Contract of Employment

A Complete Guide to Contracts of Employment (UK)

A Contract of Employment sets out the terms between an employer and an employee - defining roles, responsibilities, pay, and conditions of work. It’s one of the most important documents in any workplace, protecting both sides by ensuring expectations and obligations are clear from the start.

This guide explains what a Contract of Employment includes, why it’s important and how to create one that meets legal requirements under UK employment law.

CONTENTS

What Is a Contract of Employment?

A Contract of Employment is a legally binding agreement between an employer and an employee that outlines the terms and conditions of the working relationship. It sets out key details such as job role, pay, hours, notice periods, and benefits - providing clarity on what both parties can expect.

Employment contracts are governed by the Employment Rights Act 1996, and every employee in the UK is entitled to a written statement of employment particulars within two months of starting work. The contract goes further by detailing the full scope of employment terms, protecting the rights of both parties.

A well-drafted contract helps prevent disputes, ensures legal compliance, and provides a record of agreed terms - giving employers and employees peace of mind that their working relationship is fair, transparent and secure.

What Should a Contract of Employment Include?

While every contract is different, most cover the same key elements to ensure legal compliance and clarity.

A typical employment contract should include:

• Names of employer and employee.
• Job title and description of duties.
• Start date and (if applicable) end date for fixed-term roles.
• Place of work and any mobility requirements.
• Pay and frequency of payment.
• Working hours and rest breaks.
• Holiday entitlement and rules for carrying over leave.
• Notice periods for termination.
• Sick pay and absence policies.
• Probationary period details.
• Pension scheme information.
• Confidentiality and data protection obligations.
• Disciplinary and grievance procedures.
• Non-compete or restrictive covenants (if applicable).
• Signatures of both parties.

Why Is a Contract of Employment Important?

Having a written contract in place protects both the employer and employee - it isn’t just a formality, it’s a legal safeguard. Without one, misunderstandings can easily escalate into disputes over pay, responsibilities or termination.

A clear contract provides certainty, ensures compliance with employment law, and strengthens trust between the parties. It also serves as evidence in the event of a disagreement or claim, helping to resolve issues quickly and fairly.

In practice, a Contract of Employment is important because it:

• Defines the scope of duties and rights for both sides.
• Helps prevent disputes over pay, hours, or performance expectations.
• Ensures compliance with the Employment Rights Act 1996.
• Provides legal protection in cases of dismissal or disciplinary action.
• Clarifies procedures for resignation, redundancy or termination.

Types of Employment Contract

The type of employment contract depends on the nature of the work and how long the employee is expected to remain in the role.

The main types include:

• Permanent contracts: Ongoing employment with no fixed end date - typical for full-time or part-time roles.
• Fixed-term contracts: Employment for a set period or project, ending automatically when completed.
• Zero-hours contracts: Employees work only when required, without guaranteed hours.
• Casual or temporary contracts: Short-term or flexible arrangements, often via an agency.
• Freelance or consultancy agreements: Used for self-employed contractors providing services, not classed as employees.

Legal Requirements for Contracts of Employment

Under UK law, every employee is entitled to a written statement of employment particulars - but a full contract provides the most comprehensive legal protection.

A valid Contract of Employment must:

• Be in writing and provided within two months of employment starting.
• Include core terms such as pay, hours, holiday entitlement, and notice periods.
• Comply with the Employment Rights Act 1996 and related UK employment laws.
• Avoid clauses that contradict statutory rights (e.g. minimum wage, working time).
• Be signed by both employer and employee to confirm agreement.

Failure to issue a compliant contract can lead to penalties and weaken an employer’s legal position if a dispute arises.

How to Create a Contract of Employment

Creating an employment contract requires a careful balance between legal compliance and clarity for both parties.

The typical process includes:

• Define the role: Outline job duties, responsibilities, and reporting structure.
• Agree key terms: Confirm pay, hours, location, and start date.
• Add statutory entitlements: Include minimum requirements for holiday, rest breaks, and notice.
• Incorporate policies: Reference internal rules such as conduct, grievance, and data protection.
• Include confidentiality and non-compete clauses: Where relevant, protect sensitive business information.
• Review and sign: Both parties should read the document carefully, make any amendments, and sign to confirm agreement.
• Provide a copy: Ensure both employer and employee retain a signed version for records.

How Much Does It Cost to Draft a Contract of Employment?

The cost depends on whether you use a solicitor, an HR service, or an online platform - and how complex the terms are.

Typical options include:

• Solicitor drafted: £250–£800 depending on complexity and seniority of the role.
• HR consultants or specialists: £100–£400 for tailored agreements.
• Online platforms: £25–£100 for solicitor-verified or custom templates.

Contract of Employment Template (Example)

Contract of Employment

The example below provides a simple overview of how a Contract of Employment is typically structured and the type of terms it usually contains. Actual content may vary depending on the role, working arrangements and legal requirements under UK employment law.

This Employment Contract is made on [date] between:

Employer:
Name: ____________________________
Address: __________________________

Employee:
Name: ____________________________
Address: __________________________

The Employer agrees to employ the Employee in the role of [Job Title] starting on [Start Date] at [Work Location].

The Employee will receive a salary of £[amount] per [month/year], paid [monthly/weekly], and will work [number] hours per week.

The Employee is entitled to [number] days of paid annual leave per year, in addition to public holidays.

This employment is governed by the laws of England and Wales and incorporates the statutory rights and protections under the Employment Rights Act 1996.

Employer Signature:
Signature: ________________________

Employee Signature:
Signature: __________

Robot Lawyer provides a solicitor-verified Contract of Employment template, drafted in line with UK employment law. It includes all essential clauses - pay, hours, duties, benefits and termination - and can be tailored to different roles and industries.

Unlike generic downloads, our template is kept up to date with changes in legislation such as minimum wage, holiday entitlement and pension rules.

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Contract of Employment FAQs

What is the difference between a Contract of Employment and a Written Statement of Terms?
A Written Statement is the legal minimum employers must provide. A Contract of Employment is more detailed and offers greater protection for both parties.

Does every employee need a contract?
Yes. While some terms may be verbal, employers are legally obliged to provide written terms. A full contract avoids uncertainty.

Can an employment contract be varied?
Only if both employer and employee agree. Changes should be recorded in writing.

Are zero-hours contracts legal?
Yes, but they must still comply with employment rights such as minimum wage, holiday pay, and protection from unfair dismissal.

What happens if there is no written contract?
Employment still exists, but disputes are harder to resolve. Courts will rely on statutory rights and evidence of agreed terms.

Are electronic signatures valid on employment contracts?
Yes. Electronic signatures are legally recognised in the UK.

Why use Robot Lawyer’s Contract of Employment template?
It is solicitor-verified, compliant with UK law, and far more affordable than traditional routes.

Get Started with Your Contract of Employment

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1. Select Create Document ➝ below and start the questionnaire.
2. Answer a few quick questions about the role and company.
3. Instantly receive a solicitor-verified Contract of Employment.
4. Save, sign, and store it securely.

Contract of Employment

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