Types of Employment Contract

It is important for an employer to be clear what contract they offer their employees and for employees to be clear which type of contract they have. Both should have their contracts checked out by a lawyer to ensure the law is being followed. Each type of contract comes with varying tax and employment responsibilities.

Some businesses may want to avoid employment legislation by only taking on self-employed staff. The label though is irrelevant. The key is what the reality of the relationship looks like. There have been numerous high profile recent cases looking at this question, involving Uber drivers and similar arrangements. Employees have greater protection. The self-employed have more flexibility.

Full Time Permanent Contract

Probably the most widely used type of contract; full time permanent employees are what keep the majority of businesses going. Pay can be hourly or salaried and the working hours, holidays, entitlements and required job responsibilities should be set out clearly in the contract.

Depending on the employee’s seniority within the company, a range of restrictive covenants may be added to the contract. These require particularly careful drafting to be enforceable. A confidentiality agreement or clause may also be required to protect sensitive information being leaked. Employers must ensure the employee gets as a minimum a written statement of employment setting out basic terms including the minimum level of paid holiday, the minimum level of rest breaks and sick pay entitlement including statutory sick pay.

Part Time Employment Contract

Part time employment contracts must contain the same basic information as for a full time employee, including clear definition of the working hours, pay and holiday entitlements. Generally part time employees have the same rights as full time employees, but this may differ for statutory sick pay and some other entitlements, so make sure you check with a lawyer to establish your exact entitlements.

Fixed Term Employment Contract

A fixed term employment contract can last for anything between two weeks and a few years. If an employee works one or more fixed term contracts for the same employer for over four years, they are considered to have a contract of indefinite duration (permanent contract). Those on fixed term contracts are covered by the unfair dismissal legislation in the same way as permanent employees.

Zero Hours Contract

The zero hour’s contract has been in the spotlight in recent years and is currently under government scrutiny. This type of contract allows the employer to call upon the employee as and when needed, with no guarantee of a certain amount of hours or any hours at all. Employees also have the right to refuse work when asked. A zero hour’s contractor is entitled to the national minimum wage and statutory annual leave in relation to periods worked.


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