Essential Contracts for Your Business

Once your company's up and running, having the right contracts in place protects both you and the people you work with, and it's worth sorting this out before you actually need it, not after a dispute's already underway. Here's what most growing businesses need, and the clauses worth paying attention to in each.

Key Takeaways

• Written employment contracts are a legal requirement for employees, covering job details, pay, hours, and termination terms.
• Consultancy agreements suit self-employed contractors rather than staff, and should clearly cover deliverables, payment terms, and confidentiality.
• Confidentiality clauses and NDAs protect sensitive business information, both with employees and when exploring a potential partnership.
• Company policies, a staff handbook, privacy notice, and any sector-specific policies, work alongside your contracts rather than replacing them.
• Free templates found online rarely offer the protection a growing business actually needs, so it's worth having contracts properly drafted or reviewed.

Employment Agreements and Offer Letters

An employment contract is the first, most obvious one most growing businesses need. Providing a written contract to employees is a legal requirement, and it's genuinely important for protecting your business's interests too.

A solid employment contract typically covers:

• The employer's name and address
• The employee's job title and a brief job description
• Place of work
• Date of the agreement
• Start date and duration
• Hours of work and holiday entitlement
• Termination, notice periods, and grievance procedures
• Optional benefits, such as sick pay
• Intellectual property, personal data, and non-compete clauses

Free templates exist online, but they rarely offer the flexibility or protection a growing business genuinely needs, so it's worth having a solicitor draft or review your standard contract rather than relying on a generic one.

Consultancy and Independent Contractor Agreements

A consultancy or contractor agreement suits situations where a self-employed individual provides services, rather than joining as an employee, since they handle their own tax and National Insurance. This is commonly used to appoint a self-employed consultant for a specific piece of work.

A consultancy agreement should cover similar basics to an employment contract, start date, duration, termination, and notice, though it isn't a legal requirement in the same way. Confidentiality and intellectual property clauses matter particularly here, especially if you've brought someone in to design or create something for your business. It's also worth specifying the services and any deliverables clearly, along with payment terms and an expectation that the consultant holds their own professional liability insurance.

Confidentiality Agreements

Protecting sensitive business information matters, but running a business inevitably means sharing some of it, with employees, and sometimes with other businesses you're exploring a partnership with. A confidentiality clause in your employment contracts covers how information is handled, processed, and shared internally, which also helps keep you compliant with UK GDPR.

When exploring a partnership or sharing sensitive information with another business, a non-disclosure agreement (NDA) is worth having in place before any detailed discussions begin, and if you do go on to formalise a partnership, make sure confidentiality is properly addressed in that agreement too.

Company Policies

Alongside your contracts, clear company policies matter too. A staff handbook supplements your employment agreements, setting out procedures for things like illness or grievances in more detail than a contract typically would.

You'll also need a privacy policy and privacy notice covering how you handle data under UK GDPR, along with any other disclaimers relevant to your business. Depending on your sector, anti-slavery and human trafficking policies, or anti-bribery and corruption policies, may also be worth having, and are sometimes a requirement for working with certain organisations, government departments among them.

Should I Use a Free Template or Get Proper Legal Advice?

Having these contracts in place from the start is one of the simplest ways to protect your business early on. Free templates are tempting, but they're rarely tailored to your specific business or risk profile, and getting it wrong can cost considerably more than the template saved you. A solicitor's fees can feel steep for a new business, but for anything covering employment, intellectual property, or confidentiality specifically, it's usually worth the investment given what's actually at stake.

Where Can I Read More About Specific Contract Types?

If you want to understand a particular contract in more depth before drafting or reviewing one, Legislate publishes guidance on common business contracts and policies, including employment agreements, consultancy agreements, NDAs, staff handbooks, and privacy notices. Worth a look if you're trying to get your head around what a specific document should actually cover before you approach a solicitor.

FAQs

Is a written employment contract a legal requirement?

Yes, employees must be provided with a written contract, and it should cover core details like pay, hours, job description, and termination terms.

What's the difference between an employment contract and a consultancy agreement?

An employment contract is for staff and is a legal requirement. A consultancy agreement is for self-employed contractors, who handle their own tax and National Insurance, and isn't a legal requirement in the same way, though it's still worth having in writing.

Do I need an NDA before discussing a potential business partnership?

It's worth having one in place before sharing sensitive information, such as your user base or business strategy, with a potential partner.

What company policies should a growing business have beyond contracts?

A staff handbook, a privacy policy and notice for GDPR compliance, and any sector-specific policies relevant to your business, such as anti-bribery or anti-slavery policies.

Are free contract templates good enough for a growing business?

Usually not on their own. They can be a starting point, but they rarely offer the specific protection a growing business needs, so it's worth having key contracts properly drafted or reviewed.

This article is for general information only and does not constitute legal advice. It's worth speaking to a qualified solicitor to make sure your contracts are properly tailored to your specific business.