What are the essential elements of an employment contract?

In an ideal world, employers should review their contracts of employment on a yearly basis. However, the day-to-day running of your business can leave little time for anything else, making this feel like an impossible task.

Still, it’s crucial for your employment contracts to be up to date. Employers should set time aside to ensure their documentation reflects the way their business works, and how their staff are expected to behave. Employment law is always evolving, and out-of-date documentation could expose your business to unnecessary legal risk.

Below, we look at the essential elements of an employment contract and what employers should know when updating their documentation.

What is a contract of employment?

First, let’s start with the basics. A contract of employment is an agreement between an employer and employee that stipulates the terms and conditions of the employment.

You can think of it as a set of promises that establish the legal basis of the employment relationship.

As it’s a legal agreement, there’s a clear intention that, should one party fail to keep to any of their promises, the other party may take enforcement action for breach of contract.

When must employees receive their contract of employment?

Under employment legislation, certain information must be provided to employees in writing. Under the Employment (Miscellaneous Provisions) Act, you must provide staff with the key terms of employment in writing within five days of their start date.

This was further amended with the European Union (Transparent and Predictable Working Conditions) Regulations 2022 (the 2022 Regulations), which expanded the key terms to provide within the first five days.
Employers are required to provide their employees with a five-day statement that includes the following core terms of employment:

• The full names of the employer and employee.  
• The address of the employer. 
• The expected duration of the contract (where the contract is temporary or fixed-term). 
• The rate or method of calculating pay and the pay reference period for the purposes of the National Minimum Wage Act 2000 (for example, a week, a fortnight, or a month). 
• What the employer reasonably expects the normal length of your working day and week to be, in a normal working day and in a normal working week. 
• The duration and conditions relating to a probationary period, if applicable. 
• The place of work or, where there is no fixed or main place of work, a statement specifying that the employee is employed at various places or is free to determine his or her place of work or to work at various places. 
• The title, grade, nature or category of work for which the employee is employed or a brief description of the work. 
• The date of commencement of contract of employment. 
• Any terms and conditions relating to hours of work (including overtime).

The next deadline falls one month after an employment relationship begins (extended from the original two months). Under the Terms of Employment (Information) Act, you must provide the completed written Statement of Main Terms of Employment within one months of employment commencing.

A Statement of Main Terms must include the following additional terms:

• The training, if any, to be provided by the employer. 
• In the case of a temporary contract of employment, the identity of the user undertakings i.e., the person or firm hiring the agency worker. 
• If the work pattern of the employee is entirely or mostly unpredictable, the principle that the work schedule is variable, the number of guaranteed paid hours and the remuneration for work performed in addition to those guaranteed hours, the reference hours and days within which the employee may be required to work and the minimum notice period the employee is entitled to before the start of a work assignment. 
• The identity of the social security institutions receiving the social insurance contributions attached to the contract of employment and any protection relating to social security provided by the employer. 
• The country or countries in which the work outside the State is to be performed and its duration. 
• Their ‘tips and gratuity’ policy (where applicable). 
• The length of the intervals between the times at which remuneration is paid, whether a week, a month, or any other interval. 
• Any terms or conditions relating to paid leave (other than paid sick leave). 
• Any terms or conditions relating to incapacity for work due to sickness or injury and paid sick leave and pensions and pension schemes. 
• The period of notice which the employee must give and entitled to receive. 
• A reference to any collective agreements which directly affects the terms and conditions of the employee including, where the employer is not a party to such agreements, particulars of the bodies or institutions by whom they were made.

FREE DOWNLOAD: Employment Contract Template

What is the difference between express, implied and statutory terms?

Typically, an employment contract contains three different types of contractual terms. These are statutory, express, and implied terms.

Express terms

Express terms are specifically drawn to the attention of the employee. An express term can be included in an employment contract in writing or orally i.e., it doesn’t have to be written down to be an express term.

Implied terms

Implied terms are not written into the contract of employment or communicated to the employee. However, they may be implied into the employment relationship in a number of ways:

• Custom and practice – for example, an annual bonus may not be in the contract but if it has been paid every year for a number of years, it may be implied into the contract of employment. 
• Business efficacy – for example, if a contract of employment for a delivery driver is silent on the need for the employee to have a driving licence, the term would be implied into the contract to make it workable. 
• Terms implied by law – terms can be implied from various sources of law including legislation, common law and the Constitution.

Statutory terms

Some terms are inserted into a contract because the law prevents anything to the contrary. This means that if a term in the contract does not comply with a statutory minimum requirement, the statutory minimum will override the contract and render the contractual term void. Common examples include minimum notice periods and the national minimum wage.

Can employers update employment contracts unilaterally?

Updating an employment contract should be a two-sided exercise. It’s important to notify an employee of any change to their contract unless that change arises from a legislative update, administrative provisions, or collective agreements referred to in the contract.

To legitimately add, remove, or make any changes to the terms of an employee’s contract, it’s best to first receive agreement from the employee in writing.

If you want to change either an express term or an implied term, without employee consent, the question then becomes one of reasonableness. For instance, was it reasonable for you to request the change and was it reasonable for the employee to refuse the change?

So, even in situations where an employee hasn’t agreed to a change to their employment contract, it may be possible for you to implement a change where the employee’s refusal was unreasonable.

Need expert guidance before reviewing your employment contracts?

If you need help reviewing your contracts of employment in Ireland, one of our HR advisors will be happy to provide you with immediate and 24/7 HR support. Call now on 1800 719 249.