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Stew Pennykid Oct 23, 2023 1:44:09 PM 3 min read



In the world of employment, permanent contracts are the backbone of a stable and committed workforce. For small businesses looking to hire long-term employees, understanding what a permanent contract entails and the legal aspects surrounding it is essential. In this blog, we'll provide a comprehensive overview of permanent contracts, outlining what they include and the relevant legal considerations that small businesses should be aware of.

A permanent contract, often referred to as an ‘open-ended contract’, is a type of employment agreement that does not have a fixed end date. Unlike fixed-term contracts, which have a specific duration, a permanent contract is ongoing until either the employer or the employee decides to terminate it.

When offering a permanent contract to an employee, small businesses should ensure that certain key elements are included to establish a clear and transparent employment relationship.

These elements typically consist of:
Job Title and Responsibilities: The contract should outline the employee's job title and a detailed description of their roles and responsibilities. This clarity helps prevent misunderstandings about the scope of work.
Working Hours: Specify the number of hours the employee is expected to work each week or month. This can be full-time or part-time, depending on the needs of the business and the agreement with the employee.
Salary and Benefits: Clearly state the employee's salary or hourly wage, along with any additional benefits they are entitled to, such as health insurance, retirement plans, vacation days, sick leave, and any other perks offered by the company.
Probationary Period (If Applicable): Some permanent contracts include a probationary period, during which the employer assesses the employee's suitability for the role. This period allows both parties to evaluate the working relationship before committing long term.
Termination Clause: Define the conditions under which either party can terminate the contract. It's essential to comply with employment laws when it comes to terminating an employee's contract to avoid legal complications.
Notice Period: Specify the notice period that either party must give before terminating the contract. This allows for a smooth transition and gives the employer time to find a replacement if necessary.

For small businesses, complying with employment laws and regulations is crucial to avoid legal issues and protect both the company and its employees. Here are some key legal considerations related to permanent contracts:

Employment Rights: Permanent employees have various statutory rights, including the right to a minimum notice period, paid holidays, and protection against unfair dismissal after two years of continuous employment.
Discrimination Laws: It is illegal to discriminate against employees based on characteristics such as age, gender, race, religion, disability, or sexual orientation. Ensure that hiring and employment practices are in line with anti-discrimination laws.
Data Protection: Small businesses must adhere to data protection regulations when collecting and storing employee data. The General Data Protection Regulation (GDPR) imposes strict guidelines on data privacy.
Minimum Wage: Ensure that the wages offered to permanent employees meet the legal minimum wage requirements set by the government.
Health and Safety: Provide a safe working environment for employees and comply with health and safety regulations to minimise workplace accidents and injuries.

Permanent contracts play a vital role in establishing a committed and stable workforce for small businesses. By including essential elements in the contract and adhering to employment laws, businesses can foster a positive working relationship with their employees while ensuring legal compliance. Remember that employment laws may vary depending on your location, so seeking legal advice or consulting with HR professionals is advisable to ensure your business's practices are in line with local regulations.

Cento Group are a BESA Affiliate member and provide recruitment solutions for the building services industry. Register for their free BESA webinar on How to recruit in a candidate short market.