Why Every Small Business Needs a Contract of Employment: Essential Insights

Why Every Small Business Needs a Contract of Employment: Essential Insights

As a small business owner, you juggle multiple responsibilities daily. Amidst the hustle of growing your business and managing operations, the importance of a well-drafted contract of employment can often be overlooked. However, we firmly believe that this document is crucial for both protecting your business and creating a positive working environment.

What is a Contract of Employment?

A contract of employment is a legally binding agreement between an employer and an employee. It sets out the terms and conditions of employment, including roles and responsibilities, remuneration, working hours, and other key aspects of the employment relationship. In the UK, it’s a legal requirement to provide employees with a written statement of employment particulars within two months of their start date.

Why is a Contract of Employment Important?


  1. Legal Compliance: First and foremost, having a contract of employment ensures that your business complies with UK employment law. Failure to provide a written contract can result in legal penalties and claims from employees. By formalising the terms of employment, you protect your business from potential disputes and legal challenges.
  2. Clarity and Understanding: A contract of employment provides clear expectations for both parties. It outlines the job role, responsibilities, and performance standards, reducing the likelihood of misunderstandings. When employees understand what is expected of them, it leads to a more harmonious and productive workplace.
  3. Protects Business Interests: The contract can include clauses that protect your business interests, such as confidentiality agreements, intellectual property rights, and non-compete clauses. These provisions safeguard your business from the risk of sensitive information being disclosed or employees joining competitors.
  4. Defines Rights and Benefits: The contract specifies the rights and benefits of employees, such as holiday entitlement, sick pay, and pension schemes. This transparency ensures that employees are aware of their entitlements, fostering trust and job satisfaction.
  5. Facilitates Dispute Resolution: Should disagreements arise, a well-drafted contract of employment serves as a reference point for resolving disputes. It provides a clear framework for addressing issues such as disciplinary procedures, grievances, and termination processes, which can prevent conflicts from escalating.
  6. Enhances Professionalism: Presenting a formal contract of employment demonstrates that your business operates professionally and takes its responsibilities seriously. This can enhance your reputation as an employer and help attract and retain talented employees.


Why Choose JE Baring & Co for Your Employment Contracts?

We specialise in creating tailored contracts of employment that meet the specific needs of small businesses. Our team of experienced solicitors understands the unique challenges faced by small business owners and can provide you with practical, effective solutions.

We take the time to understand your business and its operational requirements, ensuring that each contract we draft is comprehensive and aligned with your business goals. Our attention to detail and commitment to excellence guarantee that your employment contracts will be robust, clear, and enforceable.


A contract of employment is more than just a legal requirement; it is a foundational document that supports the smooth functioning and growth of your business. By clearly outlining the terms of employment, you create a stable and positive working environment that benefits both your business and your employees.

If you have any questions or would like to discuss how we can assist you in drafting or reviewing your contracts of employment, please contact us at or call on 020 7242 8966. Our team is here to provide the guidance and support you need to ensure your business thrives.