The need-to-know bits when dealing with employment contracts
Employment contracts are not the most exciting topic in the world, but understanding your options and knowing what to do and when to do it, ensures things are managed quickly and efficiently, without exposure to employment claims. It is important to ensure that your employees’ contracts protect your business during their employment, and also at the stage when individuals leave. I’ve tried to condense everything you need to know into digestible chunks, but if you’re short of time scan through to the parts which are applicable to you and come back later.
You do need…
- to understand that the contract forms the basis of your employment agreement with your employee and is not an added extra, but in fact a legal requirement.
- to issue a written statement/contract of employment to a new starter on or before day 1 of employment starting.
- As a minimum contracts must include
- the employer’s name
- the employee’s or worker’s name, job title or a description of work and start date
- how much and how often an employee or worker will get paid
- hours and days of work and if and how they may vary (also if employees or workers will have to work Sundays, nights or overti
- holiday entitlement (and if that includes public holidays)
- where an employee or worker will be working and whether they might have to relocate
- if an employee or worker works in different places, where these will be and what the employer’s address is
- how long a job is expected to last (and what the end date is if it’s a fixed-term contract)
- how long any probation period is and what its conditions are
- any other benefits (for example, childcare vouchers and lunch)
- obligatory training, whether or not this is paid for by the employer
- other items such as confidentiality, social media, sick pay arrangements, employer’s family friendly obligations, disciplinary and grievance clauses are normally to be found in contracts.
- Confirmation that the employee is a UK citizen or has the right to reside and work in the country
You don’t need…
- to be a lawyer(sorry lawyers) to grasp the basics of contracts. If you’re confused or worried already, it’s because you are anticipating confusion, rather than actually being confused! You need to clear your mind of these thoughts and focus!
There is always one topic that trumps all others in terms of web visits: Dismissing staff with short service. This is a huge topic, so if you’re thinking of delaying issuing the contract… DON’T. It’s an invaluable document if you want clarity on how to manage, or dismiss someone early on.
If you make a contract verbally, that’s wonderful, but it doesn’t leave you much protection if things go belly up. Plus, you still have to be aware that the employee has a legal right to written statement of terms/contract of employment on or before day 1 of employment. Interestingly, organisations that do things by the book with staff, sometimes mess up and do things verbally when agreeing terms with senior appointments. A big mistake and one that many come to regret!
Contracts do not need to be signed to be valid, but a refusal to sign should be treated differently to a failure to sign. If someone refuses to sign and gives a clear reason then you cannot consider the contract implemented. If they simply fail to sign – sometimes due to an allergy to putting pen to paper, then you can consider the contract you issued in place.
You might find that some terms are considered to be contractual by the employment courts, even if not included in the written contract of employment. These terms come about through custom and practice and can become employment rights without you ever planning that. For something to be considered to be custom and practise it must:
- Be reasonable
- Be certain (i.e. be able to be defined precisely)
- Be notorious (i.e. be long established and well known)
Zero hours contracts.
- Zero hours contracts are permanent contracts. If, over time, you stop using your zero hours employee, be aware that unless you officially terminate their contract, it will still be in place, along with your responsibilities to them.
Most of your employees will probably be issued with a permanent contract.
Permanent contracts have no end date and it has been many years since you can force staff to retire at a specific age. The only options for terminating a permanent contract are:
- The employee resigns.
- You dismiss on grounds of conduct, poor performance, ill health.
- The employees right to work in the UK has expired.
- SOSR – a legal term meaning ‘some other substantial reason’ (too complicated to go into here).
- Grounds of redundancy.
A word of warning:
If a permanent employee goes AWOL, fails to return from long term sick leave, spends a period at her majesty’s pleasure etc. if you fail to properly terminate the contract (if appropriate to do so) you might just find that one day your long forgotten employee walks back in through the door stating they are ready to work!
Fixed term contracts
Fixed term contracts last for a specific length of time and end when a specific task is completed or when a specific event takes place. e.g Covering a maternity/adoption leave could be achieved with a fixed term contract – don’t forget to include in the contract that you may wish to give notice prior to the end of the contract if the person on maternity/adoption leave decides to return earlier! Unless, of course, you can afford to pay two salaries for the same role?!
A classic mistake with fixed term employees is to let time drift and all of a sudden you realise time was up several months earlier and they are now effectively working as a permanent employee. Don’t let this happen to you; it’s careless and could cost you a great deal
All contracts should be reviewed every 3 years as legislation moves on and external events e,g covid affect the way employers and employees interact.