If you’re employing people, you’ll need to put employment contracts in place – no, we’re not just saying that because we work in the HR industry!
An employment contract sets out each parties’ rights and forms the basis of the whole employment relationship between employer and employee.
A comprehensive and well drafted employment contract can help protect both parties should you find yourselves in stormy seas if the employment relationship breaks down.
Some employment relationships can be rockier than others and if a dispute occurs in the future, the terms set out in the employment contract can if needed, be used as evidence and also helps to protect your business if you work with sensitive information.
What should be included in every employment contract?
Section 1 of the Employment Rights Act 1996 sets out that every employee is entitled to receive, on or before the first day of their employment, a contract of employment.
Additionally, Section 1 strictly sets out the information that must be contained in that contract of employment.
Section 1 is a bit……. wordy, so we’ve done our best to simplify it below (although it’s hard to believe that this is the simplified version!):
- The names of the employer and the employee
- The date when employment began
- That date on which the period of continuous employment began
- Job title
- Details of any probationary period
- The rate of pay for the employee
- When the employee will be paid (i.e. weekly, monthly, on a certain date etc)
- The employee’s holiday entitlement, including public holidays
- How holiday pay will be calculated
- The usual place of work (or, if various locations, an indication of that)
- The employee’s normal working hours
So far, so good – right? Well it also includes…
- The days of the week the employee will work (or, if hours are variable, a statement as to how they vary or how variation is determined)
- Any provisions relating to absence due to sickness or injury, including any relevant sick pay provisions
- Details of any paid leave to which the employee is entitled
- Details of any pension contributions and pension schemes
- Any benefits provided by the employer
- The amount of notice to be given by either the employee or the employer to terminate the contract
- If employment is not intended to be permanent, the length of time it is envisaged to last or the fixed end date of employment
- Any collective agreements which affect the terms and conditions of the employment
- Any training entitlement the employer offers (including whether the employee is required to complete that training and if so whether the employer or the employee will bear the cost)
- Whether the employee is required to work outside of the UK for a period of more than a month and, if so:
- The length of that period
- The currency in which they will be paid for that period
- Any additional pay or benefits to be provided to the employee for that period
- Any terms and conditions relating to their return to the UK
Many businesses consider inserting additional clauses into their contracts of employment to offer additional protection.
Additional Clauses to include in contracts of employment
Whilst Section 1 sets out the minimum criteria for every contract of employment, many businesses consider inserting additional clauses into their contracts of employment to offer additional protection.
These very much depend on the type of business you operate, for example you may want to consider non-compete clauses or terms relating to bonuses and promotions.
Some other common clauses found in contracts of employment include:
- Clauses relating to an employee’s Duties and Responsibilities;
- Clauses relating to Company property and acceptable use;
- Expenses clauses;
- Payment in Lieu of Notice / Garden Leave clauses;
- Clauses governing whether the employee can work elsewhere;
- Lay-Offs and Short-Time Working clause;
- Intellectual Property clause;
- Confidentiality clause;
- Restrictive Covenants, for example non-compete or non-poach.
Get help drafting an employment contract
Whilst there are plenty of free employment contracts available to download from the internet, we’ve seen what can go wrong when a poorly drafted contract has been issued.
We recommend ensuring that all of the above is covered as a bare minimum and to seek advice from an employment lawyer or independent HR consultant who can offer you more tailored advice and support with the drafting of a specific contract.
If you’d like some help with creating employment contracts and ensuring they comply with current UK employment law, our integrated team of CIPD qualified HR advisors & employment lawyers can help.
As part of our employment & HR service, a contracts and policy review is included and you can use our unlimited advice line to ask HR advisors and UK employment lawyers questions about your employment contracts whenever you need. We’ll even help up-skill your managers’ knowledge to help them manage workplace compliance and managing your people with confidence.
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