“A verbal contract isn’t worth the paper it is written on”
Well that really sums it all up.
You have a good relationship with your staff after all they’ve been recommended by your brother-in-law’s brother what could possibly go wrong. Why should I bother with the hassle and expense of drawing up an employment contract or still worse a handbook. I could better spend my time finalising the deal currently on the go with Messrs Scrooge there does seem an upturn in demand from him for Christmas turkeys.
The approach is above is extremely common for owners of small companies indeed the smaller the company the more likely the response and on the face of it, it is absolutely correct why bother/ what could possibly go wrong? The staff are happy business is good.
So why bother with contracts?
Contracts apart from the legal obligation actually benefit both employers and employees. Legally within 8 weeks of starting your employee should have a contract whose basics can be found on my website www.ukemploymentlawadvice.co.uk. More than that however it helps the employer by setting out clearly what is expected of the employee the hours they should work, how much and how often they are paid, holiday and sick pay arrangements and other day to day issues. It is important for the employee because they then know in addition to items above how to lodge a grievance, what notice to give and their rights under family friendly policies such as maternity or paternity leave and the company expectations in areas such as the use the use of social media.
Carefully crafted contracts help the employer to protect the confidentiality of his business and can even restrict at least for a limited period what the employee can do after leaving employment. In a slightly larger company for more senior employees this is a vital tool for the employer often overlooked. Contracts need to be regularly reviewed and updated and if an employee is promoted they should always be issued with an updated contract reflecting their new rights and responsibilities.
A final caution if it all goes completely wrong and you do end up at a tribunal and lose, failure to have a contract in place will lead to an increased award being made against you.
I am often asked well if I have a contract in place why do I need a handbook. A contract is a legally binding document mutually agreed and any variation to it again needs to be mutually agreed and to undergo a period of consultation before any change is implemented. A handbook is what is says a book setting out company policy from expenses to confidentiality, to dealing with harassment and bullying, email, social media and internet policies and many others. It is not legally binding and therefore does not have to be mutually agreed. It gives the employer the ability to change and amend policies to deal with the changes in legislation and social trends e.g shared paternity leave or say the use of facebook.
Both employers and employees need both.