Contract types and employer responsibilities

by Nadine de Souza

When employing staff the tax and employer responsibilities will depend on the type of contract they have and what their employment status is. So it’s a good idea to find out about different types of employment contracts. Read our guide below before you make your mind up.

Full-time/part-time employment contract for an indefinite period

The majority of employment contracts are for an indefinite period. They end by either party giving notice and the period of notice is usually specified in the employment contract but if not, there is an implied term that the contract may be ended by reasonable notice taking into account the ability of the employee, remuneration of the employee and what is usual in the trade.

The contractual notice period must not be less than the statutory minimum period of notice, but if the contractual notice is longer, then the longer period must be given.

As an employer you must give full-time and part-time employees the following:

  • A written statement of employment or contract.
  • The statutory minimum level of holiday.
  • A pay slip showing all deductions.
  • The statutory minimum level of rest breaks.
  • Statutory sick pay and maternity, paternity and adoption pay and leave. 

You must also make sure of the following:

  • That these employees don’t work longer than the maximum allowed by law;
  • Ensure that you pay the minimum wage;
  • Have employer’s liability insurance;
  • Register with HMRC; and 
  • Consider flexible working requests.

Part-time workers have a right not to be treated less favourably than full-time workers.

Fixed-term employment contracts

A fixed-term contract is one that has a definite end. Fixed-term contracts may provide that a notice to terminate the employment earlier than the original termination date can be given; if there is no notice provision, employment is guaranteed for the full period.

Fixed-term employees are entitled to the same rights as permanent employees. However, if the contract is for less than three months, the employee isn't entitled to statutory sick pay or medical suspension pay.

Nanny employment contracts

When a nanny or domestic help is employed directly by a family, the family, as their employer, will have legal obligations. Nannies have basically the same statutory rights as all other employees. But there are some rights that they don’t have because their employer is exempt as a small employer. 

Nannies have: 

  • No right to the National Minimum Wage, if they are living with the family; 
  • No right to a stakeholder pension; 
  • No rights against discrimination on the grounds of disability; 
  • No automatically unfair dismissal rights if the dismissal is due to pregnancy or giving birth (but the nanny will still have the right to claim unfair dismissal, it just won’t be automatically unfair).

As an employer you must:

  • Deduct the correct amount of PAYE from your nanny’s pay; 
  • Work out what  National Insurance contributions you and your nanny have to pay; 
  • Keep a record of your nanny’s pay, tax and National Insurance contributions; and 
  • Pay the total tax and National Insurance contributions to HMRC. 

There are organisations that carry out payroll services for families employing nannies. This is a good way to make sure that your legal obligations as an employer are met.

Help from Lawpack

If you want more in-depth information – from an employment lawyer – about all aspects of employment law, then read our guide Employment Law Made Easy. Packed with tips and expert advice on complying with employment legislation.

This article has been adapted from Lawpack’s Employment Law Made Easy.

Other information


External links

Published on: February 9, 2015

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