The importance of reviewing & understanding contracts of employment

Employment relationships in the modern working world are vast and varied: from workers, to employees, to consultants, to freelancers. On top of this, businesses operate at all times of day and night, many internationally, and following Covid-19, there is an ever-increasing ability for many individuals to work anywhere in the world.

There have never been more types of employment law relationships, and making sure that there is a written document setting out the obligations and expectations of the ‘employer’ and the individual, has never been more important.

Whilst there is an obligation to provide a simple statement of the main terms and conditions on day one of the employment relationship, this only covers the mandatory information that must be provided, and the basic rights and obligations of the parties.

It doesn’t cover other things that may be important to you and your business. Here, we look at a few common issues that need careful consideration:

• Notice from the Employee – The Employment Rights Act 1996 only entitles an employer to receive 1 weeks’ notice from an employee wishing to terminate their employment. If you want more notice as an employer, you need to specify this. Imagine how hard it may be to recruit a new member of staff and how long this may take. One week’s notice for most businesses is never going to be sufficient to enable the business to advertise, interview, appoint and then train a new member of staff.
• Post Termination Restrictions – once employment ends, the ability to stop a former employee competing with your business doesn’t exist. There is only a very limited obligation regarding your confidential information. If you want to try to prevent a former employee setting up in competition with you or stealing your staff or customers, then you need to set this out in writing – and get the employee to sign the agreement!
• Deductions from Wages – the Employment Rights Act 1996 only permits deductions in certain specified circumstances. If an employer wants the right to deduct for damage or negligence caused by an employee, then they need to ensure that this is covered in the written agreement.
• Home Working – much more popular following the pandemic, its important to set out what is expected from the employee in terms of attendance at the office and/or working time. Other things to consider are insurance, health and safety, data protection, access to the employee’s property and who is providing what in terms of equipment.

We find that many of the employers we advise either don’t have their contracts reviewed often enough or come to us having used a template that they had as an employee in a former life or which has been given to them by a mate. These contracts were not drafted for their business and often haven’t been reviewed for a very long time. They don’t take account of any changes to legislation, how their business operates and what their working practices are, nor do they take account of developments in best practice. Very often, they don’t understand all of the clauses and what rights or obligations they place upon them. Simply put, the contract isn’t right for them or their business.

We help our clients ensure that they understand what their rights and obligations are under the contract from the outset of the relationship, particularly in relation to their rights and obligations on termination of the relationship and/or in the event of a dispute; as unfortunately, this is the time when we find that the contract is given the most attention!

We would recommend undertaking a review of your contracts of employment, and other terms of engagement, at least every 12 months to ensure that they are legally compliant and working for you and your business.

Our specialist Employment Team would be happy to answer your questions today.

Contact us today