Why employees should be given a written Contract of Employment
An employment contract is the document which sets out the rights and obligations of each party. Here are just some of the reasons why employers should give their employees a written contact of employment:-
1. A Legal Requirement
All employees must, as a bare minimum, be given a written statement of terms within two months of starting work. The law prescribes what should be included in the written statement but it only covers the most basic elements of the employment relationship for example start date, job title, place of work and pay etc.
Failure to give an employee a written statement of terms entitles the employee to complain to the Employment Tribunal. The Tribunal will then decide what those terms should have been.
There is no free standing right for an employee to bring a claim for compensation for a failure to be given a written statement of terms. However, if the employee does bring a successful claim against the employer (e.g. for unfair dismissal), the Employment Tribunal can order the employer to pay the employee additional compensation of between two to four weeks’ pay (capped at the statutory rate) for the failure to issue a written statement.
2. It protects the employer’s business assets
A comprehensive contract and staff handbook will benefit and protect an employer’s business. The written statement of terms required by law is very basic and is likely to offer insufficient protection for most businesses. There are many compelling reasons to have a detailed contract of employment and even a staff handbook for example:-
- Notice Period – as a general rule, an employee only has to give an employer one weeks’ notice, regardless of their length of service. One week may be insufficient time for the employer to find a replacement. The contract of employment can require an employee to give a longer notice period e.g. one month, 3 months etc.
- Restrictions – a contract can protect an employer’s important business assets for example, confidential information, staff, clients and customers. A well drafted contract can include restrictions preventing appropriate employees from poaching clients and staff/working for clients a period of time after their employment has ended. It can also include provisions to protect confidential business information and intellectual property rights.
- Other Terms – A contract of employment can also deal with sickness absence, deductions from wages, snow days, disciplinary issues and grievances, bullying and harassment, use of the employees telephone, internet and social media etc.
3. It reduces the risk of disputes
A well drafted contract/staff handbook will let everyone know where they stand. It helps avoid disputes and misunderstandings as it sets out the expectations of each party. If there is not a written contract in place, both parties are left with the considerable uncertainty as to what has actually been agreed and will have to rely upon the implied common law principles which may not be enough to protect your business.
If you would like further advice on contracts of employment please contact our experienced employment Solicitor, Jacqueline Penfold on 01323 727321 or use the enquiry form below.