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Got employees? Reasons to sign on the dotted line...

Aug 23, 2012

For any employer it is important to have written contracts of employment - they record the relationship with the employee, protect the business, help avoid disputes, and they make a business more attractive to a prospective buyer. With a lot of luck some businesses do survive without written contracts in place but I’ll never forget the words of an Employment Judge at the end of a long and expensive dispute:  

If we had a contract to refer to, we wouldn’t be here today!

The basics  

All employees who are going to be engaged for a month or more have the right to be provided with a written statement of the main terms and conditions of their employment within the first two months of starting work. The written statement must contain certain basic information such as pay, hours of work and holiday. This is known as the rather catchy “Section 1 statement” and it is the bare minimum that we would advise any employer to provide to their workforce. If a statement is not issued then the employee has a limited right to claim compensation from the employer in certain circumstances.  

Beyond the basics  

We find that a Section 1 statement is insufficient for almost all of our clients. Most will want to see contracts which are tailored to the needs of their business by, for example, expressly dealing with how the employees handle their confidential information and any intellectual property that they create. In addition, employers can prevent employees from going to competitors and stealing away key customers or employees but such provisions must be carefully drafted to ensure that they are enforceable and don't fall foul of competition rules.

Carte blanche: the contract can be tailored to your needs, within reason. Other common areas include expenses, company sick pay and designating the places where the employee will be expected to work. If there is going to be a flexible or homeworking arrangement then this will also need to be clearly set out. A detailed contract is there for the benefit of the employee as well. If you are going to allow a generous holiday entitlement or offer enhanced payments during maternity leave or sickness absence then your employees will want to see this recorded in writing. The employer must also be aware that all employees have certain statutory rights that cannot be varied by contract. Examples include rights to minimum notice periods and unfair dismissal - any clauses which run contrary to these rights will be void.  

The staff handbook  

It is sensible to have a staff handbook which runs along side the contract, but does not normally form part of it.  This would typically include policies and procedures for dealing with issues like grievances, disciplinaries, bullying and harassment, health and safety, maternity leave and smoking - to name but a few.  

Changing the contract  

If you already have staff contracts in place and you want to introduce new ones then you will need to tread carefully, especially if your employees have been in service long enough to acquire the protection against unfair dismissal.  If you impose any significant changes without proper consultation then this could give rise to a claim. Therefore it is important to consider how best to implement the changes before you take any action.  

If you would like a free initial chat about drafting new contracts or changing and updating existing ones then please contact one of our specialist employment law solicitors on 020 7234 0200 or email contact@waterfront.law.