Call us on:  0808 172 93 22

Contract Essentials

Contract sorter - FG Solicitors

SUMMARY: With unemployment rates at an all-time low we are frequently asked by clients whether they can use the same contracts for each type of employee or worker they engage. The short answer to that question is “no”. As there are a number of contracts and agreements widely available to organisations, we have produced a quick guide to the key contracts.

Type of contract/agreement

Who does it apply to?

Who should it not be used for?

When should your organisation use this contract/agreement and what are the key considerations?

Directors’ Service Agreement

Any Executive Director

Employees generally

Apprentices

Temporary Workers

Zero Hours Casuals

Consultants

Non-executive Directors

  • It is a legal requirement to provide specific terms and conditions within 2 months of an employee commencing employment. Although a standard employment contract can be used, businesses often prefer using Directors’ service agreements due to the additional obligations owed by directors.
  • For owner managed businesses these agreements are favoured to provide protection of the directors’ rights on the sale/transfer/takeover of a business.

Employment Contract

Employees (including directors where a Directors’ Service Agreement is not in place)

Apprentices

Temporary Workers

Zero Hours Casuals

Consultants

  • It is a legal requirement to provide specific terms and conditions within 2 months of an employee commencing employment.
  • Contracts can be standardised for differing categories of employee within the business such as managers, shift workers or home based employees.
  • The contract can include additional protections for the employer such as post-termination restrictions, confidentiality and intellectual property rights – particularly relevant for a number of industries including IT, Professional/Financial Services and Pharmaceuticals. These need to be tailored to the organisation’s needs.
  • Employment contracts for part-time employees need to include specific provisions to ensure entitlements are accrued on a pro-rata basis.
  • Employment contracts for fixed-term employees need to include specific provisions relating to the termination of the employment.

Apprenticeship Agreement

Apprentices (on a work-based training programme).

Employees (including directors)

Temporary Workers

Zero Hours Casuals

Consultants

  • Apprentices are employees and the legal requirement to provide specific terms and conditions within 2 months of the employment commencing applies.
  • Failure to ensure the appropriate apprenticeship agreement is in place, can result in apprentices having rights which can make it difficult and costly to terminate their employment before the end of the apprenticeship.
  • The agreement will include specific provisions relating to the termination of the employment.
  • The agreement can include additional protections for the organisation such as post-termination restrictions, confidentiality and intellectual property rights – particularly relevant for some industries typically associated with apprenticeships such as the IT industry. These need to be tailored to the organisation’s needs.

Zero-hours Casual Worker Agreement

Zero Hours Casuals

Employees (including directors)

Apprentices

Consultants

Directors

  • The agreement will make it clear that it is intended the individual is a worker, rather than an employee, so does not have employment rights.
  • The agreement will set out how work will be offered and accepted.

Consultancy Agreement

Consultants (individuals who are self-employed or whose services are provided through a service company)

Employees (including directors)

Temporary Workers

Zero Hours Casuals

Apprentices

Directors

  • The agreement should specify that the individual is not a worker or employee, but is self-employed or engaged by a service company*.
  • The agreement will detail the basis on which work is offered, payment (including the submission of invoices) and where tax liability sits.
  • It is prudent to set out whether the consultant will have the benefit of various employment rights, or the more limited rights available to workers.
  • The agreement should clarify whether the individual is owed health and safety duties or whether the individual (as an independent contractor) is responsible for their own safety.
  • The agreement can also include additional protections for the organisation such as appropriate restrictions, confidentiality and ownership of intellectual property rights – particularly relevant for a number of industries including IT, Professional/Financial Services and Pharmaceuticals. These need to be tailored to the organisation’s needs.
  • The agreement should also contain appropriate termination provisions and/or substitution rights.

*Organisations are advised to take advice on the practical workplace arrangements and obligations when engaging consultants as these considerations will factor when determining if the “consultant” is, in fact, an employee.

Secondment Agreement

Secondees

Consultants

Zero Hours Casuals

  • Specific agreements should be put into place where the employer intends to temporarily transfer an employee from one organisation to another.
  • The agreement will set out details of the relationship between the two organisations and the employee.
  • The agreement will deal with the employee’s employment status, payment arrangements, day to day management arrangements and the corresponding liabilities.

 

 

Contact Details

For more details about any of the above contracts, or if you just want someone to check that your current contracts are up to date, please contact a member of our Employment Law team:

fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice.

Updated: by FG Solicitors
Call us on:  0808 172 93 22

CONTRACT ESSENTIALS

Contract sorter - FG Solicitors

SUMMARY: With unemployment rates at an all-time low we are frequently asked by clients whether they can use the same contracts for each type of employee or worker they engage. The short answer to that question is “no”. As there are a number of contracts and agreements widely available to organisations, we have produced a quick guide to the key contracts.

Type of contract/agreement

Who does it apply to?

Who should it not be used for?

When should your organisation use this contract/agreement and what are the key considerations?

Directors’ Service Agreement

Any Executive Director

Employees generally

Apprentices

Temporary Workers

Zero Hours Casuals

Consultants

Non-executive Directors

  • It is a legal requirement to provide specific terms and conditions within 2 months of an employee commencing employment. Although a standard employment contract can be used, businesses often prefer using Directors’ service agreements due to the additional obligations owed by directors.
  • For owner managed businesses these agreements are favoured to provide protection of the directors’ rights on the sale/transfer/takeover of a business.

Employment Contract

Employees (including directors where a Directors’ Service Agreement is not in place)

Apprentices

Temporary Workers

Zero Hours Casuals

Consultants

  • It is a legal requirement to provide specific terms and conditions within 2 months of an employee commencing employment.
  • Contracts can be standardised for differing categories of employee within the business such as managers, shift workers or home based employees.
  • The contract can include additional protections for the employer such as post-termination restrictions, confidentiality and intellectual property rights – particularly relevant for a number of industries including IT, Professional/Financial Services and Pharmaceuticals. These need to be tailored to the organisation’s needs.
  • Employment contracts for part-time employees need to include specific provisions to ensure entitlements are accrued on a pro-rata basis.
  • Employment contracts for fixed-term employees need to include specific provisions relating to the termination of the employment.

Apprenticeship Agreement

Apprentices (on a work-based training programme).

Employees (including directors)

Temporary Workers

Zero Hours Casuals

Consultants

  • Apprentices are employees and the legal requirement to provide specific terms and conditions within 2 months of the employment commencing applies.
  • Failure to ensure the appropriate apprenticeship agreement is in place, can result in apprentices having rights which can make it difficult and costly to terminate their employment before the end of the apprenticeship.
  • The agreement will include specific provisions relating to the termination of the employment.
  • The agreement can include additional protections for the organisation such as post-termination restrictions, confidentiality and intellectual property rights – particularly relevant for some industries typically associated with apprenticeships such as the IT industry. These need to be tailored to the organisation’s needs.

Zero-hours Casual Worker Agreement

Zero Hours Casuals

Employees (including directors)

Apprentices

Consultants

Directors

  • The agreement will make it clear that it is intended the individual is a worker, rather than an employee, so does not have employment rights.
  • The agreement will set out how work will be offered and accepted.

Consultancy Agreement

Consultants (individuals who are self-employed or whose services are provided through a service company)

Employees (including directors)

Temporary Workers

Zero Hours Casuals

Apprentices

Directors

  • The agreement should specify that the individual is not a worker or employee, but is self-employed or engaged by a service company*.
  • The agreement will detail the basis on which work is offered, payment (including the submission of invoices) and where tax liability sits.
  • It is prudent to set out whether the consultant will have the benefit of various employment rights, or the more limited rights available to workers.
  • The agreement should clarify whether the individual is owed health and safety duties or whether the individual (as an independent contractor) is responsible for their own safety.
  • The agreement can also include additional protections for the organisation such as appropriate restrictions, confidentiality and ownership of intellectual property rights – particularly relevant for a number of industries including IT, Professional/Financial Services and Pharmaceuticals. These need to be tailored to the organisation’s needs.
  • The agreement should also contain appropriate termination provisions and/or substitution rights.

*Organisations are advised to take advice on the practical workplace arrangements and obligations when engaging consultants as these considerations will factor when determining if the “consultant” is, in fact, an employee.

Secondment Agreement

Secondees

Consultants

Zero Hours Casuals

  • Specific agreements should be put into place where the employer intends to temporarily transfer an employee from one organisation to another.
  • The agreement will set out details of the relationship between the two organisations and the employee.
  • The agreement will deal with the employee’s employment status, payment arrangements, day to day management arrangements and the corresponding liabilities.

 

 

Contact Details

For more details about any of the above contracts, or if you just want someone to check that your current contracts are up to date, please contact a member of our Employment Law team:

fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice.