Permanent (Open-Ended) Employment Contract

Overview

A permanent employment contract (sometimes still loosely called an "open-ended" or "indefinite" contract, though English law does not use the French CDI terminology) is an employment relationship with no fixed end date. Since 6 April 2020, section 1 of the Employment Rights Act 1996 (as amended by the Good Work Plan reforms) requires every employer to give workers and employees a written statement of particulars of employment no later than their first day of work — this is a "day one" right, not something that can be delayed until after a probationary period. When to use it: for any hire without a fixed end date, whether full-time or part-time, in the private sector. Where the role has a defined end date or is tied to a specific task or event, a fixed-term employment contract should be used instead. Parties: the employer and the employee (or worker, though this template addresses the more protective "employee" employment status). Mandatory content of the written statement (s.1 ERA 1996): the names of employer and employee, the date employment (and continuous employment) began, pay and pay interval, hours of work, holiday entitlement and holiday pay, job title or a brief description of the work, place of work, any probationary period, terms relating to sickness and sick pay, other paid leave, pensions, notice periods, any collective agreements, and — where relevant — details of any training entitlement. Note there is no general statutory requirement in England and Wales for the underlying contract itself to be in writing at all (unlike some jurisdictions) — but the section 1 written statement is mandatory regardless, and it is best practice for the statement and the substantive contract to be combined in a single document, as this template does. Notice periods: the Employment Rights Act 1996 (s.86) sets statutory minimum notice periods rising with length of service (one week's notice after one month's service, up to a maximum of 12 weeks after 12 years' service) — the contract may specify longer notice, but not shorter. Unfair dismissal: an employee generally needs two years' continuous service before they can bring an ordinary unfair dismissal claim (Employment Rights Act 1996, s.108) — though certain dismissals are "automatically unfair" regardless of length of service (for example dismissal related to pregnancy, whistleblowing, or asserting a statutory right), and this exception should not be relied upon to justify treating a probationary employee's rights loosely. Common pitfalls: failing to issue the written statement by day one (a breach of s.1 ERA 1996, which can result in a compensation award if the employee later brings another successful tribunal claim); a probationary period with no clarity on the notice applicable during probation; a restrictive covenant (e.g. non-compete) with no legitimate business justification, which is likely to be held unenforceable as an unreasonable restraint of trade; and confusing the National Minimum Wage / National Living Wage thresholds, which change annually and must be checked against current rates.