There are all sorts of legal requirements associated with employing staff nowadays. What is a ‘written statement’? When should you issue one to your new member of staff? What other legal obligations must you fulfil? What types of contract are there? What type of contract of employment is right for you?
Employment contracts
Whether in writing or not, it is important to understand that a new employee has an implied contract of employment as soon as he or she accepts your offer of employment. There are two implications of this:
- You must make clear in any job offer that you make, that it is dependent upon the receipt of acceptable references. You should also use your offer of employment letter to state any other conditions on which your offer is dependent.
- You should issue a written contract of employment as soon as is realistically possible after your new employee has started work.
Under the Employment Rights Act 1996, you have a legal obligation, as an employer, to provide every employee, whether full-time or part-time, with a ‘written statement’ covering the main terms and conditions relating to the employment. You must issue this statement within the employee’s first two months of employment.
As a minimum, these are the features that should appear in any written statement of employment:
- The names of both the employer and the employee.
- The date when the employment commenced.
- The employee’s rate of pay and the frequency of wages or salary.
- Information relating to working hours, including start and finish times, shift patterns, breaks, time off, overtime and overtime payments.
- Holiday entitlement, including bank holidays, public holidays and holiday pay.
- The employee’s job title, as well as a brief description of the work for which the person was employed.
- The employee’s work location.
However, in addition to this legal requirement, it is good practice to protect both the employer and employee by providing a full written contract of employment. So you should include the following details in a written job contract, or provide them separately in other documents, as well as the basic terms and conditions required by law:
- Terms, conditions and benefits relating to sickness or injury, including provision for sickness pay and medical insurance.
- Terms and conditions relating to pensions and pension schemes.
- The employee’s notice period that he or she is obliged to give, and entitled to receive, if the contract of employment is terminated.
- Information relating to discipline, dress code, or any other behaviour that is relevant to the work of the employee.
- If the position is short-term, you should also indicate the intended length of employment, or the date when the employment will end.
By law, every contract of employment includes certain contractual terms, whether they are written down or not. For example, employers must adhere to certain working practices, and take appropriate health and safety action. You must provide appropriate health and safety training. You must not take action which may undermine the relationship of trust and confidence with your employees.
In turn, employees must serve their employer honestly and faithfully. They cannot compete with the employer’s business, nor may they divulge confidential information. They must work with due diligence, skill and care.
There are also certain statutory rights that all employees are entitled to. These include a minimum period of notice, rights under anti-discrimination laws, the right to choose whether or not to join a particular trade union, and rights under legislation relating to working time and pay. Any attempt by the employer to impose contractual terms that override any of these rights are likely to be unenforceable.
However comprehensive the contract that you draw up, there are other regulations over which you have little control. These include:
Working hours
There is new legislation regarding the maximum number of hours that you can expect an employee to work within a week. There are also laws regarding rest periods, meal breaks and paid holidays. You should seek further advice about these if you have any concerns.
Annual holiday
Employees are entitled to a minimum of four weeks’ paid leave each year.
Intellectual property
Usually the employer owns the rights to any intellectual property created by the employee in the course of his or her employment.
Confidentiality
If your employee is likely to be entrusted with confidential information, you should include a confidentiality clause within your written contract. There is an implied duty for employees not to divulge trade secrets, both whilst they are employed by you and after employment has ended. If there are specific areas of confidentiality that concern you, you may wish to set these out within the written contract.
Competition
In reality, it is very hard to stop a former employee from setting up in business to compete with you. You should include a restriction within the contract, but this is only likely to be enforceable for a specified period, and will probably only cover a specified geographical area.
The Employments Act 2002
This new Act requires that all employers include, as a contractual term, any disciplinary and grievance procedures. As an employer, you must ensure that basic terms regarding dismissal, discipline and grievance are incorporated within the terms and conditions of employment. The Act applies to all employees and all grievances, no matter how small. Failure to abide by the statutory minimum will be regarded as a breach of contract, and might therefore result in an employer being taken to court for constructive wrongful dismissal. Whilst it is believed that most employers will already satisfy the requirements of the Act, you must review your contracts of employment to make sure that you do abide by these new regulations.
Non-contractual terms
If there are perks or benefits that accompany a job, you may wish to make it clear if you intend them to be non-contractual. Non-contractual benefits are easier to change or even withdraw altogether. Examples might include health insurance, sales bonuses, and certain dress codes. If these are included in the main employment contract, they might lose their status as ‘perks’, and become forever linked to the job. You may then find it difficult, or even impossible, to review or change any of these benefits in the future.
Types of contract
It is unlikely that you will be able to use a single contract of employment that will cover all employees. You should remember that there are a number of different kinds of employee, each of whom will have particular requirements detailed within the contract. For example:
- Full-time employees
- Fixed term contracts
- Home workers
- Job sharers
- Part-time employees
- Casual workers
One way to ensure that the issue of job contracts remains manageable is to provide all employees with a standard written statement (the legal requirement), and then supplement this with specific terms and conditions, relevant to each type of employee, laid out in a separate employment contract.
Employment contract procedure
Ideally, once satisfactory references have been received, you should send out the contract of employment to the candidate along with an unconditional offer of employment. You should ask the candidate to sign a copy of the contract and return it as evidence of their acceptance of its terms.
Tip
The phrase ‘contract of employment’ is a little misleading. It need not be a single document. You may wish to refer to the offer letter, the written statement of terms and conditions, a staff handbook, health and safety documents, and any other documents or manuals that together outline what is expected of employer and employee.
Dress code
It can be quite difficult to set out within a contract of employment rules and regulations regarding dress codes and standards. After all, there is a narrow line between what is and what is not acceptable. Often this is a subjective matter. Certainly, if a uniform is required as part of the role, you should indicate this within the contract of employment. In March 2003, an administrative worker at a jobcentre won a legal case regarding his right not to wear a tie to work. He argued that whilst the male workers were required to wear a shirt and tie, the female workers had no equivalent clothing requirement. Indeed, the female workers were allowed to wear T-shirts. So think carefully before trying to impose dress codes as part of the contract of employment.
Legal requirements: Checklist
- Have you issued your new recruit with an employment contract?
- Do you know what elements should be included in an employment contract?
- Have you included terms relating to working hours, annual leave and confidentiality?