Do your employment contracts adequately cover your legal obligations?

In April 2020, important changes were made to Section 1 of the Employment Rights Act 1996, requiring that all employees and workers receive a written statement of employment particulars.

This written statement – often called a “Section 1 statement” – outlines the key terms and conditions of employment. It can also form the foundation of an employment contract. Crucially, it must be provided no later than the first day of employment.

Yet, despite these changes, many businesses are still failing to meet these legal requirements. Below, you will find what must be included, why it matters, and what steps you can take to ensure compliance.

What information must be provided?

The easiest way to comply with Section 1 requirements is to incorporate the mandatory information directly into the employment contract.

Your employment contract should clearly include:

1. Names and addresses of both the employer and employee/worker.
2. Start date of employment and continuous employment date, including any period of probation.
3. Job title or a brief job description.
4. Place of work, and whether the employee may be required to work overseas for more than one month.
5. Rate of pay or the method of calculating pay, and the interval of payment (e.g. weekly or monthly).
6. The hours and days of work and if these are variable, details of how they vary.
7. Holiday entitlement and pay.
8. Sick leave and pay arrangements.
9. Details of other paid leave entitlements (such as maternity, paternity, or parental leave).
10. Details of any other benefits the employee or worker is entitled to and if these are to be non-contractual, it should be clearly expressed.
11. Details of the disciplinary and grievance procedures in place.
12. Information on pension schemes or other pension arrangements.
13. The amount of notice the employee or the worker is entitled to receive and required to give when terminating the contract.
14. Details of any mandatory training the employee must complete.

If you have an employee handbook that covers policies such as sickness absence, holidays or the disciplinary procedure, it is best practice to refer to the handbook in the contract rather than repeating the details. Be clear that the handbook is non-contractual, so policies can be updated without varying the employment contract and so you do not risk being in breach of any policy

Why compliance matters and what are the risks?

Providing a Section 1 statement is a legal requirement for an employer.

While an employee or worker cannot bring a standalone claim solely for not receiving an adequate Section 1 statement, they can add it to another claim (for example, unfair dismissal). If the Employment Tribunal finds a breach, it may award up to four weeks’ basic pay (subject to the statutory cap).

Alternatively, there is also a risk that an employee or worker invites an Employment Tribunal to determine what the employment terms are based on the facts of the case – something that can be both time-consuming and damaging for your business.

Beyond the legal risks, there are reputational consequences. Employment Tribunal claims and negative reviews can discourage talented candidates from applying and possibly hinder key business relationships.

For both an employer and employee, one of the most important advantages of having a clear, well-drafted contract containing all the section 1 key information, is that it also reduces the likelihood of disputes arising from minor misunderstandings because the information has been provided at the start.

What action should you take?

1. Review your current contract templates.
   If you have not reviewed your contract terms in a while, then now is definitely a good time to service it to ensure it includes all the required information under Section 1.

2. Align current and new contracts.
   The obligation to provide a Section 1 statement only applies to new employees but if you have a number of existing employees on older contracts you may wish to update their contracts so that all staff are on similar contract terms. From an employer’s perspective this could be very helpful as it can be hard to manage day-to-day employment queries when staff have differing terms.

This is also a great opportunity to tailor any contracts so that they are appropriate to each employee’s level and responsibilities

If you need any guidance or assistance with reviewing your contracts or any other questions, my colleagues and I would be happy to help so please feel free to get in contact.

Equally, if you are an employee and need legal advice on your contract terms, please feel free to get in touch.