Using AI to Write Employment Contracts: Risks and Rules

AI tools can produce a plausible-looking employment contract in seconds. The risk is that a plausible-looking contract and a legally compliant one are very different things, and the consequences of using a defective contract fall entirely on you as the employer.

What the Law Actually Requires

The Employment Rights Act 1996, Section 1 requires employers to provide a written statement of employment particulars to employees on or before their first day of work. This is not optional. Failure to provide it is a breach of the Act regardless of how much the employee appears to understand their role.

The written statement must include:

• The employer's name and address
• The employee's name
• The job title or a brief description of the work
• The date employment began
• The date continuous employment began (if different)
• Pay rate and the interval at which pay is made
• Hours of work, including any terms and conditions relating to normal working hours
• Holiday entitlement, including public holidays and holiday pay
• Sick leave and sick pay entitlements
• Any other paid leave entitlements (maternity, paternity, adoption leave)
• Notice periods - both employer and employee
• Whether the job is permanent or fixed-term
• Place of work or, where the employee works at various locations, that they are required or permitted to work at various places, along with the employer's address
• Any collective agreements that affect terms and conditions
• Pension arrangements
• Training entitlement

Since April 2020, the full written statement must be provided from day one, not within two months as previously required. Many AI tools are trained on data predating this change and may produce contracts or guidance that no longer reflects current law.

The Specific Risks of AI-Drafted Contracts

Outdated statutory figures: Statutory sick pay rates, national minimum wage rates, and statutory maternity and paternity pay figures change every April. AI language models have a training cutoff date and may produce contracts with incorrect statutory rates. You are bound by current statute regardless of what a contract says.

Missing required clauses: Even sophisticated AI tools regularly omit required particulars. Common omissions include the disciplinary and grievance procedure reference, the pension scheme details, and the training entitlement clause introduced in 2020.

Generic wording that creates problems: AI-generated contracts often use boilerplate wording that sounds reasonable but creates ambiguity. Garden leave provisions, intellectual property clauses, and post-termination restrictions drafted generically may be unenforceable or may say more or less than you intend.

Sector-specific requirements ignored: Some sectors have additional requirements. Construction workers, agency workers, and workers in certain licensed industries have additional legal protections. An AI tool will not know which sector you are in unless you tell it explicitly, and even then may not accurately reflect current sector-specific law.

Zero-hours and flexible working arrangements: AI tools frequently produce fixed-hours contracts even when instructed to draft a zero-hours or flexible contract, or produce zero-hours contracts that do not adequately reflect the worker's actual rights.

Jurisdiction errors: AI tools trained on global data sometimes include clauses from US, Australian, or EU employment law that have no legal basis in England, Wales, or Scotland.

When AI-Drafted Contracts Are and Are Not Adequate

Situation	AI drafting adequate?	Notes
Basic permanent employee, standard role	With review, possibly	Must check all ERA 1996 s.1 particulars are present and current
Zero-hours or casual worker	No	Too many variables; high risk of errors on key worker rights
Fixed-term contract	With review, cautiously	Ensure fixed-term reasons and end provisions are correct
Senior employee with restrictive covenants	No	Restrictive covenants require bespoke legal drafting to be enforceable
Employee with equity or commission	No	These terms require specific legal and commercial input
TUPE transfer situation	No	TUPE transfers require specialist employment law advice

What a Competent Review of an AI Draft Looks Like

If you use an AI tool to draft a contract, do not simply read it through and sign it. Your review must:

1. Check every item on the ERA 1996 Section 1 list is present with current, accurate information
2. Verify any statutory figures against the current GOV.UK rates (minimum wage, SSP, SMP)
3. Check that working hours reflect actual agreed arrangements, not defaults
4. Confirm that any post-termination restrictions are specific to your legitimate business interests, proportionate in duration and geographic scope, and targeted at the correct concerns
5. Remove any clauses from other jurisdictions
6. Add your actual pension scheme details rather than generic placeholder text
7. Cross-reference the contract with your staff handbook to ensure consistency

If you are not confident you can carry out this review competently, use a lawyer or a professionally drafted template from a reputable HR provider.

Safer Alternatives to Pure AI Drafting

Rather than generating a contract from scratch with an AI tool, consider:

Professionally drafted templates with AI assistance: Start with a template from ACAS, a reputable employment law firm, or a professional HR platform. Use AI to adapt the wording for your specific role, then review the output against the base template.

AI for specific clauses only: Use AI to help you draft a specific clause (such as a flexible working clause or a specific job description section) rather than the entire document.

Hybrid approach: Have an AI tool produce a draft, then have an employment solicitor review it before first use. This is significantly cheaper than commissioning a contract from scratch but gives you professional assurance.

The Cost of Getting It Wrong

An employment contract that is missing required particulars, that contains unenforceable clauses, or that does not reflect the employee's actual working arrangements can cause problems throughout the employment relationship:

• Disputes about pay, hours, or notice become harder to resolve
• Disciplinary and grievance processes may be challenged on the basis that procedures were not clearly communicated
• Restrictive covenants that are too broad will not be enforced by a court, leaving you with no protection
• Unfair dismissal or wrongful dismissal claims are more difficult to defend when the contract is defective

Investing a few hundred pounds in a properly drafted or reviewed contract is substantially cheaper than an employment tribunal claim.

---

This is guidance, not legal advice. Employment contracts are legally binding documents with significant financial consequences if they are defective. If you are uncertain whether your contract meets current UK legal requirements, take advice from an employment solicitor before issuing it.