The agreement that is reached by an employer and an employee is the basis of understandng the rights that each might have in the relationship. Overall this agreement is usually referred to as a 'contract of employment' although there are different types of contract and 'status' depending on what has been agreed by the two parties (see below).
A contract does not have to be in writing to be legally enforceable. In fact it is common for employees or workers to only have verbal contracts (or ones where only some of the terms have been recorded in writing).
Unwritten contracts can cause particular problems, since you need to try to work out what has been agreed in the event of a dispute - and the two sides might have different views on that!
All employees are entitled to a written statement setting out the main terms and conditions of employment within two months of starting
Each part of the contract is known as a 'term' - so there will be seperate terms regarding pay, notice or holiday entitlement.
Once a contract is agreed it cannot be changed unless both the employee and the emloyer agree.
Breaking a term of the contract is known as 'breach of contract' and may give grounds for compensation to be paid by the party breaking the
The different types of employment contract and 'status'
There can be different types of agreement for doing work and some care needs to be taken with the language that is used. There can be contracts for:
Employment - A contract of employment arises when the individual agrees to work personally for an employer, accept an obligation to do work that is offered and to be subject to the direction and control of the employer.
Work - A contract for work arises when the individual agrees to work personally for an employer but there is no obligation to perform ongoing work or to be directed or controlled by the employer. A worker must also not be in business on their own account.
Self-employment - self-employment arises where there is only a commercial relationship and no personal obligation to do work is entered into by an individual and there is no direction or control of the work by the employer - there is only an agreement that the work be done
The importance of these distinctions is that different levels of rights will apply at the different levels. For instance someone who is a worker will not be able to claim unfair dismissal or qualify for maternity leave.
The different levels are usually referred to as employment status.