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Emma Reid, a solicitor practising in our Employment Law Team, explains our top five reasons why employers should review their employment contracts.
New Year Resolutions
The beginning of a new year is traditionally a time for individuals to review and resolve: reviewing the status quo and resolving to improve things or perhaps to move in an entirely new direction. For many employers it is a good time to do similar. A resolution to improve existing employment contracts (or to put written contracts in place where none exist) is one which will benefit the employer long past the time when other, personal resolutions might have lapsed.
Here are our top five reasons why employers should review existing contracts and ensure that all employees are covered by written terms and conditions, and one very good reason why you should contact us to help you with this task!
1. The law requires it (at least in part)
All employees who have been employed for longer than a month are entitled to a written statement of particulars summarising the main points of their contract. Legislation states that the written particulars must be provided to those employees within the first two months of employment and provides a list of the information which must be included such as pay, holiday entitlement and job duties. (See here for further information.)
Although there is no legal requirement for a full written employment contract to be provided, problems often arise where gaps exist in the written arrangements between employer and employee. A full written contract should cover all the requirements of the legislation as well as filling in the ‘gaps’. The reality is that the information used to fill in the ‘gaps’ can turn out to provide the most important protections to the employer
2. Your business will be better protected
Employment contracts are an asset for employers if drafted correctly. Employment contracts can be used to protect the employer’s interests, help the employer save money and avoid difficulties in the future. For example:-
• Specifying the types of conduct which may give rise to disciplinary action make it easier for an employer to deal with disciplinary matters swiftly and effectively;
• Equal opportunities provisions, in conjunction training and review, can help employers avoid liability for discrimination claims arising from their employees’ conduct;
• Provisions dealing with sickness absence can help the employer handle ill health situations fairly and effectively, and minimise loss of staff hours;
• Restrictive covenants can influence the ability of former employees to work for competitors, and help protect client/customer base if key employees leave; and
• Carefully drafted notice periods, confidentiality provisions and protection of intellectual property rights are all beneficial.
3. Employment law is constantly changing
One reason why employment law is interesting is because it changes so frequently. It is an area of law which concerns a great number of people (whether employers or employees) and the main political parties all have views on how best to regulate the labour market, so it is a heavily legislated area. For example, 2014 saw the introduction of early conciliation through ACAS, an extension to the right to request flexible working, new provisions on shared parental leave, and an increase in minimum wage rates, amongst other changes. Of course, there is also a continually evolving body of case law which also affects things. Although not all of the changes in employment law directly impact on the contents of employment contracts, many do, and it is important to ensure that contracts are compliant to minimise the risk of unhappy employees, grievances and potential Employment Tribunal claims.
4. Other things change too
Over the months and years that a person is employed, it is likely that their duties and responsibilities will change, their rate of pay and benefits package will change, and the way that their employer does business evolves whether as a result of changes in structure or direction. If an employment contract is drafted at the outset of the employment relationship, with an absence of review, it can become out of date fairly quickly. The best position to be in is to have a written contract that reflects the current state of play. This leads us nicely on to reason number five.
5. Everyone will know where they stand
We firmly believe that an employment contract should be a reference tool for employer and employee. It should explain in detail the arrangements between the parties, it should be clear to read, easy to understand, and it should provide guidance on matters such as conduct, protection of business interests, sick pay and calculating holiday entitlement, to name but a few. With this detail in place, hopefully fewer questions and disputes will arise and the employer can concentrate on running their business.
Having considered all of that, why should you contact us in relation to your employment contracts? We offer a free contract review service to potential employer clients. We will review existing contracts and highlight areas that should be updated or included, and, if there are no written contracts currently in place, we offer to meet with you (on a no obligation basis) at your place of business or one of our Edinburgh offices to discuss your needs and how best to put contracts in place.
If you would like to arrange a free contract review for your business, or discuss anything relating to employment law, please give our Employment Law team a call on 0131 554 8649, or email us at firstname.lastname@example.org.
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