A contract of employment exists between every employee and their employer and is designed to protect both the interests of the business and the employee.
As soon as a job offer is accepted an employment contract should be drawn up to put in place the terms and conditions of the role, what it entails and the employees’ rights during their time with the company.
Contracts can be confusing, especially if you’re hiring your first employee or a start-up. It’s always advisable to get the advice of a legal expert to check it over, but we’ve put together a guide explaining what you should look to include if you’re going it alone.
The Basics
Let’s start with the absolute basics you don’t want to forget when drawing up a contract.
- Name and address of employee
- Organisation details, including place of work
- Start date
- Job title and description
- Hours of work
- Salary
- Termination clause
- Benefits
- Probationary period
- Restrictive covenants (preventing an employee from setting up a competing business whilst employed or within a set period once they have left)
- Jurisdiction (contract is under the jurisdiction of English courts)
- Particulars of employment
This is the bare minimum that you should include in the contract, however we’ve broken down a few of the sections further to delve in a bit deeper.
Defining the Job Role
Throughout the contract you should aim to be as clear and concise as possible to allow no room for confusion. State the job title and describe in detail what the job will entail. Your aim as the employer should be to make your expectations clear.
Use easy to understand language, but make sure you allow for an element of flexibility within the description.
Benefits
Employee benefits are becoming increasingly more diverse and popular, so make sure to include these within your contract. Benefits may include; discretionary benefits, retirement plans and pension, company car, expenses, health or dental care, life or health insurance policies, holiday and profit share.
Where possible you should include the terms relating to the benefits, how they are handed out, and if a financial contribution or premium is to be paid in.
Termination
When drawing up a contract, termination is probably the last thing on your mind but it’s essential you include how termination of the contract works. You’ll want to cover what happens when a contract is terminated with an employee with or without a cause.
Make clear what would happen in each eventuality and include the time period in which notice must be served.
Statutory Entitlements
Despite what you include in the employment contract, it does not override the statutory rights the employee is entitled too. This means that by law as a business you are required to abide by the statutory entitlements which set the minimum requirements you must offer as an employer.
Variation, Flexibility and Mobility Clauses
There are times when the needs of the business or industry change which lead the employment contract terms to change. In order to allow for this within the contract it’s essential to include clauses to protect the business from claims, and ensure the employee is aware that such change may occur.
The variation clause allows for changes to be made to the contract without asking an employee beforehand. This will often present itself in the contract under a specific section such as the hours worked, overtime requirement or salary.
If a flexibility clause is included this enables you as the employer to make changes to the job description. ‘You may at times be required to undertake duties outside of your main role’ is a term commonly used.
A mobility clauses refers to a change in place of work. It may mean you are required to work anywhere in the country your employment contact relates to or at a different office if your business has practices across the country. However, any request must be reasonable with a notice period also given before a change takes place.
Employment contracts shouldn’t be rushed and you should make them as detailed and thorough as possible to ensure you cover all bases. They are there to make sure you are doing right by your business and employee and vice versa for them too.
Contributed by: Taylor Rose
