The absence of a written contract of employment does not necessarily mean that no contract exists. Employment contracts can be formed orally, through conduct, or by implication. An employee may therefore have a legally binding employment contract even where the employer has failed to provide a written agreement.

However, where no contract of employment exists at all, an individual cannot bring claims that depend on employee status, including unfair dismissal or statutory redundancy claims. Depending on the circumstances, the individual may still qualify as a worker and benefit from more limited statutory protections, such as rights relating to minimum wage, working time and protection from unlawful deductions from wages.

Employers are under a statutory duty to provide employees and workers with written particulars of employment under section 1 of the Employment Rights Act 1996 (ERA 1996). A failure to provide these particulars can result in an additional compensation award of 2–4 weeks’ pay where the employee successfully brings another qualifying employment claim.

This guide explains the difference between lacking a written contract and lacking a contract altogether, how employment status affects available claims, the employer’s duty to provide written particulars, and the remedies available where contractual status is disputed.

Formalities and Formation of Employment Contracts

There are no specific formalities required for creating an employment contract. A contract of employment may be express or implied and may be formed orally or in writing.

An employment contract requires the usual contractual elements, including consideration. In the employment context, this is generally provided by the employer paying remuneration and the employee agreeing to provide work.

The absence of a written contract does not mean that no employment relationship exists. Employment contracts commonly consist of:

● express terms agreed verbally or in writing;

● implied contractual terms;

● statutory rights and obligations; and

● terms incorporated from other sources, such as workplace policies or collective agreements.

A written contract is therefore evidence of the employment relationship but is not a requirement for one to exist.

No Written Contract vs No Contract at All

A key distinction must be drawn between:

No Written Contract

Where an employer fails to provide a written contract, this does not remove the employee’s contractual rights.

The employee may still establish:

● employee status;

●contractual notice rights;

● entitlement to wages and benefits;

● protection against unfair dismissal (where qualifying requirements are met); and

● other employment rights.

The terms of the contract will be determined from the parties’ conduct, oral agreements, workplace practices and implied terms.

No Contract of Employment

Where no contract exists at all, the individual cannot rely on rights reserved exclusively for employees.

This may occur where the relationship is genuinely one of:

● self-employment;

● a client/customer relationship; or

● an arrangement lacking mutual obligations or personal service.

In those circumstances, the individual may not qualify as an employee and may instead only have limited rights as a worker, or no employment rights at all.

Employment Status and Available Claims

Employment status determines which legal protections apply.

The Employment Rights Act 1996 recognises three main categories:

Employees

An employee is an individual who works under a contract of employment, whether express or implied and whether oral or written.

Employees benefit from the widest range of employment protections, including:

● unfair dismissal protection;

● statutory redundancy payments;

● maternity and family rights;

● notice rights;

● breach of contract claims; and

● protection under the Acas Code of Practice on Disciplinary and Grievance Procedures.

Workers

Workers have a broader definition and include individuals who personally perform work or services under a contract where the other party is not genuinely a client or customer.

Workers benefit from certain statutory protections, including:

● national minimum wage rights;

● working time protections;

● protection from unlawful deductions from wages;

● rights to written particulars of employment; and

● discrimination protection.

However, workers generally cannot bring claims for unfair dismissal or statutory redundancy payments.

Self-Employed Individuals

A genuinely self-employed individual generally has no employment law protections and must pursue contractual disputes through the civil courts.

Written Statement of Employment Particulars

Employer’s Duty

Even where there is no formal written contract, employers must provide employees and workers with written particulars of employment under section 1 ERA 1996.

Since April 2020, this obligation applies from the first day of employment and applies to both employees and workers.

The statement must include key information such as:

● the parties’ names;

● start date;

● pay;

● working hours;

● holiday entitlement;

● notice periods;

● job title or description;

● place of work;

● disciplinary and grievance procedures.

A written statement is not necessarily the contract itself. It may simply record terms that have already been agreed.

Failure to Provide Written Particulars

Where an employer fails to provide a compliant section 1 statement, an employee or worker may bring a claim to the employment tribunal.

However, compensation for this failure is generally only available where the employee succeeds in another specified employment claim.

If the tribunal finds that the employer was in breach of its duty to provide written particulars at the time another qualifying claim was brought, it may award:

● a minimum of two weeks’ pay; or

● up to four weeks’ pay where there are exceptional circumstances.

Examples of qualifying claims may include:

● unfair dismissal;

● breach of contract;

● discrimination;

● unlawful deduction from wages; or

● certain other claims listed in Schedule 5 Employment Act 2002.

This means an employee who successfully brings another employment claim may receive an additional 2–4 weeks’ pay purely because the employer failed to provide a written contract or compliant written particulars.

Employment Tribunal Contract Claims

Employment tribunals have limited jurisdiction to hear contractual claims.

A breach of contract claim can generally only be brought after employment has ended.

Contract claims may include:

●  unpaid notice pay;

● failure to provide contractual benefits;

● breach of express contractual terms.

Only employees can bring contractual claims in the employment tribunal. Workers may need to pursue contractual claims through the civil courts unless the claim falls within another employment law category.

The maximum award for a breach of contract claim in the employment tribunal is currently £25,000.

Wrongful Dismissal

Wrongful dismissal occurs where an employer terminates an employee’s contract in breach of its terms.

Usually this occurs where:

● the employer dismisses without giving contractual notice; or

● the employer fails to make a contractual payment due on termination.

A wrongful dismissal claim requires a contract of employment.

Where there is no express notice term, the law may imply a reasonable notice period depending on the circumstances.

Compensation normally reflects the wages and benefits the employee would have received during the notice period, subject to deductions for earnings obtained during that period.

Establishing Whether a Contract Exists

Where employment status is disputed, tribunals will consider the reality of the relationship rather than simply relying on labels used by the parties.

The tribunal will consider factors including:

Personal Service

The obligation to personally perform work is a significant factor.

An unrestricted right to provide a substitute may indicate that the relationship is not one of employment.

Control

The tribunal may consider the level of control exercised by the employer over:

● how work is performed;

● when work is carried out; and

● where work takes place.

Mutuality of Obligation

There must generally be an obligation on the employer to provide work and an obligation on the individual to perform it.

A complete absence of mutual obligations may indicate that no employment contract exists.

Remedies Where No Written Contract Exists

Where an employee establishes that a contract exists but the employer failed to provide written particulars, the employee may still bring normal employment claims.

Potential remedies include:

Unfair Dismissal

Where the employee has sufficient qualifying service, they may claim unfair dismissal despite never receiving a written contract.

The absence of a written contract does not remove statutory dismissal protection.

Wrongful Dismissal

An employee may claim notice pay where the employer breaches contractual notice obligations, even where those terms were agreed verbally or implied.

Additional Award for Failure to Provide Written Particulars

Where the employee succeeds in another qualifying claim, the tribunal may award:

● 2 weeks’ pay as the normal minimum award;

● up to 4 weeks’ pay where exceptional circumstances justify a higher award.

Remedies Where No Contract Exists

Where a tribunal determines that no employment contract exists, the individual cannot bring employee-only claims, including:

● unfair dismissal;

● statutory redundancy payments; or

● contractual employment claims.

However, the individual may still have rights if they qualify as a worker, including:

‍ ‍● unlawful deduction from wages;

● national minimum wage claims;

● working time claims; and

● discrimination claims.

If the individual is neither an employee nor a worker, they will generally be treated as self-employed and must pursue any contractual dispute through the civil courts.

Practical Guidance for Employers

Employers should ensure that all employees and workers receive written particulars from the beginning of their employment.

Failing to provide written terms creates unnecessary disputes regarding:

● employment status;

● pay arrangements;

● notice periods;

● working hours;

● benefits; and

● contractual obligations.

A written contract provides clarity and may reduce the risk of additional compensation awards where an employee later succeeds in another employment claim.

This guide provides general information only and is not legal advice. Anyone considering a specific contract claim or counterclaim, whether an employer or an employee, should contact us here contact@gec-law.co.uk for legal advice.

If you require assistance with drafting an employment contract contact us here.