Despite it being a legal obligation, many business owners think that it’s in their interests to delay giving an employee a contract, or not bothering at all, but this blog will explain the importance of having employment contracts in place.
Firstly…It’s the Law!!
It is a legal requirement to have an employment contract in place within two months of hiring an employee but if you didn’t know act now – don’t ignore it!
Contracts actually benefit both employers and employees; it helps the employer by setting out clearly what is expected of the employee the hours they should work, how much and how often they are paid, holiday and sick pay arrangements and other day to day issues. It is important for the employee because they then know in addition to items above, how to lodge a grievance, what notice to give and their rights under family friendly policies such as maternity or paternity leave and the company expectations in larger company for more senior employees this is a vital tool for the employer often overlooked. Contracts should be regularly reviewed and updated and if an employee is promoted they should always be issued with an updated contract reflecting their new rights and responsibilities.
Also, given this is a contractual agreement you are putting in place between you and the employee, I would advise that you take professional advise so that you can clearly articulate what you want the contract to say and that you fully understand what you as the employer are committing to.
It avoids disputes
Even without anything written down, when an employee turns up for work and gets paid, there is a basic employment contract agreement between the two parties.
Without any written terms then it’s either statutory rights that are in place (which often benefit the employee), or oral agreements which can be open to interpretation and misinterpretation. Dealing with disputed oral terms is at best time-consuming and at worst can also be financially costly.
Decide the terms that work for your business, by offering a job with terms and conditions that you have set, you are not only presenting a professional image and setting the tone for the employment relationship, but giving clear guidelines to what the employee can expect when working with you.
You can specify working hours, any overtime payments (or not), the notice period you require from them, how much sick pay they can expect, how much holiday they are due, and when they can or cannot take holiday, amongst many other things.
It protects your business
If an employee leaves your employment, you can put restrictions in place (within reason) so that your business is not adversely affected if their next role is in competition with your business. You also need to put in place protection for your business regarding critical, confidential information.
If it’s not specified in the contract, you may be taking a risk if you decide to put someone on gardening leave, or pay them in lieu of notice, if your rights to do this are not detailed in the employment contract.
Finally, to reiterate we would always advise that you take professional guidance so that you can clearly articulate what you want the contract to say and that you fully understand what you as the employer are committing to.
Businesses often wonder if there are contracts in place, do they also need a Company handbook… the answer is yes! A contract is a legally binding document mutually agreed and any variation to it again needs to be mutually agreed and to undergo a period of consultation before any change is implemented. A handbook is a document setting out company policies from expenses to confidentiality, to dealing with harassment and bullying, email, social media and internet policies and many others. It is not legally binding and therefore does not have to be mutually agreed. It gives the employer the ability to change and amend policies to deal with the changes in legislation and social trends eg. Maternity/Paternity etc.
HR Revolution would advise that employers and employees need both.
If you need any further advice on employment contracts or handbooks get in touch.