A contract of employment is an agreement between an employer and employee and is the basis of the employment relationship. Most employment contracts do not need to be in writing to be legally valid, but it is better if they are. A contract ‘starts’ as soon as an offer of employment is accepted.
Do:
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- Have a clause allowing you to vary the contract – you will still need to consult with your employees, but it’s helpful to have
- Include a pay in lieu of notice (PILON) clause – so that you can remove a disruptive employee more quickly
- Remember that probationary periods and fixed term contracts are useful management tools, but have no real legal standing – if you get rid of someone, it’s still a dismissal
- Take expert advice on restrictive covenants – these are difficult to enforce, particularly if they are very onerous
- Have a suspension clause – to allow you to suspend an employee on full pay while you investigate an allegation
- Have a clause allowing you to make deductions directly from wages – for example for unpaid bills, holiday taken in excess of that accrued or costs of cover if incorrect notice given on termination.
- Make sure you get them signed and returned! – it’s surprising how often businesses don’t do this, which makes many of the above clauses unenforceable.
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Do not:
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- Make the disciplinary procedure contractual from day one – you can dismiss employees without following the ACAS code in certain circumstances during the first two years of employment
- Include long notice periods from employer to employee from the start of employment – notice periods do not have to be the same from employer to employee as from employee to employer. If you offer three months notice from the start of employment, you will need to pay this, even if you dismiss someone after a few weeks of work.
- Have a contractual performance management process or capability procedure – we see many businesses tie themselves up in knots because of such policies
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Always remember – carefully drafted contracts (and handbooks) can save you an enormous amount of time, trouble, and money!
Please note – the information in this article is for guidance only and is not a substitute for specific legal advice.
