The importance of a written contract

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The importance of a written contract

The importance of having a written contract when deciding employment status should not be understated. Failing to make proper provision for written contracts can mean relying on oral agreements, which are obviously much harder to prove. Having a written contract can provide certainty to both parties and help avoid disputes or at the very least make it easier to handle any disputes that arise.

HMRC manuals say that where there is a written contract, the Courts will decide employment status based on the written contractual terms and on the factual matrix that existed when the contract was made. Generally, the Courts will not refer to evidence other than the written contract (for example, they will not refer what the parties did in practice).

Exceptions to this are where:

  • the contract is not comprehensive (other terms and conditions then have to be established from other evidence),
  • one or more of the written terms have been varied by agreement,
  • one or more of the written terms are a sham.

In contrast, where there is no comprehensive written contract, the Courts regard employment status as a question of fact or a mixed question of fact and law. The Courts will not disturb a Tribunal decision based on fact unless they think it is perverse.

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