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Employment Contracts…Why have one?

27th Jul 2020
Employee Handbook, HR Resources, Human Resources, Payroll, Recruitment

Employment Contracts

We have heard both sides of the argument, with some employers suggesting that employment contracts are an absolute must, so that both parties know exactly what the rules of engagement are from the get go, likening it to a kind of “pre-nup”.

Then we have the other end of the spectrum, whereby the argument is the shorter the contract and the less specific it is, the greater the flexibility, enabling both parties to navigate the murky shades of grey at a later date as and when needed.  This is quickly justified with, “we don’t need contracts here, that’s not our culture, we don’t operate like that.”  In the fullness of time, however, what commonly follows is a call for assistance to resolve a dispute which is around someone exiting the business and the terms which can or cannot be applied.

In any event, the reality is that employers are legally required to issue new employees with a Written Statement of the Main Terms and Conditions of Employment (known as Written Particulars) from day one of employment.  Prior to the Good Work Plan coming to force from 6 April 2020 (see our blog for more info), employers had two months grace to “get their ducks in a row” and issue a written statement of particulars, usually in the form of an employment contract, however this is now not the case.

Not only that, there are certain requirements as to what needs to be defined in this document, in addition to the specific details relating to the role, it must also include:

  • How long the job is expected to last (or state the end date of a fixed-term contract);
  • Terms relating to normal hours of work. This includes day of the week the worker will be required to work, plus whether these days/hours will vary;
  • How much notice is required from both the employer and the employee;
  • Details of eligibility for sick leave and Statutory Sick Pay;
  • Details of any other types of paid leave, including family;-friendly leave;
  • Duration and conditions of any probationary period
  • Remuneration;
  • Which specific days and times workers are required to work;
  • Training entitlements, requirements, and whether it’ll be paid for by the employer; and
  • Details of other employee benefits, not just those relating to pay.

The main purpose of the contract is to ensure that both you and your employee have a clear understanding of what is expected during the term of employment. It helps both parties to understand what their rights are and can help to eliminate any disputes which may arise at a later date, this saving time, money and energy.

Still not convinced? 

OK, if the legal requirement isn’t enough of a reason to put pen to paper and create a comprehensive, up to date employment contract, how about protecting your business from a commercial perspective?  For example, you have found the perfect addition to your team and from day one you are imparting them with all the knowledge they need to begin contributing to the financial success of the business, the details of the business strategy, the pricing strategy, your client and supplier lists, the valuable relationships that you have spent years building,  all of those nuggets that give you the competitive edge in the marketplace.  Then maybe a few months or even a few years down the road, either you or the employee decide to move on and not only do they take all of that valuable information they have gleaned from their time with you, they take it to your greatest competitor, along with some other valuable members of your team!

Employment contracts with a few carefully worded restrictive covenants, confidentiality clauses, requirements for the handling, processing and storage of data, to name but a few, can be invaluable when protecting the business and its assets.

Approach with caution…

However, before you begin Googling “contract template”, please bear in mind that what is in one company’s contract may not necessarily be relevant or appropriate to your business or even up to date with current legislation.  The wording of your contract is critical and should be based on your business needs and requirements in order to provide maximum clarity and protection, and having particular wording in your contract that you did not intend or are unaware of can be costly.

Next Steps

In order to give you peace of mind that you have a contract that reflects your individual business needs and is up to date with legislation, please contact a member of the MAD-HR team and we will be happy to consult with you on your unique needs and create a bespoke template providing you with all that you need.

Not only that, we can help develop policies and procedures which set out expectations that are required by your team from day one and throughout the duration of their employment with you, providing protection for your business, in the unfortunate event that disputes arise.

So whether you have no employment contracts currently in place, or it has been a while since it has been updated or you just want to sense check to see if what you have is fit for purpose, please feel free to give us a call today.

Brilliant service and advice from MAD-HR.   Thank you so much, you’ve made the process of taking on our first employee an absolute breeze! Highly recommended.