Q&A – Contracts of Employment
Q: Can you explain to me why I need to give my employees written contracts?
A. Written contracts help the employer rather than the employee. You could get away with not giving people contracts, but the biggest disadvantage of that is statutory Employment Laws will apply to the employees. Employment Law is generally weighted towards the employee’s rights rather than the employers. So, the main reason for having a written contract is to protect your business, giving you the freedom to do what you need to do within the business. There are areas that aren’t governed by statutory employment law, so, if put in paragraphs dealing with those issues you will have some flexibility that you wouldn’t otherwise have.
Q: If we have our own contracts of employment, can we change some of the statutory rights which may be better for us as a business?
A: Yes. One of those could be the notice periods for example. If you have your own contract of employment you could have someone who has completed their probationary period, having to give you a month’s notice period. If they are more senior you might like to increase this period to three months. This enables you to find time to replace them. If you don’t have that in your contract of employment, the legal statutory minimum requirements will apply. The statutory minimum notice period for the employee to give their employer is just one week. It doesn’t matter how long they’ve been with you; they only have to give you one week’s notice. So, even if they’ve been with you for 5 or 10 years, they still only need to give you a week’s notice.
Q: What are some of the areas of the contract of employment we could change?
A: One of the areas could be to do with gardening leave. This would apply when somebody has either resigned or you’ve given them notice. You can then decide whether you are going to make them work their notice or whether you would rather send them home. You might do this if you feel there could be problems with them being at work or you don’t think they’ll be motivated. You need to have a paragraph in their contract saying you have the right to put the employee on gardening leave, otherwise you’re removing their right to provide you with work, which is a breach of contract.
Q: So, if you didn’t have the gardening leave clause in their contract of employment, we could not dismiss them and ask them not to come in to work their notice period?
A: No, they could insist on coming in. Without that in the contract, you would not be able to stop them coming in if they wanted to. If you were to stop them, they could take you to a tribunal for breach of contract. Or, they could be looking for a settlement under discrimination or constructive dismissal. You could also include a sentence in the contract that says if they are under threat of redundancy, you reserve the right to put them on gardening leave. This leaves you with greater flexibility to do what you need to do for the business.
Q: So, if I issued a written contract of employment, employees know exactly where the boundaries are?
A: If everything is in black and white it is more straightforward. It is a good thing for both sides so everyone knows exactly where they stand on all aspects. The biggest thing is that there really is no advantage to not having a written contract. An employer will not be at an advantage if contracts of employment are not in place for their employees.
Q: At what stage should I issue a written contract?
A: You have to give employees a written statement of their terms and conditions of employment within two months, if they are employed for one month or more. If you issue a contract straight away, it is very clear what they’re entitled to and what’s expected of them from the beginning of their employment. This reduces misunderstandings.