What an Employment Contract Does, and Why This Hire Needs One

1.1A senior employment contract in one paragraph

When a company hires a senior employee, the contract of employment fixes the terms between them. It sets the job, the pay and how the job ends, and what the employee may not do after leaving. This workbook follows one such contract, for one senior hire, clause by clause. You are a trainee in the employment seat at Marchbank Orme LLP, a law firm in Nottingham, and you act for the employer.

1.2Why the employer and the new hire both want this hire

The employer in this workbook makes coffee machines and rents them to offices, hotels and cafés. It now wants to win hotel chains, which buy for many sites at once. So it is hiring a sales manager from a larger rival, where she sells to hotels. The employer gets:

• A seller who knows how hotel chains buy, so it wins them in months, not years.
• Its customers and prices kept safe if she leaves.
• Terms that follow the new employment rules that start in 2027.

The new hire wants the move for her own reasons:

• A bigger job and more pay.
• No loss from leaving before her current bonus is paid.
• Clear notice, so she knows how secure the job is.
• Two days a week working from home.

A hire from a rival also needs care. She knows her current employer’s customers and prices, and her current contract limits what she may do with them. So the employer must not ask her to break those limits.

One day she may leave this employer too, and take what she knows to the next rival. The contract must protect the employer against that day as well.

1.3The hire in this workbook

The employer is Cressby, and the new hire is Esme. These are the people in this workbook, with your own team:

Neil wants Esme as Cressby’s Head of Sales, reporting to him.

At the start of October 2026 Esme accepts Cressby’s offer letter, which sets out the main terms of the job. Once she accepts it, both sides are bound, on conditions such as good references. She resigns that week, and her current employer puts her on garden leave for her three months’ notice. She stays employed and paid, but away from work and customers, so she cannot take fresh news of them to Cressby.

In November 2026 Esme signs the Contract at home, still on garden leave. She starts at Cressby on 4 January 2027. The Contract opens by naming the two parties:

The Contract calls Cressby “the Company” and Esme “the Employee”, but this workbook uses their names. Neil signs for Cressby as a director, and Esme signs for herself.

Some firms call a senior contract a service agreement. They usually keep that name for directors, whose contracts bring in company law too. Esme is not a director, so hers is a contract of employment.

1.4Why the terms must be written down

The law requires every employer to give a new employee a written statement of the main terms by the first day of work. A contract that holds those terms can be the written statement itself. Clause 2.1 says that this one is:

The Commencement Date is 4 January 2027. So Esme gets one document, not two, and has it before she starts. Chapter 2 lists what the written statement must contain.

Writing the terms down matters for a second reason. Some of Cressby’s rights exist only because the Contract creates them:

• Garden leave: keeping her away from work and customers during her notice.
• A payment in lieu: pay instead of notice, so the job ends at once.
• The restrictions: limits on what she may do for a time after she leaves.

Without these clauses, a seller who leaves could join a rival and call Cressby’s customers the next day.

1.5A contract for the rules of 2027

Esme starts just after the law changes. The Employment Rights Act 2025 (“the 2025 Act”) changes many employment rules in stages. Some changes take effect on 1 January 2027, three days before she starts. Others are due later, and some dates are not yet fixed.

Cressby’s old template was written for the old rules, so you check each clause against the law on her start date. Chapter 2 sets out that law.

1.6From offer letter to leaving

The hire runs through six stages, and later chapters take them in turn:

1.7Your job

Your first task is a hire sheet. It lists each term the offer letter fixed, and the clause of the Contract that must carry it. This matters because clause 28.1 says the Contract replaces the offer letter. So a term the offer letter promised but the Contract leaves out is lost when Esme signs.

• The job title, and who she reports to (clause 5.1).
• The start date (clause 2.1).
• The conditions: her right to work and references (clause 3.1).
• Probation (clause 4).
• Her place of work and two days at home (clause 6.2).
• Salary and bonus (clauses 8.1 and 9.1).
• The sign-on payment for the bonus she gives up (clause 10).
• Notice after probation (clause 19.1).
• The restrictions after she leaves (clause 23).

A term in the offer letter that no clause carries goes to Beth before Esme signs.