In the ever-evolving landscape of employment, having a clear and comprehensive employment contract is not just a legal requirement; it's a powerful tool that safeguards your business and empowers your employees. Recent findings from HMRC reveal that approximately 16% of employees in the UK are without a formal employment contract. This is not only illegal but also exposes businesses to unnecessary risks, including costly employment tribunals. In this article, we explore the importance of employment contracts and how they can prevent common workplace disputes by empowering employers to implement effective employment contracts.
I often hear local SME's saying they don't need HR or all employees are 'on zero hour contracts' so they don't require an employment contract. This couldn't be further from the truth, every employee requires one, even if they are a temp worker. If this is you, read on to see the risks and benefits of having employment contracts. As an employer you will feel empowered, knowing you have everything in place to support your employees, but also to protect your business. Sometimes you hire an employee who just isn't a good fit, and you dismiss them without notice or providing a reason, do you know the risks?
Employees - Do you have an employment contract?
Yes
No
Yes - but I know someone that doesn't
Why Employment Contracts Matter
It’s the Law!
Under UK law, employers are required to provide employees with a written statement of employment on the first day of employment (it used to be two months). This document, commonly known as an employment contract, outlines the terms and conditions of employment, including pay, working hours, and key policies.
You just never know when an employee might go down the route of an employment tribunal, maybe they believe they have been unfairly dismissed or discriminated against. When an employee takes action, they can also add a few week's worth of wages to the claim as a penalty for not providing an employment contract.
So, by having a contract in place you’re avoiding costly penalties and legal battles.
Clear Expectations from Both Parties
Contracts set clear expectations for both parties. Employees know their rights, responsibilities, and entitlements, while employers can outline their company policies and procedures.
Employees may leave without giving notice, fail to inform you that they are pregnant, or have high levels of absenteeism (to name a few), all due to a lack of clarity that can be provided by a well-created employment contract. Empower your staff to follow policies and procedures and go above and beyond for the organisation, by making expectations clear from the get-go.
Other terms can be included, specific to your
organisation, like confidentiality, non-compete clauses, and social media policies. These are in place to protect the organisation.
Employees are more likely to be committed to the organisation, perform better, and be innovative when clear expectations are in place.
Avoiding Conflicts
Over the last 10 years, a significant number of employment tribunal cases come from issues related to the Working Time Directive and unauthorised deductions. Employment contracts that clearly define working hours and payment terms can help prevent such disputes.
Do your staff know how to raise a grievance? Do you have a whistleblowing policy? If not, how can employees feel supported in raising concerns? When staff is unheard they may take the case further, which is detrimental to the business.
Handle conflicts by laying out clear policies and procedures showing that you will listen and actively deal with employee concerns.
Protection Against Unfair Dismissals
Contracts specify the conditions under which an employee can be dismissed, reducing the risk of unfair dismissal claims.
The best practice for employment contracts is to outline reasons for dismissals and employees know straight off the bat what is expected such as disciplinary and capability proceeding overviews, redundancy etc. Dismissals are automatically unfair if it’s because an employee requested flexible working, has been involved with a trade union or refused to give up their working time rights (along with a few others). Employers can protect themselves by outlining this in employment contracts and having full policies to flesh out the details.
What’s Included in an Employment Contract?
To empower your business and protect your employees, ensure your employment contracts include:
· Job title and description
· Salary and benefits
· Working hours
· Holiday entitlement
· Notice periods
· Termination procedures
· Grievance and disciplinary procedures
· Data protection and confidentiality clauses
· Equal opportunities and anti-discrimination policies
Conclusion
Employment contracts are not just pieces of paper; they are the foundation of a fair and legally compliant employment relationship. By providing clear, comprehensive contracts to your employees, you empower them with knowledge and security while protecting your business from costly legal disputes. Remember, an investment in well-drafted employment contracts is an investment in the stability and success of your company.
Don't wait—prioritise employment contracts today and build a stronger, more compliant workforce for tomorrow.
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