Do I need a written employment contract? What every Scottish small business should know

One of the most common conversations I have with new clients goes something like this: "My employee has been with me for six months. Do I actually need to give them a contract?" The answer is yes — and the obligation starts earlier than most business owners realise.

The legal requirement

Under the Employment Rights Act 1996 (as amended by the Good Work Plan 2020), all employees and most workers in the UK must receive a written statement of employment particulars from the first day of employment. There is no qualifying period — this applies from day one.

This applies whether someone is employed full-time, part-time, on a fixed-term contract, or on a zero-hours arrangement. The only exception is workers engaged for under one month, though even this exception is narrowing in practice.

What must the statement include?

The written statement must cover the following as a minimum. Some of these must be provided in a single document (the "principal statement"), while others can be provided in a separate document within two months of the start date.

Must be in the principal statement (from day one)

• The employer's name and the employee's name
• The start date of employment and, if different, the start date of continuous employment
• Pay: the rate or method of calculating pay, and how often it is paid
• Working hours: the days of the week the employee is required to work, and whether hours or days may vary
• Holiday entitlement and pay (including public holidays)
• Job title or a brief description of the work
• Work location(s)
• If the employment is not permanent, the expected end date or the basis on which it is fixed-term
• Notice periods (from employer and employee)
• Sick leave and sick pay entitlement
• Any other paid leave entitlement (e.g. maternity, paternity, parental leave)
• Details of any probationary period (including its length and any conditions)
• Any training entitlement provided by the employer
• Any other benefits (e.g. private health, pension enrolment)

Can follow within two months

• Details of collective agreements affecting terms and conditions
• Any pensions and pension schemes (beyond the automatic enrolment information)
• Any training that you require the employee to complete but do not pay for
• Disciplinary rules and procedures, or where to find them
• Grievance procedures

What happens if you don't provide one?

In practice, the bigger risk is that if an employment dispute arises — over dismissal, discrimination, or pay — the lack of a written contract makes your position significantly weaker. Without a clear written record of the terms agreed, a tribunal is more likely to accept the employee's account of what was agreed.

What about workers (not employees)?

The Good Work Plan 2020 extended the right to a written statement to workers as well as employees. Workers include people on casual or zero-hours contracts who don't meet the full definition of an employee. If in doubt, provide a written statement — it protects you either way.

Going beyond the minimum

A legal minimum written statement is a start, but it isn't the same as a full employment contract. A well-drafted contract will also cover:

• Confidentiality and data protection obligations
• Intellectual property and ownership of work produced
• Garden leave provisions
• Post-termination restrictions (where appropriate)
• Social media use
• Amendments and variation of terms procedures

For most micro businesses, a straightforward but well-drafted contract will suffice. You don't need a 30-page document — but you do need something that clearly sets out the terms and protects you if things go wrong.

A note on existing employees

If you have staff who have been with you for a while and don't have written contracts, you can still issue one now. Frame it as a confirmation of existing terms rather than a change to them. Have the employee sign and return a copy. If you're making any changes to terms at the same time, you'll need to consult with the employee first.

Getting this sorted is a straightforward task that gives you significant protection. It's one of the first things I help clients with, and it typically takes a few hours from first conversation to signed document.

This article provides general information only and does not constitute legal advice. For complex or disputed employment matters, please consult a qualified employment solicitor.

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