Employment contract: what you need to know

Employment contract: what you need to know

It is a legal requirement that all employment relationships between employee and company are governed by a legally binding employment contract, setting out the terms of the employment. So, you need to have an employment contract in place if you’re hiring someone on an employment basis. 

Equally though, you would want to have one because ultimately it is the foundation on which your employed team members are required to deliver for your company, and equally it gives them the certainty and stability they need to be able to focus on doing the job you want them to do. 

Without your employment contract, you have nothing to enforce against an employee who fails to deliver, or even who uses the company intellectual property unauthorised. So this is just as much about protecting your business (if not more) than it is about writing down the employee’s rights.

For the company, the employee is then locked into those commitments, on the agreement that in exchange for the employee’s salary and benefits, all intellectual property and value created belongs to the company.

What is in our Legal Sidekick employment contract?

It is set out like a normal contract. The names at the top, followed by a series of clauses setting out the rights, responsibilities and obligations of the different parties, followed by a section where both parties sign to confirm that they are legally bound by the agreement.

In terms of content, there are all the standard commercial terms: salary, holidays, notice period, role title, probation period etc.

Then mixed in with them, there are various legal terms to protect the company, for example confirmation of ownership in all work created (i.e. ownership of intellectual property rights), rights to terminate the contract without notice if the employee steals or is guilty of any other misconduct, non-competition rights and confidentiality obligations.

To create your employment contract, click here.

How long does it last for? Can I end it if it isn’t going well?

In summary, it lasts until either side chooses to end it, and you can end it. B it is much easier to end an employment contract  either during the probation period, or during the first two years. Here is some more detail:

Usually, there will be a 3-6 month trial period (also known as a probation period) during which either the company or the employee can terminate on 1 or 2 weeks’ notice (based on whatever you decide when creating your employment contract). 

During the first two years’ of employment, there is generally very little the employee can do to prevent the company giving what we call ‘contractual notice’ (i.e. the standard notice period, whatever you have chosen – e.g. 1 month, 2 months, etc). This is because an employee only has rights to claim that they have been unfairly dismissed after 2 years of employment. 

After 2 years, the employee’s rights are a little more entrenched, and it would be more difficult to just fire someone because you aren’t quite satisfied with them. However, there is still a notice period, and if you have good reasons to do so, then even after 2 years you can give notice to end the employment contract.

Can I fire someone without notice?

Yes. If an employee breaches the terms of the contract, like with any contract, you can terminate it immediately, for example for gross misconduct. This is the standard concept of ‘firing’ someone.

This article was written by Legal Sidekick. Legal Sidekick is the legal platform for startups. We offer automated contracts and loads of startup legal resources and guides. For 'hire a freelancer' queries, please contact us at hey@legalsidekick.com.