Every employment relationship is based on a contract - a written agreement to do something in return for payment. Contracts can be for services (where someone is hired to do work for another, but is not under their control) or more commonly are Contracts of Service, usually referred to as Contracts of Employment. These also arise where a party asks another to do something in return for payment, but where the way that the work is carried out is under the direction and control of the party paying for it.

The fact that there is no written document setting out its terms does not mean that the parties have not established a contractual relationship; an oral agreement is just as much a contract as is a written one. However, knowing what has been agreed in the contract is important, and for this reason employers are obliged in law to set out the principle terms of the contract in writing.

An individual working under a Contract for Services is treated either as ‘self-employed’, with few or no statutory employment rights, or as a ‘worker’, with limited employment rights. However, an individual working under a Contract of Service/Employment has the status of ‘employee’, and to this is attached an entitlement to all of the statutory employment rights currently in force.
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