Understanding Contracts of Employment – And How to Get Them Right
You’ve gone through the recruitment process and found the ideal candidate. You’ve sent them a contract of employment. What could possibly go wrong?
Regrettably, this is a complex area of employment law, and if your contract of employment isn’t appropriately worded, it could cause problems in the future. Here’s a guide, detailing the key things to include on a contract of employment and statement of terms, and how to steer clear of costly (not to mention stressful) errors.
Employment Law: What is a Contract of Employment?
This important legal contract is an agreement between your company and the employee. Most people mistakenly presume this is always a written document, but actually, it can be a verbal agreement. Of course, it goes without saying that, if you want to protect yourself legally, your contract of employment should always be in written form – in case you require written proof in the future.
Bear in mind, a contract of employment is not the same as an offer of employment. The offer is made in order for your employee to formally accept the position (after which, you’ve entered into a legally binding arrangement).
Statement of Terms
Under the Employment Rights Act 1996, you’re required to give your employee a written statement, which details all the main terms and conditions of their employment. This is not, strictly speaking, the same as your contract of employment, though often employers provide both documents at the same time.
Your statement of terms should include:
- Names (both employer and employee)
- Date when employment commenced
- Payment terms
- Payment intervals
- How many contracted hours
- Holiday / sick leave entitlement
- Pension schemes
- Job title and description
- Details of job location
- Collective agreements affecting terms and conditions of employment
It should also contain details about what happens in the event of a grievance (e.g. disciplinary procedures). Note that your employee should receive the terms and conditions in writing within two months of commencing employment.
What Could go Wrong?
Unfortunately, without proper preparation, there are a number of things that can (and do) go wrong with contracts of employment.
- Flexibility in the future. It’s possible that you may want to change contract terms in the future. In order to do so, you’ll need to renegotiate terms with your employee – and if your original contract of employment doesn’t cover this eventuality, it may cause problems.
- Any legal document must always be free from ambiguity. If anything is unclear, poorly worded or confusing, this means the law could potentially be on your employee’s side in the event of a dispute.
- Lack of disciplinary terms. In some industries, it’s necessary to include additional terms in certain key circumstances. For example, when hiring operatives for your warehouse, you may want to clarify that it is automatically gross misconduct if they have consumed alcohol during work hours. Stating these disciplinary terms covers your company; and failure to do so gives your employee grounds to dispute your disciplinary measures.
Help with Employment Law
When creating important legal documents like contracts of employment, it’s a good idea to work with a company that specialises in this field. They’ll put together an appropriate document on your behalf, which ensures that you’re well protected in the future, in the event of a dispute or issue.
If you’d like to find out more about creating contracts of employment or employment law in general, get in touch with Harris Law today. We’re HR and employment law specialists in South-West England, and it’s our aim to provide support and legal guidance for your business. To get started, call us on 01803 861086 or 07532 231061. Alternatively you can contact us HERE.