Legal Issues and the Small Business Part II
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?
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
29th July 2020
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