Abolition of Contracting Out – are your employment contracts fit for purpose?

The recent abolition of contracting-out has implications for employment contracts. Have you checked your contracts are fit for purpose?

A written statement setting out the basic terms of employment is required to be given to employees under section 1 Employment Rights Act 1996 (the Act). There is an ongoing obligation to inform the employee of any changes to the particulars set out in this statement within one month of that change being made.

Section 3 of the Act currently requires the Statement to include a note about disciplinary procedures and pensions. Section 3(5) of the Act previously required that note to 'state whether there is in force a contracting-out certificate ...'. Standard clauses were generally drafted into employment contracts confirming whether or not there was a contracting-out certificate in place.

Section 3(5) of the Act was repealed by the Pensions Act 2014 with effect from 6 April 2016. This means that employers are no longer be required to confirm in the Statement whether or not there is a contracting-out certificate in place. Standard employment contracts and statements of particulars should therefore be amended for new joiners.

For existing employees, whilst there is no need to amend employment contracts, where employees have previously been in contracted-out employment, employers may wish to explain the changes to employees in any general communications that are circulated.

For more information or further advice, please contact one of our pensions specialists below.

Author: Alex Goldrein

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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Tim Green

Partner - Head of Pensions

I am a Partner in the Pensions team with a broad advisory, transactional and dispute resolution practice.