Employment Contracts

employment contract

We can help you review, update or change your employment contracts. In the eyes of the law, an employment contract exists the moment an offer of employment is accepted. That means if you make a verbal offer and the worker accepts, a contract exists between you. Technically, a contract is simply an agreed and mutual obligation. You are obliged to provide the employee with work. They are obliged to do that work.

As an employer, you are legally obliged to give an employee a written statement of terms and conditions of employment. You must provide this within 30 days of their start date. The terms and conditions govern how employment relationship will work. It covers everything from initial salary and job title through to notice, dismissal and grievance procedures.

Most employers will use written employment contracts that include the terms and conditions within the same document.

Best Practices with employment contracts

Verbal contracts are valid but unwise. Without a document to refer to, you will it harder to resolve any future dispute over what was agreed. A written employment contract avoids this problem. However, this depends upon it being accurate, well-drafted and up to date.

Because employment law changes, as do HR best practices, we recommend that you review your employment contracts fairly regularly. At least once every couple of years or so. We routinely find that older contracts need attention. Here’s why…

Leave policies out of contracts

All too often we find an employment contract includes clauses describing policies and processes, rather than the essential employment obligations. For example, if you put expense claim or holiday booking policy rules in the contract. This is a bad idea. Policies and procedures should be maintained in a staff handbook and not the employment contract.

Your policies and procedures will sometimes need to be updated as the business grows and changes. Or perhaps when you just need to clarify or correct a policy.

The problem is that contracts are binding and cannot be changed without the employee’s explicit consent. If you have policy and process clauses in your contract, you’re going to have to get consent from your employees every time you update them. If you don’t, you could be liable for a breach of contract claim.

On the other hand, if you keep the policies in your handbook and just refer to them from the contract, you’re able to update the policies without needing to negotiate and agree a contractual change.

For example, a contract could say “you must abide by our code of conduct policy in the staff handbook”. That way, you have obliged the employee to follow the rules but you are free to update those rules in the handbook whenever you need to.

Fixing missing or irrelevant clauses

Many employers use employment contracts that are derived from generic templates. Sometimes these have been downloaded directly by the employer, or sometimes obtained from a previous HR service provider.

The problem here is that because templates are ‘general purpose’, they may not be tailored to your business needs. There could be clauses in there that are irrelevant. For example, outdated and flowery boilerplate legalese, or clauses talking about bonuses and company cars that may not apply if you don’t provide these.

There might also be clauses missing. Specific obligations that your business requires that wouldn’t apply to everyone. For example, shift work, overseas work, post-termination restrictions for senior positions, etc..

Therefore, we recommend ensuring that your employment contracts actually reflect your needs.

Improve consistency

You will have employees doing different jobs and on different salaries. Therefore, you will always have some variation in terms and conditions in these areas. However, we sometimes find that an employer has employees on different versions of an employment contract where there’s no good reason.

Obviously, you don’t want these differences to be discriminatory. But also, you want to be able to manage your workforce consistently. Otherwise, you might end up with someone feeling that they’re being unfairly treated.

Improve clarity

There are two related problems here. One is that some clauses in employment contracts are vague, or imprecise, or sometimes incomprehensible. This can lead to differences in understanding between you and an employee, which could lead to a dispute.

If that dispute escalates, an Employment Tribunal will not rewrite a badly written contract clause – they will just strike it out completely, as if it didn’t exist. This is known as the blue pencil test. If you were relying on that clause in a dispute, you’re at a big disadvantage.

We strongly recommend having really clear, well understood employment contracts for this reason.

The other problem are clauses that are excessively verbose. There has been a fashion for using pronominal adverbs to excess when drafting contracts. For example; henceforth, hereafter, hereinafter, heretofore, aforementioned, and so on. This is often combined with using multiple words where one will do.

You won’t always be able to have an employment contract in entirely plain English, but you can certainly cut down the superfluous legalese.

Gaining consent

You can only modify an employment contract if both parties agree. That means you need to get consent from the employee. It doesn’t matter what the modification is, you will always need to get the employee’s consent.

We find that benign changes to contracts are often accepted with little trouble, provided that the reasons for the change are clearly explained and the new contract is on no less favourable terms. Employees may be very wary about any more substantial changes you propose to make. Some may even be suspicious, depending upon the nature of the changes and your relationship with them.

We can help you with managing this change with your employees. We can assist you with negotiations to gain consent.

Alternatives to consent

If an employee does not consent to a change to their employment contract, there may be other options. We can advise you on your alternatives if you’re unsuccessful.

Contact us to discuss your situation

If you are planning to make some changes to your employment contracts, get in touch with us. Alternatively, we can review your contracts and give you our recommendations on what, if any, changes are needed.
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