee Handbook.
Contract of Employment, Employee Handbook, or terms and conditions?