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Employment Contracts: What Are They And Why Are They Important?

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The consumer-watchdog  reports that at least 5.1 million people in the UK fail to read their employment contracts properly. Moreover, at least two million people do not have a written employment contract.

From 12th to 21st February 2010, Which? asked 4,075 members of the British public aged 16 or above about their employment contracts. 32% of them (excluding the self-employed) only skim read their contract (26%) or didn't read it at all (6%). Based on a adult population of 48.5 million, this equates to between 5.1 and 6.8 million people (using a 95% confidence interval). 12% of respondents (again, excluding the self-employed) don't have a written contract. This equates to between 2 and 2.9 million people. Moreover, only 3 in 10 employees received their contract before starting their job, and 9% didn't get a contract until they'd been in the post for six months or more.

Employment contracts: your rights

Your employer must provide you with a "statement of terms" within 2 months of starting work. A statement of terms is not synonymous with an employment contract, however, since it need only contain the following terms:

  1. your name and the name of your employer;
  2. your job title and a brief job description;
  3. the date you started work;
  4. the date 'continuous employment' began;
  5. if your job is not permanent, the period for which the employment is expected to continue or, if it is for a fixed term, the date when it will end;
  6. your salary and when you will be paid (e.g., weekly or monthly);
  7. the address or addresses of the places where you work;
  8. the number of hours you must work and when you must work them;
  9. details of any collective agreements (e.g., negotiated by a trade union);
  10. holiday entitlement;
  11. sick leave and pay;
  12. notice;
  13. disciplinary and grievance procedures;
  14. pensions and pension schemes.

An employment contract usually contains additional clauses, including restrictive covenants which may restrict your ability to work for a competitor after your employment ends.

As Which? chief executive Peter Vicary-Smith advises: "Always read your contract before signing it and check that the terms - such as salary, holiday entitlement, notice period and redundancy procedure - are in line with what your employer agreed at your interview. Dotting the 'i's and crossing the 't's could pay dividends in the long-term. People who fail to take the time to read their employment contracts properly may have no idea what they've signed up to and could be in for a shock in the future."

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