What should be included in an employment contract?
Myths seem to thrive and multiply in employment law and HR – so at New Dawn Resources, we’re setting out to do our bit to bust them.
This is the first instalment of a series uncovering some of the common misconceptions we see and hear in our working world.
We hope you enjoy our blogs and find them useful – as always, please get in touch to talk further about these matters, or any others.
Today’s topic is: What should be included in an employment contract?
There are all sorts of theories about what should – and shouldn’t – be in an employment contract.
Many of the finer details are up to you and your organisation but one thing is clear – this is an essential document.
By law, all employees must be given a written statement of their key terms and conditions within two months of starting their employment.
A failure to comply with this rule could result in an award of compensation of up to four weeks’ gross pay.
From April 2020, these written statements will have to be given to employees and workers on or before their first day of work.
The written statement doesn’t need to be complicated. It just needs to cover the following:
- Job title / duties
- Hours / days of work
- Place of work
- Rate of pay and intervals of pay (eg. weekly / monthly)
- Overtime arrangements
- Holiday entitlement / Sick pay entitlement / Pension entitlement
- Where your disciplinary and grievance procedures can be obtained from
- From April 2020, where your maternity/ family leave provisions can be obtained from
- Start date and end date / notice period
- Whether any previous employment will be taken into account
- Whether there are any collective agreements connected to the contract.
A contract of employment can include all the above and more. For example, you may wish to include:
- A clause to give you a certain amount of flexibility to change hours / duties / place of work. This doesn’t give you carte blanche to make changes – they will need to be reasonable and should be discussed with the employee first. But you may be glad of the flexibility, if your business needs change.
- The right to make deductions from pay. This would enable you to take the cost of repairing or replacing property damaged or stolen by an employee. For example, if an employee leaves and doesn’t return their uniform or keys.
- The right to use temporary lay-off / short time working. This would enable you to temporarily reduce someone’s hours or stop them coming into work if you experienced a sudden reduction in work. For example, if a major contract is delayed by four weeks and you have no work for your staff to be getting on with.
- Protection of your confidential information. The courts will not protect confidential information other than ‘trade secrets’, unless you have a clear contractual agreement with the employee that they will not use or disclose your confidential information – and that agreement spells out what you mean by confidential information. For example, customer requirements and terms you’ve agreed with customers.
- Restrictive covenants. The courts will enforce restrictive covenants – provided that they go no further than is reasonably necessary to protect your business. For example, you can ask an employee not to compete with your business, but you must define what types of business you wish to include in this restriction, and you must limit the geographical application of the restriction.
If you need any help in preparing or updating contracts of employment for your staff, or you would like some support on employment law and HR issues, please get in touch with us.