New Year – New Contracts
As we reach the end of the year it is always good practice to review your employment contracts and to check whether your policies really do reflect company practice.
Many businesses fail to issue written contracts of employment. This can work when relationships are harmonious and the contract is based on custom and practice and implied terms. But ambiguity can lead to disputes.
We often come across badly drafted contracts which are onerous for the employer. We set out below our top 10 reasons for updating and putting in place written contracts for your business.
10 reasons for having a written contract of employment
- Providing a six month probationary period: enables busy employers to review their employee’s performance at six months, and if there are any issues, to set up monthly performance reviews over the remaining six months, with set targets for improvement.
- Setting a shorter notice period for the probationary period: if things don’t work out early on in the relationship, this limits the cost to your business. A longer notice period can be provided for, once the probationary period has been successfully completed.
- Defining working days and hours, including breaks: avoids confusion and ensures these hours meet your business needs.
- Mobility clause: important if you are likely to relocate. This can cover a reasonable geographical area.
- Contractual sick pay: we recommend this is minimal to begin with and increases with length of service, to reward loyalty.
- Right to place employees on garden leave: important when you require employees to stay at home during their notice period, rather than paying in lieu of notice. This is useful where you need to protect your business as your employee must comply with their employment contract.
- Right to claw back contractual sick pay: ensures repayment of contractual sick pay where there has been third-party negligence. For example, if your employee has been injured in a car crash.
- Reference to various policies: capability, grievance or disciplinary policies are necessary but should be provided separately. This is to avoid making the process contractual. Any failure to follow these policies would result in you breaching your employee’s contract.
- Clear bonus rules: if providing the right to a bonus, define this so it only applies if your employee is still employed on a set date and not in their notice period. This will limit your company’s ongoing financial liabilities to an employee who is leaving.
- Post termination restrictions: prevents departing employees from soliciting or dealing with your clients or customers for a reasonable time period will protect your business.
Throughout January we are offering 10% off our junior and senior contracts. We will also provide free up-to-date grievance, disciplinary and capability policies. For more information please contact Fiona Martin on 01273609911, or email info@ms-solicitors.co.uk.
This article was written by Fiona Martin as a blog 11 November 2015 for the Brighton and Hove Chamber.
