An employment contract is the most fundamental and important document entered into between employer and employee.
Q. Must I provide a written contract of employment?
A contract can be verbal or written. While a written contract of employment is not a legal requirement, it is good practice.
It is, in any case, a legal requirement that employees and workers are given a written statement of their basic terms of employment.
This should at the least cover their place of work, salary or hourly rate (and overtime rates, where applicable), working hours, notice period, holiday and sick pay entitlement.
Q. What happens if I fail to provide written particulars of employment?
Employers risk a penalty awarded by the employment tribunal of between two and four weeks’ pay for a failure to provide written particulars of employment on or before the employee’s start date.
Q. Are there any particular areas to watch out for?
In relation to the basic written terms, you’ll need to ensure that what you offer your employees and workers, and what is reflected in their contracts, is equal to or exceeds the various minimum legal entitlements.
- Check that they will be paid at least the national minimum wage, which tends to increase in April every year. We are frequently called on by farmers to advise on cases where employees are paid a salary, but work so many hours that they end up being paid less than the minimum wage. Employees, or anyone else, can notify HMRC if they think they are being paid less than the minimum wage.
- Some employers make the mistake of attributing and deducting more than is allowed where a good level of accommodation is provided with the job. An employer can only deduct the maximum statutory amount for such accommodation, which is £60.90 a week.
- Workers must receive at least the minimum holiday entitlement (28 days/year) and state whether this includes bank holidays – in general these are in addition to the minimum holiday entitlement.
- Notice periods must not be below the statutory minimum, which is one week for each year of service up to a maximum of 12 weeks, where they have been employed for more than two years.
- If you are employing farmworkers in Wales, they will also benefit from certain minimum terms set out in the Agricultural Wages Order for Wales (also updated annually).
- Given that some of these statutory minimum entitlements change each year, it’s a good idea to take legal advice and have any old template contracts reviewed and updated regularly.
- When an employee is taken on on the understanding that they have certain licences or qualifications, it is prudent to check these and to take a copy – for example, if a full driving licence is necessary for the performance of the role. Where this is the case, employers may want to include in the contract or statement of terms the option to terminate the employment if the employee loses that licence.
Q. What else should a contract cover?
An employment contract or statement of terms can cover a wide range of additional issues.
You may use it to set out your requirements in relation to the use of personal protective equipment, or your expectations in terms of not taking holiday during harvest or how sickness absence should be reported.
Setting out the employee’s holiday year will enable you to accurately calculate what holiday they have accrued for the purpose of a payment when they leave, or for understanding what holiday they have accrued during maternity leave, for example.
You can also use a contract to state how employees should record the hours they have worked (for example, on a timesheet) and how often this should be reported, even if you pay them a salary rather than an hourly rate.
It is important to note that should HMRC ever decide to investigate whether you have paid your employees or workers the national minimum wage, the onus to keep records of hours worked is on the employer, not the employee.
Q. Do I have to provide a job description?
It is advisable to attach a detailed job description to the contract, setting out every aspect of your employee or worker’s role on the farm. This can alleviate disagreements further down the line, but be sure to build in some flexibility so that you can make minor or reasonable changes to what you can require them to do.
What is reasonable is always a question of fact relative to the employee’s core role.
If a farmworker’s job description lists general maintenance roles around the farm, it would not be unreasonable to ask them to do things that are similar, albeit not specifically mentioned in the description, such as sweeping or mending a gutter.
However, it probably would be unreasonable to ask them to do things that are vastly different from their core role, such as cleaning or bookkeeping.
Q. Must I do right to work checks?
The contract should also set out the requirement for the employee to have passed the requisite right to work checks before their start date.
Whether you are employing someone local to work on the farm or bringing in seasonal workers from abroad, employers are required to check that each individual has the appropriate immigration permission to work in the UK. A right to work check consists of the following three steps:
- Obtain original versions of the acceptable documents from the prospective employee (or perform online checks, if applicable)
- Examine the document in the presence of the employee to ensure that it is genuine and to check that it is valid
- Make and retain copies of the documents, along with a record of the date on which the check was made.
Acceptable documents for these checks are listed on the Gov.uk website.
Within the contract you should set out the basic policies you have in place, such as for disciplinary action, grievances, sickness and so on, including where copies of the policies can be found.
We recommend that the contract specifies that the policies do not form part of the contractual terms of the employment, because if they are contractual and you do not stick to them by the letter, you would be opening yourself up to a potential breach-of-contract claim.
Also, if policies are contractual, employees’ consent will be required to make any changes to them.
Q. Can employers make changes to employment contracts?
Changes to employment contracts can only be made in consultation with employees and with their consent, unless the changes are trivial and you have reserved the right in the contract to make small changes without consent.
A change of business structure – for example, a move from a partnership to a company structure, or the sale of the farm – would require employees to be transferred with the same terms and conditions, including length of service, through the Transfer of Undertakings (Protection of Employment) (Tupe) legislation.
Under Tupe, employees have to be informed of the change and when it is taking place. If there are going to be any implications for their employment, they also need to be consulted with.
In a farming situation, this may often mean that there is no change from a practical perspective, but this does not remove the obligation of the outgoing employer to inform its employees.
Natalie Ward is a senior associate at law firm Thrings
When does an employment contract start?
An employment contract begins when the employee starts work, even if there is nothing in writing.
The contract might begin even earlier if all the following apply:
- Someone accepted the job offer verbally or in writing
- The offer was unconditional or the person met all the conditions (for example, the employer was satisfied with their references)
- The employer set out the terms of the job in a clear and definite way, verbally or in writing
Source: Advisory, Conciliation and Arbitration Service