Contracts of Employment – why getting it right is so important to the success of your business
This guest blog has been written by Chloe Leyland who I know through networking. Chloe is in credibly talented in her area of specialism, HR Contracts. Chloe and I work together on contracts and I know you will find her guest blog really useful. So over to Chloe:
We are now fully into the swing of 2018, January has gone in a flash, but are you sticking with your goals for the year?
If you are employing staff, one goal should be to have contracts of employment in place. If you do, now is a good to time to review those contracts to be certain that they properly set out what is required from the individual and, importantly, that they protect your business.
Under Section 1 of the Employment Rights Act you are obliged to provide certain key information to employees within 2 months of them starting employment. This key information includes terms such as rates of pay, hours of work, holiday entitlement, job title and place of work. These days you can downloand free contracts of employment from a number of providers and whilst these standard documents may fulfil your legal duties to provide written terms, they will not be tailored to your business.
Additionally, there are many different types of contracts incorporating shift patterns, fixed term, part time, flexible working and zero hours contracts to mention just a few. We also have the ‘gig economy’ to contend with. If you use these workers, what sort of contract do you need? Are they genuinely self employed, or could they be described as a “worker”? If so, they will be entitled to a number of rights such as holiday pay and minimum wage. Before you issue a ‘standard’ contract to individuals, it is important to consider the working relationship and then set out the expectations in the contract so as to avoid any confusion regarding their status.
Another key issue to be aware of in protecting your business is whether you have the right provisions in place should an individual leave the business. This is especially crucial if you employ individuals (or engage workers) who might have access to your business critical information (such as pricing and sensitive client information). If so, it is likely that you will want to include post termination restrictions in the contract should they leave the business. These need to be carefully drafted to ensure that they are enforceable. The courts have made it clear that, when determining whether these restrictions are enforceable, the needs of the business in seeking to protect their interests needs to be balanced against the potential damage it would cause to the individual.
Put simply: a contract of employment just like any contract for services, sets out the foundation of what the parties agree to carry out during the relationship. The basics have to be right to be legally compliant, but businesses should consider whether they are also fit enough to protect their business.
If any business would like a free audit of their employment contracts, please contact me.