Discover these 7 different types of employment contract
Discover the 7 types of UK employment contracts that employers should be aware of and the digital solutions that can help you manage them.
It's vital that all UK organisations know the types of employment contract valid in UK employment law. Human Resources teams are an essential ingredient in the hiring and contracting processes for employees. As part of the strategic role of HR teams, it's crucial to define the most appropriate contract of employment types, while considering the duration of the new employment contract and pay to ensure resources are managed efficiently and effectively. Read on to discover types of employment contracts in the UK.
1. Fixed-term contract
In the UK, fixed-term contract employees should be treated the same as full-time permanent staff. In a fixed-term contract, the relationship between employee and employer is established for a defined period that is set in advance. This type of employment may also end when a specific task is completed, or a specific event takes place. A worker isn't classed as an employee if their contract is with an agency they work for rather than the company. If an individual has had a fixed-term contract for two years or more, they acquire the same redundancy rights as a full-time permanent employee would in their job. This legal contract gives fixed-term contract employees extra protection.
2. Full-time or part-time contract for permanent employment
A permanent employee contract is the most common status and employment contract for an employee in the UK. Under employment law, employers must give their employees a written statement of employment or an agreement which should include at least a statutory minimum of paid holiday. A contract should consist of the terms of work, including employment rights, conditions, responsibilities and duties.
Both parties have the right to terminate the contract. This can occur through either the employer or employee giving notice, or through the employer's dismissal of an employee.
3. Agency staff or temporary employee contract of employment
As an employer, you can hire temporary staff from an agency to meet an urgent need or a transient increase in demand for your product or services, such as during Christmas. Employers should provide the agency with information about the business terms and conditions so that they can provide the worker with terms. Temporary agency workers should receive the same conditions as permanent employees after 12 weeks.
4. Zero hours job contract
Zero hours employment contracts are usually for work or jobs that needs to happen on a sporadic basis or 'on-call', meaning an employer doesn't have a fixed amount of work to offer, and workers are not obliged to accept every shift. Crucially, zero-hours workers are fully entitled to statutory annual leave and the National Minimum Wage for all hours worked.
The UK is currently undergoing significant legislative shift aimed to provide greater security and predictability for zero-hours workers. The Employment Rights Bill, expected to be fully implemented by 2027, is introducing new protections. This includes a right for eligible workers to request:
A contract reflecting their regular hours
Reasonable notice for shifts
Potential compensation for shifts cancelled at short notice
5. Self-employment contract
A self-employed worker isn't an employee of the organisation they're working for but works for themselves and is responsible for the success or failure of their own business. If an organisation continuously works with a self-employed worker, they can be characterised as self-employed by being fully responsible for defining their work activities. They will probably use their own tools or assets and can decide what work they do and when they do it.
6. An internship employment contract
An intern could be considered to be a volunteer, a worker or an employee. If interns do regular work, they could be viewed as employees and gain employment rights. If an intern is considered a worker, they will be entitled to the National Minimum Wage. Voluntary workers do not get paid. Students required to do an internship as part of their higher education course are not entitled to a minimum wage.
7. Apprentice agreement
An apprentice must sign an apprentice agreement giving details of the skills, trade or occupation the apprentice is being trained for and the amount of training that the apprentice will be given. It provides the employment details of the apprenticeship. Anyone aged over 16 who is not currently in full-time education can apply for an apprenticeship.
When you review the types of employment contracts available, it's easy to see the benefits of digital HR. Organisations can help improve employee onboarding and contract experiences by streamlining manual processes using digital solutions. Docusign eSignature enables employees to review and sign contracts securely from almost anywhere across the globe, and sign on their mobile.
8. FAQ's
What is an employment contract?
An employment contract is a formal, legally binding agreement between an employer and an employee that outlines the terms and conditions of the working relationship. It typically includes details such as job title, duties, salary, benefits, work hours, duration of employment, workplace or business premises, termination conditions, and policies regarding leave, confidentiality and dispute resolution. In the UK, employment contracts must adhere to employment law, notably the Employment Rights Act 1996, which establishes core statutory entitlements such as pension benefits, statutory sick pay and the length of rest breaks. The contract helps both parties understand their employment rights and responsibilities clearly. Employment contracts can be permanent, fixed-term, or casual, depending on the nature of the job and the agreement made.
In summary: what are the different types of employment contracts in the UK?
There are several different types of employment contract including full-time or part-time, fixed-term contracts, temporary, internships, apprentice agreements and freelancer contracts. Employers can also engage employees via zero-hours contracts. Permanent employment is the most common type of contract in the UK and this usually applies to employees who work regular or set hours and are paid a salary or hourly rate , they may be full-time or part-time. These types of contracts are only usually terminated if the employee or employer chooses.
What is the difference between a contract of service and a contract for service?
The difference between a contract of service and a contract for service lies in the nature of the working relationship. A contract of service refers to an agreement between an employer and an employee, where the individual works under the employer's control and is entitled to employment benefits such as leave, insurance and job security. In contrast, a contract for service involves an independent contractor or service provider who is hired to complete a specific task or project, works autonomously, and is not entitled to employee benefits, as they are considered self-employed.
How can Docusign help with employment contracts?
Docusign can help you send HR forms and employment contracts out to any number of employees with a few clicks. The contract is then very easy for a new recruit or promoted employee to sign remotely from anywhere on their mobile. If you have multiple recipients for one contract type you can import a bulk list and send this simultaneously. Docusign eSignature offers numerous benefits, such as saving time and money, improving customer experiences, and boosting business efficiency.
How fast can I type up employment contracts with Docusign?
Docusign has already created templates for the most commonly used HR forms, and they can help you automate a wide variety of processes. So you can easily select the template you want to use and send it out to future employees to review and sign securely across the globe. When you have created a template you can tag the fields on the form the recipient needs to complete. Discover more about signing employee contracts with Docusign.
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