In most cases it is not necessary for an employment contract to be in writing to be legally binding. The contract commences as soon as the employee starts work even if it is not in writing. The terms that have been offered and accepted will be implied by the way the parties conduct the relationship.

The problem is that the employee and the employer’s understanding of those terms may differ significantly and may cause disagreements later on. Once an employee has completed their two year statutory probationary period they may be able to claim unfair dismissal if they are asked to do something which is not included in their contract. It is therefore recommended that employees be asked to sign a written contract of employment so that there is no dispute over their terms and conditions.

Where there is no contract of employment the Employment Rights Act 1996 still requires employers to provide employees with a written statement of the main terms of employment within two months of starting work. As an employee does not have to sign a statement there is no formal agreement, but the employee’s agreement to the terms will depend on whether they have acted in accordance with those terms.

Should an employee successfully take an employment tribunal case against their employer then where there is no statement or contract of employment then an additional award of two to four weeks pay may be made against the employer.

Employers should therefore ensure that they get employees to sign a written contract of employment and then keep to the terms of the contract, particularly any grievance procedures.