Employment Contracts for Employers and Employees

Employment Contracts for Employers and Employees

A strong employment contract sits at the foundation of a successful employment relationship — setting out the rights and obligations of both employers and employees.

A well-drafted contract provides clarity during employment and can offer key protection where disputes arise, or the relationship ends. For employers, it can help to safeguard confidential information, intellectual property and protect legitimate business interests. For employees, it provides certainty on vital issues such as pay, benefits and responsibilities.

With significant employment law reforms being implemented during 2026 and 2027, reviewing employment contracts now is crucial to ensure they are legally sound, effective and commercially robust.

What Should an Employment Contract Include?

Employment contracts do not need to follow a precise format. Terms of employment may be recorded in writing, agreed verbally or even arise through conduct.

Employers must, however, provide employees and workers with a written statement of employment particulars. The principal statement must be provided on or before the first day of work, with certain additional information forming part of the wider written statement to be provided within two months of the start of employment.

The mandatory written particulars must include key terms such as pay and benefits, working hours, holiday entitlement, the place of work, the employee's job title or work description, any probationary period, notice provisions and sick pay arrangements.

Employers must also notify employees and workers in writing of changes to the required particulars within one month of the change.

In practice, however, most employers will provide a more comprehensive written contract to specify both mandatory information and broader terms, provide better certainty and greater protection for their business. Detailed written contracts of employment are highly recommended to all employers for this reason.

Key Employment Contract and Policy Issues for Employers

Employment contracts should be tailored to the needs of both the relevant roles and the business. Generic templates will often fail to address the risks associated with particular positions, levels of seniority or industry sectors.

Employers should also ensure that contracts are supported by suitable workplace policies and procedures to provide clarity, manage expectations and risk and protect their business interests.

Employers should also address immigration compliance issues. This includes carrying out required right-to-work checks before work begins and meeting any broader immigration or sponsorship requirements where relevant. This point is particularly important due to the right-to-work check regime being expanded from 1 October 2026 to cover a wider range of working arrangements.

The Employment Rights Act 2025 — Planning for Big Changes Ahead

The Employment Rights Act 2025 marks a major reform of UK employment law — affecting a range of matters from contracts to dismissals and workplace risk.

For dismissals from 1 January 2027, the qualifying period for ordinary unfair dismissal will fall from two years to six months of continuous employment — making robust probation terms, performance procedures and dismissal records increasingly important.

Further fire-and-rehire restrictions will also take effect in January 2027. Additional 2027 reforms are expected to introduce guaranteed-hours rights for qualifying zero and low hours workers and restrict non-disclosure agreements concerning workplace harassment or discrimination.

Many contracts and templates which predate these reforms may no longer provide the necessary protection, flexibility or compliance employers need. Employers should therefore carefully review their contracts, handbooks and procedures now to identify gaps, manage risk and prepare for change prior to the new rules taking effect.

What Should Employees Check Before Signing an Employment Contract?

Before accepting a new role, employees should review their proposed employment contract carefully and seek legal advice should any terms be unclear.

Attention should be paid (in particular) to issues such as notice periods, bonus and commission arrangements, garden leave provisions, confidentiality obligations, intellectual property and any post-termination restrictions.

Such terms can have a major impact on an employee's rights and obligations both during and after employment — including restrictions on joining a competitor, soliciting clients or colleagues and using valuable intellectual property. This can be especially important for directors and senior executives.

Changing Employment Contracts and Contract Disputes

Changes to employment contracts can be legally complex and the position will depend upon factors such as the wording of the contract, the nature of the proposed change and how it is introduced.

Broadly — contracts may permit limited changes, but significant changes to contractual terms will usually require consultation and agreement.

If changes are imposed without an appropriate contractual or legal basis, it may give rise to disputes and potential claims (including breach of contract or constructive dismissal). Taking advice at an initial stage can help employers and employees understand their options and reduce the risk of disputes around contractual changes being imposed.

How We Can Help

Employment contracts and workplace policies require careful thought and tailored drafting. Where drafted well, they can considerably help employers manage risk, protect business assets and reduce the scope for costly disputes.

We support employers with putting in place documentation and procedures that are legally robust, commercially effective and aligned with the needs of the relevant business and how it operates in practice.

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