For a growing business, understanding the different types of employment contracts – and having the knowledge to decide which is best – is crucial.
As an employment law specialist with over 30 years of experience, Beecham Peacock’s talented team of solicitors are best-equipped to advise on every type of employment contract.
Read on to learn about the importance of employment contracts in complying with UK employment law and read a full overview of every type of job contracts.
Fixed-term contracts
Fixed-term contracts are a type of employment agreement that covers employment for a specific time frame or until the completion of a specified project.
The end date of the contract should be clearly defined within the contract itself, although it is possible for this date to be renewed. If the contract is renewed continuously for up to four years of service, the employee will gain permanent employee status unless the business can justify otherwise.
If the fixed-term contract is with an agency worker, it is important to recognise that the employee’s contract is between themselves and the agency, meaning that they are not classified as an employee of the company. This will therefore affect their employment rights and benefits, such as redundancy leave, holiday entitlement and more.
You may consider a fixed-term contract for:
• Covering maternity leave.
• Finishing infrequent, high-workload projects.
• Managing seasonal fluctuations in business.
• And more.
Full-time or part-time contracts
Full-time and part-time employment agreements are different types of employment agreements, differentiated by the total amount of weekly working hours stipulated within the contract.
Full-time worker – typically works between 35–40 hours per week, with full employment rights that include statutory sick pay, protection against unfair dismissal, maternity or paternity leave and a minimum 5.6 weeks (28 days) statutory leave entitlement.
Part-time worker – typically works between 10-30 hours per week, retains the same working rights as full-time workers, and has holiday entitlement calculated on a pro-rata basis.
In certain circumstances, both full-time and part-time workers may be able to have their contracts terminated by the employer or employee, subject to a notice period which should be stipulated by the employer in both types of employment contract.
The statutory minimum notice period for both types of contract will depend on the length of service of the employee:
One month to two years – one week’s notice
Two or more years – One week’s notice per year served, up to 12 weeks’ notice.
Agency staff or temporary contracts
Agency staff or temporary contracts refer to workers who are employed through an employment agency – this company then supplies the employee to work for a client on a temporary basis.
The advantages of employing agency staff mainly concern how the temporary employee is managed, with the agency organising the worker’s pay, contract and all administrative responsibilities, leaving the client free to dictate work.
Agency staff or temporary contracts are mainly used for short-term work, keeping the temporary staff and business’ relationship at arms’ length.
Under the Agency Workers Regulation Act 2010, agency workers are entitled to the same basic rights as the client business’ permanent staff after 12 continuous weeks in the same role at the same company.
These rights include:
• Equal pay
• Holiday entitlement
• Access to company facilities – including canteens, childcare or transport services
• And others.
Before reaching 12 weeks of continuous employment, agency staff still have the right to the National Minimum Wage, fair treatment, statutory sick pay and protection against discrimination.
Zero-hours contracts
Zero-hours contracts are designed to be a flexible alternative to full or part-time employment, specifically aimed at seasonal workers or on-call positions.
Flexibility in zero-hours contracts goes both ways, entitling the employee to turn down or accept shifts freely. Zero-hours workers are also entitled to the National Minimum Wage, statutory sick pay, protection against discrimination and to be treated fairly if they refuse work.
For holiday entitlement, zero-hours workers accrue their holiday based on the hours that they have worked. This time off is calculated at 12.07% of shift hours worked, which is in line with the minimum 5.6 weeks of leave for full-time contracts.
Recent changes to zero-hours contracts through the government’s Make Work Pay Plan (2024), a part of the Employment Rights Bill expected to be passed into law no earlier than summer 2025, expands the rights of zero-hours workers, intended to close loopholes in unfair treatment:
• Guaranteed hours: Zero-hours and low-hours contact workers must now receive a “guaranteed hours contract which reflects the hours eligible workers regularly work over a reference period.”
• Shift notice and cancellation payments: Zero-hours and low-hours contract workers now must receive reasonable notice of shifts, and payment for shift cancellation and curtailment.
Internship contracts
Internship contracts are generally considered to be a type of employment agreement that pays in experience rather than standard, monetary repayment – aimed at younger or inexperienced candidates.
These internship contracts can classify as a volunteer, worker or employee depending on the nature of the role stipulated within the contract. Volunteers typically refer to those who are unpaid and under no obligation to complete tasks or adhere to set hours.
Workers, however, are guaranteed to basic rights, such as holiday entitlement, statutory sick pay, the National Minimum Wage and more.
Regardless of how an intern is classified, they must never be exploited. One way an intern can be exploited is if their tasks are indistinguishable from the responsibilities of a full-time employee – this would break minimum wage laws, unless the intern is classified as a volunteer instead of a worker.
To best avoid exploitation, it is important for businesses to clearly define the intern’s classification and responsibilities within their employment contract – as well as communicate these responsibilities to management.
Length of internship contracts vary, but typically they range between one and 12 months.
Apprentice agreements
Apprenticeships are unique to other forms of employment in that they combine employment with structured training, resulting in a fully qualified employee at the end of their apprenticeship.
Apprenticeships are often considered to be the most common way to receive training and qualification for manual labour roles. However, apprenticeships are available for countless sectors – from marketing to hospitality, administration and everything in between.
Apprentices should be treated as employees, working under a formal contract not too dissimilar to a full-time contract – outlining their role, entitlements, responsibilities, payment and benefits.
For employees to undertake an apprentice, employees must meet training standards set by approved bodies, ensuring that the apprentice has appropriate time to complete formal training and is in a safe, supported environment.
The minimum wage for apprentices is lower than that of standard, full-time employees – currently set at £5.28 an hour for those under 19 or in the first year of their apprenticeship.
One of the core advantages of hiring and training an apprentice is that employers will benefit from government subsidies, such as apprenticeship levy funds and financial incentives – meaning an employer can gain a uniquely skilled, experienced and fully qualified worker at the end of their apprenticeship training with financial help.
Get in touch
Still unsure what different types of job contracts are ideal for your business? Get in touch with our talented team of employment law specialists.
For more expert insights, consult our blog .
Call on 0191 232 3048 or email at enquire@beechampeacock.co.uk today.
