Employment Contract Essentials: What UK Employers Must Include

Every employee and worker in the UK has the legal right to receive a written statement of their employment particulars on or before their first day of work. Getting this wrong — or failing to provide it at all — exposes your business to tribunal claims and additional compensation awards.

This guide explains exactly what you must include, what you should include, and the most common contractual mistakes that land employers in trouble.

The legal requirement: Section 1 statements

Since 6 April 2020, all employees and workers must receive a written statement of employment particulars on or before day one of their employment. This is commonly called a Section 1 statement after Section 1 of the Employment Rights Act 1996.

Before this change, employers had up to two months to provide the statement. That grace period no longer exists.

What must be included on day one

The following particulars must be provided in a single document on or before the start date:

What can be provided within two months

Certain additional particulars can be provided in a supplementary document within two months of the start date:

• Terms relating to incapacity for work (if not already covered)
• Pensions and pension schemes details
• Collective agreements affecting employment terms
• Details of any non-compulsory training provided by the employer
• Disciplinary and grievance procedures (or reference to where they can be found)

Key contractual clauses beyond the statutory minimum

While the Section 1 statement covers the legal minimum, a well-drafted employment contract should go further to protect your business and set clear expectations.

Confidentiality

Include a clause requiring the employee to keep business information confidential during and after employment. Define what constitutes confidential information — customer lists, pricing strategies, trade secrets, and proprietary processes.

Restrictive covenants

Post-termination restrictions (such as non-compete, non-solicitation, and non-dealing clauses) must be carefully drafted to be enforceable. Key principles:

• Restrictions must be no wider than reasonably necessary to protect a legitimate business interest
• Duration, geographical scope, and scope of restricted activities should all be proportionate
• Overly broad restrictions are unenforceable — courts will not rewrite them to make them reasonable
• Consider different levels of restriction for different seniority levels

Intellectual property

If employees will create anything that could be intellectual property (software, designs, written content, inventions), include a clause assigning ownership to the company. Under the Patents Act 1977, inventions made by employees in the course of their normal duties belong to the employer by default, but copyright and other IP rights benefit from explicit assignment.

Garden leave

A garden leave clause allows you to require an employee to stay at home during their notice period while remaining employed. This is useful for protecting business interests when senior employees resign to join a competitor. Without an express clause, you may not be able to enforce garden leave.

Deductions from wages

The Employment Rights Act 1996 prohibits deductions from wages unless authorised by statute, the contract, or with the worker's prior written consent. If you want the ability to deduct overpaid holiday, training costs, or other amounts from final pay, you must include explicit provisions in the contract.

Variation clause

Employment contracts cannot be unilaterally changed by the employer. A variation clause does not give you the right to change terms at will, but it establishes the process for agreeing changes and records that both parties understand terms may need to evolve.

In practice, any material change to employment terms requires the employee's agreement. Imposing changes without consent can amount to a breach of contract and may give the employee grounds for constructive dismissal.

Common contract mistakes

Having reviewed hundreds of employment contracts for small businesses, these are the errors we see most frequently:

1. No contract at all

Some employers still rely on verbal agreements or handshake deals. This leaves you with no evidence of agreed terms if a dispute arises, and breaches the Section 1 requirement.

2. Using a generic template without customisation

Downloading a free template and filling in the blanks often results in contracts that do not reflect your actual working arrangements. If your contract says "9 to 5, Monday to Friday" but the employee regularly works different hours, the written terms may not be enforceable.

3. Unclear overtime provisions

State clearly whether overtime is expected, whether it is paid, and at what rate. Ambiguity here is a frequent source of disputes. See our overtime pay guide for detailed guidance.

4. Missing probation period terms

Since April 2020, you must state whether a probationary period applies. But many contracts either omit probation entirely or fail to explain what happens at the end — including the notice period during probation and the right to extend. For full guidance, read our probation period guide.

5. Outdated terms

Employment law changes regularly. Contracts drafted five years ago may not reflect current pension auto-enrolment duties, the latest minimum wage rates, or the new requirement to state training and probation details. Review contracts at least annually.

Fixed-term and zero-hours contracts

Fixed-term contracts

If you employ someone for a set period, additional rules apply:

• The employee has the right to the same terms as a comparable permanent employee (Fixed-term Employees Regulations 2002)
• After four years of continuous fixed-term employment, the contract automatically becomes permanent unless you can objectively justify the fixed term
• Include a clear end date and explain what happens at expiry

Zero-hours contracts

Zero-hours workers are still entitled to a written statement of particulars. The contract should make clear that:

• There is no guarantee of minimum hours
• The worker is not obligated to accept work when offered
• Holiday entitlement accrues based on hours worked
• Exclusivity clauses are banned — you cannot prevent a zero-hours worker from working for others

Frequently asked questions

Next steps

Key takeaways

A compliant employment contract is your first line of defence in any employment dispute. Provide it on day one, cover all Section 1 requirements, and add protective clauses appropriate to your business. Review your contracts annually to keep pace with legal changes.

If you are hiring your first employee, pair this guide with our right to work checks guide and run the salary numbers through our Payroll Tax Calculator to understand the full cost of employment.