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A Timely Employment Contract

You may know that you need to give your employees a written statement of their employment terms.  While it is not it’s technically the correct term, for ease of reference I will call this an employment contract.

Anyone who works for you for a month or more is entitled to an employment contract. From April 2020, your employees will be entitled to this from day 1.   I recommend sending out the contract when you make a job offer.  Your business looks professional and organised. The kind of company a great applicant would want to work for.

The truth is, many small businesses start by employing friends and family.  Money and time are tight.  The business grows.  There is always something more pressing to do.  Having an employment contract has never quite reached the top of the to-do list.

Why bother with an employment contract?

If you haven’t used them before, you might think “why bother?”  Here’s why:

• It is your employees’ legal right.
• It clearly sets out your expectations.
• It can protect your business in a legal dispute.
• It can give you permission to do things, such as make deductions.
• If you don’t have one, it may cost you 2-4 weeks pay at an Employment Tribunal.

What should be in an employment contract?

There are certain things that you must put in an employment contract, such as:

• the employer’s name
• the employee’s name, job title or a description of work, start date and where they will be working
• the continuous employment date
• how much and how often an employee will get paid
• hours of work
• holiday entitlement
• notice period
• any collective agreements
• pension
• grievance and disciplinary information

There are other things you might want to put in there too such as:

• Any deductions you may want to make (eg training costs if they leave)
• Restrictive covenants
• Confidentiality clause
• Intellectual property rights

Thinking the Unthinkable

When deciding what needs to be in a contract, think the unthinkable.  Imagine everything has gone wrong.  You are parting ways on bad terms.  You need to rely on your employment contract to protect you.  What would you want to be in there?

When Jose Mourinho joined Man United, he was expected to bring guaranteed success.  He didn’t.  His employment contract meant that, according to BBC Sport, the decision to let him go cost Man United around £18M.

These are important points to consider when drafting your employment contracts.  If it is time to tick this off your to-do list, please contact me.  Let’s get that ticked off of your to do list.