Important Employment Law Terms Every Business Leader Should Understand

important employment law terms

There is a lot to do as a business leader but thankfully you will have hired a great team of employees to ensure that your company runs smoothly. Sometimes, these employees will have issues or expectations that you need to know about. What’s more, you often have a legal obligation to fix these issues.

You do not need a law degree to understand all of these obligations, but it does help to brush up on some of the key terms that you are likely to come across. Fortunately, you’ll find all in this article.

Important Employment Law Terms

1. Contract Of Employment

A contract of employment is a written agreement between you and your employee. This document should outline the duties of the employee, and also what they will receive in return for this work. This includes payment details, company benefits, and the amount of bereavement leave and compassionate leave they are entitled to.

important employment law terms - contract of employment

An employee that fails to uphold the duties listed in this document can be held in breach of contract and fired as a result. This contract can be used as evidence if an employee sues for unfair dismissal. However, constructive dismissal can occur if the employer fails to hold up their end of the bargain. The term constructive dismissal refers to a situation where the employee can leave the company without penalty due to the negligence of the employer.

These are two terms that you should keep in mind when drawing up initial employee contracts.

2. Employment Regulation Orders

A company with a union can negotiate employment regulation orders with both employees and the employer. This order becomes an additional set of regulations that both parties must adhere to in an attempt to further solidify pay rates and conditions in the workplace.

important employment law terms - employment regulation orders

An employee that breaches this regulation order can find themselves in legal trouble which could result in employers entering legally binding contracts to resolve disputes. It isn’t hard for an employer to find a solicitor who specializes in employment law, such as Davenport Solicitors.

3. Specified Purpose Contract

There are times when you have a job available that can be finished within a specific period of time. In this instance, you will need to draw up a specified purpose contract. This employment contract will only be in use until said work is completed.

specified purpose contract

You cannot unjustly terminate an employee while this contract is active, and if you want the member of staff to continue with the company once the contract expires you will need to get them to sign a formal contract of employment.

4. Probationary Period

A probationary period is often activated at the start of a person’s employment. This is an agreed period of time that acts as a trial for the new member of staff. Employees can be dismissed within this time without cause, and they do not have to sign a full-term contract until the probation ends.

probationary period

Probationary periods are a method of protecting the business from hiring unfit staff. Think of it as a get-out clause for removing troublesome employees without suffering at the hands of the law.


There you have a few terms to be mindful of when dealing with your employees. If everyone acts respectfully, you will never need to worry about these terms. However, it is always good to have this information handy as a business leader.