Upcoming changes to what is legally required in a contract of employment
25th March, 2020
Employers are under a legal obligation to provide employees with a written statement that sets out the key terms of the employment relationship.
Section 1 of the Employment Rights Act 1996 outlines the list of key terms, referred to as particulars, which must be provided.
The majority of these terms must be contained in a single document (known as the principal statement) and given to an employee within two months of them commencing work; normally the terms in the principal statement are incorporated in the contract of employment.
The other terms listed in the legislation does not have to be stated in a single document so long as it is accessible to employees such as in an employee handbook, on the staff intranet or in a collective agreement.
However, from 6 April 2020 there will be several legislative changes coming into force that will have an impact on the recruitment of new staff, contract reviews and even existing employees:
Change one: The employer’s duty to provide a written statement will be extended to workers
Employers will need to ensure that both workers and employees receive a written statement of particulars. This change is likely to benefit workers who will gain a better understanding of the employment relationship they are entering into. Consequently, employers should carefully review whether new hirers are classified as workers or self-employed and accordingly provide them with the correct information.
Change two: Employers will need to provide additional information to their employees and workers
The following additional particulars will need to be included in the principal statement:
• the hours and days of the week the worker /employee is required to work, whether they may be varied and how;
• entitlements to any paid leave;
• any other benefits not covered elsewhere in the written statement;
• details of any probationary period; and
• details of training provided by the employer which the worker is required to complete and any other required training in respect of which the employer does not bear the cost.
For new hirers beginning work after 6 April 2020, the following particulars that currently may be provided in a supplementary statement must now be given in the principal statement:
• the notice periods for termination by either side;
• terms as to length of temporary or fixed term work; and
• terms related to work outside the UK for a period of more than one month.
Employers will need to include the following additional new particulars which can be included in supplementary document (e.g. in installments):
• any other paid leave (other than provisions relating to holiday and sick pay); and
• any additional training entitlement provided by the employer.
Notably, whilst these changes only apply to individuals hired after 6 April 2020, existing staff will have the right to request a written statement with the new criteria. This must be given within a month of the request.
Change three: Employers will need to provide the majority of written particulars either on or before the first day of employment
This significantly shortens the deadline as to when an employer must provide the written particulars. However, employers will still have a two month window to provide employees with certain terms which may be given in installments, by way of supplementary statements. These terms are as followed:
• terms as to pension and pension scheme;
• details of any collective agreements directly affecting the employment;
• details of any training entitlement provided to the employer; and
• a note giving certain information about disciplinary and grievance procedures.
So, what will happen if an employer is non-compliant? An employee cannot make a freestanding claim to the Employment Tribunal if their employer fails to provide a written statement, but this does not let employers off the hook.
If, however, an employee is bringing a successful substantive claim such as unfair dismissal and it is found that the employer did not provide the employee with a compliant statement of written particulars, a Tribunal may award an employee additional compensation for this breach.
An employee could be entitled to an additional two to four weeks pay, subject to the statutory cap of £525 a week (which is expected to increase slightly in April).
To avoid an increased risk of claims, employers should review, amend and update their contract of employment templates to be in line with these legislative changes.