What is an employment contract?

When a business takes on an employee, the relationship is a legal one governed by contract — whether or not it is written down. In the UK, employees have a legal right to a written statement of their employment terms, and providing a clear, well-drafted employment contract protects both parties. Understanding what an employment contract is and what it must cover is essential knowledge for any employer.

An employment contract is a legal agreement between an employer and an employee setting out the terms and conditions of the employment relationship. It typically covers job title and description, start date, place of work, hours, salary and payment arrangements, holiday entitlement, notice periods, and any confidentiality or restrictive covenant provisions. UK employment law requires employers to provide a written statement of key terms on or before the first day of employment.

An employment contract does not need to be complicated, but it must reflect the actual terms of the role and comply with statutory requirements. A contract that falls below statutory minimums is unenforceable where it conflicts with the law. Our guide to employment contracts for UK founders covers what must be included and how to get it right from the start.