Legal Issues and the Small Business Part II Blog

Legal Issues and the Small Business Part II

(If you missed Part I, you can read that here)

In this blog we will take a look at the importance of getting employment contracts in place and their typical contents.

All employers need to comply with employment contract law. The risk of ignoring this legal obligation is to end up in front of an Employment Tribunal and having to both pay damages and receive unwelcome publicity!

When do employers have to provide an employment contract?

Anyone legally classed as an employee or worker has the right to a written contract detailing the main terms of their employment. Failure to provide this can result in an employee seeking damages at an Employment Tribunal. For all employees who are hired after April 2020 this entitlement starts on the first day of the contract period (i.e. normally the first day of work). Similar obligations exist for agency workers and zero hours workers.

Employment Contracts – the elements required by law

Some basic ingredients MUST be included by law within an employment contract. These are as follows.

Terms to be included in the original same document

The following must all be included in the original contract:

the employer’s name and address
the employee or worker’s name
the start date of employment or work
the date that ‘continuous employment’ (working for the same employer without a significant break) started for an employee
job title and/or a brief description of the job
the places or addresses where the employee or worker will work
pay, including how often and when to be paid
working hours, including which days the employee or worker must work and if and how their hours or days can change
holiday and holiday pay, including an explanation of how its calculated if the employee or worker leaves
the amount of sick leave and pay (if this information is not included in the document, the employer must state where to find it)
any other paid leave (if this information is not included in the document, the employer must state where to find it)
any other benefits, including non-contractual benefits such as childcare vouchers or company car schemes
the notice period either side must give when employment ends
how long the job is expected to last (if it is permanent, temporary, or fixed term)
any probation period (including any conditions and its length)
if the employee will work abroad, and any terms that apply
training that must be completed by the employee or worker, including training the employer does not pay for

Terms that may be provided later

Employers can provide some other terms bit by bit. These do not have to be provided at the same time but must be provided no later than 2 months after the beginning of the employment. The terms that can be given in this way are:

pension arrangements (if this information is not included in the document, the employer must state where the employee can find it)
any terms and conditions that apply to other employees too (known as ‘collective agreements’)
details of any training provided by the employer that is not compulsory (if this information is not included in the document, the employer must state where to find it)
disciplinary rules and procedures.

What else should be included in an Employment Contract?

If there are other terms and conditions which apply to the employment, they should be recorded in the contract, too. An example might be a restriction on working for competitors or IP protection.

Making changes to the Employment Contract

If during the course of the employment, the employer and the employee agree a change to the terms and conditions, the employer must provide the employee with an updated version of the statement containing the new terms. The contract itself may permit the employer to make sensible and reasonable changes that fit the trading position of the business or which are otherwise reasonable.

A new version of an employment contract has to be provided to the employee within 1 month of the change taking place.

How to draw up such a contract?

Everyday Legal has a wide selection of quality and up to date HR material available on its website (www.everyday-legal.co.uk) – not just contracts for employees but also for senior employees, non-executive directors and zero-hour workers. We also have a wide selection of HR letters and consultancy agreements.

Alternatively, businesses could use an employment solicitor or HR consultancy. It might be an idea to compare costs!!

Next week we will be looking at a typical supplier contract

John Davies

29th July 2020

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