Employment Contracts: What Must Be Included by Law?

Every employer in the UK is legally required to provide employees with a written statement of their employment terms. Yet employment contracts remain one of the most common areas where small businesses fall short — either issuing contracts that are too vague, too late, or not at all. With the Employment Rights Act 2025 introducing new requirements and increasing the consequences of getting it wrong, now is the time to make sure your contracts are watertight. Here is what you need to know.

Does an Employment Contract Have to Be in Writing?

Technically, an employment contract can exist without anything being written down — a verbal agreement or even conduct alone can create a binding contract. However, the law requires employers to provide employees and workers with a Written Statement of Employment Particulars on or before their first day of employment. This is not optional. Failing to provide it gives employees the right to bring a tribunal claim, with awards of two to four weeks' pay.

Many small businesses assume an offer letter is sufficient. It is not. A written statement must meet specific statutory requirements, and simply confirming a job title and salary falls well short of what the law demands.

What Must Be Included by Law?

The law requires the written statement to contain the following mandatory particulars:

• The names of the employer and employee.

• The start date of employment and, where relevant, the date continuous employment began.

• Pay — the rate or method of calculating pay, and how frequently it will be paid (weekly, monthly, etc.).

• Working hours — the days of the week the employee is required to work and whether hours or days may vary, with greater specificity now required under the 2026 rules.

• Holiday entitlement — the amount of paid annual leave the employee is entitled to, including public holidays, and the holiday pay rate.

• Sick leave and sick pay entitlement — both statutory and any contractual sick pay arrangements.

• Notice periods — the notice the employee must give and the notice the employer must give to terminate employment.

• Job title or a brief description of the work the employee is employed to do.

• Place of work — the address where the employee will primarily work, or a statement that they will work at various locations.

• Whether the job is permanent or fixed-term — and if fixed-term, the expected end date.

• Probationary period — if applicable, the length of any probationary period and the conditions that apply during it.

• Any other paid leave entitlement — such as maternity, paternity, or parental leave provisions.

• Pension arrangements — details of any workplace pension scheme and auto-enrolment obligations.

• Collective agreements — details of any collective agreements that directly affect the terms and conditions of employment.

Additional information — including disciplinary and grievance procedures, and details of any training requirements — must also be provided, though some of this can be referenced in a staff handbook or separate policy documents rather than included directly in the contract itself.

What Has Changed Under the Employment Rights Act 2025?

The Employment Rights Act 2025 has introduced several changes that directly affect employment contracts, with the first wave in force from April 2026:

• Day-one written statement required for all workers — the written statement must now be provided on or before the first day of employment for all employees and workers, including those on casual and fixed-term arrangements. The previous two-month grace period has been removed.

• Greater specificity on working hours — contracts must now specify working days and whether hours may vary with greater precision than previously required.

• Zero-hours contract reforms — employers must now offer guaranteed hours contracts to zero-hours workers where those workers have worked regular hours over a reference period. Contracts should reflect these requirements for relevant workers.

• Day-one flexible working rights — all employees now have the right to request flexible working from their first day. Employers must respond within 16 calendar days and provide clear reasons if declining. Contracts and policies should reflect this.

• Unfair dismissal qualifying period reducing — the two-year qualifying period for unfair dismissal protection is expected to reduce to six months from January 2027. This means probationary period clauses and dismissal procedures in contracts will need to be reviewed ahead of that change.

  
  

Types of Employment Contract

It is important to use the right type of contract for each working arrangement. The main types are:

• Permanent full-time contract — the most common type, with an ongoing employment relationship and no fixed end date. Full statutory rights apply from day one.

• Permanent part-time contract — the same as a full-time contract but with fewer hours. Part-time workers must not be treated less favourably than comparable full-time employees.

• Fixed-term contract — employment for a specified period or task. When a fixed-term contract expires without renewal, this constitutes a dismissal in law. If an employee has two or more years of continuous service, they may be entitled to a redundancy payment.

• Zero-hours contract — no guaranteed minimum hours. The worker is only paid for hours worked. From April 2026, employers must offer guaranteed-hours contracts to zero-hours workers who have worked regular hours during a reference period.

• Worker agreements — for those who are not employees but are not genuinely self-employed either. Workers have fewer rights than employees but are still entitled to NMW, holiday pay, and pension auto-enrolment.

  
  

Clauses Every Employer Should Consider Including

Beyond the statutory minimums, well-drafted contracts should also consider the following clauses to protect the business:

• Confidentiality clause — protecting sensitive business information, client lists, and trade secrets both during and after employment.

• Restrictive covenants — clauses that prevent employees from joining a direct competitor or poaching clients or colleagues for a defined period after leaving. These must be reasonable in scope and duration to be enforceable.

• Intellectual property clause — confirming that any work, inventions, or materials created during employment belong to the employer.

• Flexibility clause — allowing the employer to make reasonable changes to duties, location, or hours with appropriate notice, reducing the risk of a breach of contract claim when business needs change.

• Garden leave clause — allowing the employer to place a leaver on paid leave during their notice period rather than requiring them to work it, particularly useful in client-facing or sensitive roles.

• Hybrid and remote working clause — with flexible working now a day-one right, contracts should clearly set out expectations around home and office working to avoid ambiguity.

  
  

When Should You Review Your Contracts?

Employment law does not stand still. If your contracts have not been reviewed since before April 2020 — when the written statement rules were last significantly updated — they are almost certainly out of date. With the Employment Rights Act 2025 now in force, contracts should be reviewed now to ensure they reflect:

• The new day-one written statement requirements.

• Updated NMW rates effective from April 2026.

• Day-one SSP and family leave rights.

• The right to request flexible working from day one.

• Zero-hours contract obligations where applicable.

• The forthcoming reduction in the unfair dismissal qualifying period from January 2027.

  
  

How Crown Payroll Services Can Help

Getting your employment contracts right from the outset protects your business, sets clear expectations with your employees, and reduces the risk of costly disputes down the line. At Crown Payroll Services, we provide employment contract support as part of our wider payroll and employment law service — from issuing compliant written statements to advising on contract clauses and keeping your documentation up to date as legislation evolves.

Call us on 01942 644864 or email hello@crownpayrollservices.co.uk to find out how we can help you get your contracts in order.