What Is an Employment Contract?

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by Rebecca Lister | 28th Jun 2026

Why a missing contract could cost you more than you think

Article Summary

What is an employment contract? It is a legally important agreement between employer and employee that outlines key terms such as pay, hours, duties, notice periods, confidentiality, restrictive covenants and rights. Failing to provide clear, compliant documentation can increase the risk of legal claims, disputes, and costly business disruption.

Our guide explains what must be included, why it matters, and how to stay compliant under UK employment law. If you’re hiring or updating contracts, don’t leave it to chance – get expert HR support to protect your business.

Are Employment Contracts Legally Required?

Employment contracts form the foundation of the working relationship between employer and employee, helping to clarify rights, responsibilities, and expectations while supporting legal compliance.

By law, employers must provide employees and workers with a written statement of particulars on or before the first day of employment. This principal written statement outlines the core terms of employment, including employer/employee name, pay and intervals, working hours, job title, notice periods, place of work and holiday entitlement.

An employment contract is the broader legally binding agreement between employer and employee. It includes the written statement but may also cover additional terms such as confidentiality clauses, disciplinary and grievance procedures, workplace policies, and other contractual protections.

• Principal statement: This must be provided on or before day one of employment.
• Additional ‘Wider’ Particulars: Some supplementary information may be supplied within two months of the employment start date.
• Employment contract: There is no strict statutory deadline, but in practice it is normally issued on or before day one and often incorporates both the principal statement and wider particulars

This structure ensures employees receive essential terms immediately, with additional policies and procedural details provided separately.

Since 6 April 2020, UK employers must provide employees and workers with a written statement of employment particulars on or before day one, in accordance with the Employment Rights Act 1996 and updated 2018 Regulations. Ref: UK Government employment particulars guidance.

Why It Matters

Failing to provide compliant employment documentation can increase the risk of disputes, tribunal claims, and reputational damage. Clear written terms help protect both employer and employee by reducing misunderstandings around pay, responsibilities, procedures, and expectations.

What to Include in The Principal Statement

Whether you are an SME or a larger organisation, it’s essential to understand your legal responsibilities when hiring staff. By law, employers should look to include the following in their written/principal statement of particulars:

• Employer and employee details, including names and addresses
• Job title, job description, and work responsibilities
• Start date and continuous employment date, where applicable
• Salary or pay rate, including payment frequency and method
• Working hours, required days, and whether or how these may vary
• Holiday entitlement and how leave is calculated upon termination
• Place of work, including primary location or multiple workplaces
• Probation period length, conditions, and successful completion criteria
• Details of sick leave, sick pay, and any additional paid leave (or where this information can be found)
• Contract duration or end date for fixed-term roles
• Contractual and non-contractual benefits
• Required training, including whether it is paid or unpaid
• Notice periods for both employer and employee
• Overseas working terms, where relevant

What Should the Wider Written Statement or Employment Contract Include?

The wider contract often expands on statutory requirements and may include:

• Disciplinary and grievance procedures
• Pension arrangements
• Collective agreements
• Additional benefits and training obligations
• Confidentiality clauses
• Restrictive covenants
• Workplace policies such as data protection, absence management, and flexible working

Employers may also include information on wellbeing support employee assistance programmes, or company-specific benefits to provide greater clarity and strengthen employee engagement.

Not sure whether your current employment contracts meet legal requirements? Eclipse HR can review, update, or draft compliant employment contracts tailored to your organisation. Contact us today.

The Risks of Not Having a Proper Employment Contract

Without a legally compliant employment contract, businesses can face serious consequences. Missing or poorly drafted contracts may lead to disputes over pay, duties, probation periods, or dismissal procedures.

Potential risks include:

• Employment tribunal claims
• Breach of contract disputes
• Compliance failures
• Misunderstandings over employee rights
• Reputational damage

For SMEs in particular, one missing contract can quickly become an expensive legal issue. A professionally drafted contract is not just paperwork. It is a practical safeguard for your organisation.

Variations and Amendments to Employment Contracts

Employment contracts, and all other effective HR policies, need to be updated over time due to changes in business needs, legal requirements, or employee roles. Employers should communicate any proposed amendments clearly and, where necessary, consult with employees to gain their agreement.

Key examples of amendments may include changes to working hours, job responsibilities, or salary adjustments. It’s important to document these changes formally and provide updated written statements to reflect the new terms.

Failure to handle contract variations properly can lead to disputes or claims of unfair treatment. Ensuring transparency and fairness in this process helps maintain trust and prevent misunderstandings.

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Can an employer change an employment contract without employee agreement?

In most cases, an employer cannot unilaterally change an employment contract without the employee’s agreement. Proposed changes should be properly consulted on and agreed in advance. Failing to do so may give rise to legal risks, including breach of contract, constructive dismissal claims, and potential tribunal action.

In light of the Employment Rights Act 2025 and upcoming reforms, employers should be particularly cautious when seeking to vary key contractual terms, as stricter limits are being introduced on making significant changes especially where these are imposed without agreement. Clear consultation, transparency, and proper documentation are therefore essential.

How Can We Help?

Still unsure what an employment contract is or how to draft one correctly? Our HR experts can help you create compliant, customised agreements for your team across many sectors.

Whether providing you with employment contracts/written statements of particulars, employment policies, employee handbook templates, or reviewing the documents you currently have in place.

Hiring your first employee, reviewing compliance, or asking what is an employment contract, Eclipse HR can help protect your business with legally sound employment contracts and practical HR expertise. Been asking what is an employment contract – Get in touch today.

Author: Rebecca Lister

Rebecca supports the Eclipse HR team and our clients across a range of tasks. Rebecca has recently completed her Master’s degree in Advanced Legal Practice (MLaw) at the University of Kent and is now studying for her Solicitors Qualification Exams. Her academic focus, particularly in employment law, complements her practical experience and deepens her understanding of HR in action.

Disclaimer

Information and reference materials included within Eclipse HR Limited articles and blogs are provided free of charge and for reference purposes only. They are not intended as a substitute for legal advice, or professional or other advice in regard to specific circumstances. Whilst every effort is made to ensure the contents are correct on website publication, they should be considered for guidance purposes only.