Wayne Smith, director and solicitor with Nottingham firm of specialist employment solicitors Integra Legal, outlines the importance of having properly drafted contracts of employment.
As the economy picks up we are seeing more new clients who want us to help them with updating their contracts of employment, or putting new contracts together.
It never ceases to amaze us how many small businesses (and a few larger ones) don’t have contracts of employment in place, or have contracts which are woefully inadequate. This can be problematic as a business grows and takes on more people, or when employees leave to go elsewhere.
The Employment Rights Act 1996 requires all employers to issue new employees with a written statement of particulars of employment within two months of the employment commencing. Changes to this must be notified within one month of the change taking place.
As well of this it is important to have employment contracts in place as these govern the relationship between the employer and the employee. A properly drafted contract makes it clear to the employee what is expected of them at work and what rights they have in return. It is also important to provide the employer with protection should the employee decide to go to pastures new, particularly if they go and work for a competitor.
Issues to consider when preparing a contract of employment include:
- The starting point of any good contract is section 1 of the Employment Rights Act as this sets out the basics of what must be included, including matters such as the date employment began, details of pay and overtime, holidays, hours of work and sick pay.
- What is the appropriate notice period for the role in question? The law sets out minimum periods of notice which the employer must give. It is important to consider what notice the employer needs the employee to give, for example, to allow time to carry out sufficient handover, or for the employer to recruit a replacement. Consider whether you need the right to put the employee on garden leave if they resign.
- Include provisions to protect your confidential information and any trade secrets. These provisions should make it clear that they apply during the employment and after is has come to an end.
- Consider whether the employee could damage your business if they set up in competition or go to work for a competitor. This is a difficult area to get right so take advice about what you can do to prevent the employee from approaching customers, setting up in competition or poaching fellow employees. It is possible to protect your business in this way provided the restrictions are reasonable.
- The contract should refer to the employer’s disciplinary and grievance procedures. A good disciplinary procedure and rules should make it clear to the employee what standards of conduct are expected them and when they might be subject to disciplinary action.
- Consider what other policies and procedures you might need, such as an equal opportunities policy, or to deal with the use of IT systems and email/internet usage.
- Get your contracts and polices checked and updated frequently, at least every one or two years. Employment law is an ever changing area and contracts and policies can quickly go out of date.
If you’re affected by any of these issues or encounter problems take legal advice. You can get in touch with Integra Legal at contact@integralegal.co.uk or 0115 987 6790.