The Importance of Tailored Employee Contracts

 

 

 

 

 

According to the Employment Rights Act 1996, a written contract must be provided to an employee no more than two months after their start date.

A tailored employment contract is beneficial for both employers and employees and ensures that both parties understand what is expected of them. A contract can go a long way in helping to prevent disputes and, in the worst cases, potential tribunal claims.

A Tailored Employment Contract

An employer can tailor an employment contract to suit their requirements, but an employer cannot rely on a contract in which the employee has fewer rights than they are entitled to by law.

Whilst many businesses provide the same standard contract to a specific group of staff members, an employer may also tailor a contract to a specific employee.

Contracts are generally made up of two types of terms:

Express Terms

These terms may be written in one document, over several documents, or spoken. Examples of express terms include how much the employee will be paid and the number of hours they will work.

Implied Terms

Implied terms may not be written or spoken, but do need to be followed. An example of an implied term is the duty of mutual trust and confidence between an employer and an employee – ie an employer must not act in a manner calculate or likely to destroy the relationship of trust and confidence; to do so amounts to a breach of contract even though that term is unlikely to be found in a written contract

Custom and Practice

For a term to be implied through custom and practice, it must be long-standing, uninterrupted, widely known and happen automatically. There must also be no express term that addresses the issue.

Example 1

An employee works 30 hours a week for 20 years, but their contract states they should only work 20 hours. As the contract states the number of hours they are required to work, they cannot use custom and practice to show their right to work more hours, despite the number of years they have worked 30 hours a week for (although an employee in this case is likely to argue that the contract has been “varied” over time)

Example 2

An employee has received a Christmas bonus every year for many years and their employer has now stopped this. If there are no express terms covering the right to a bonus, the employee could state this was an implied term through custom and practice.

Whilst copying the contract of a similar business to save time and money may be tempting, slight variations in wording can have a significant impact on meaning. Ambiguity in a contract will typically benefit the party that did not draw it up, so it is important to ensure that the terms stated in your contract are applicable and understood by you before you include them.

Basic Contract Terms

Whilst there is no one size fits all approach to drafting up a contract, a standard contract will state terms including, but not always limited to:

The duties of the employee
Notice periods required during and after probation
Holiday allowance
Pay and benefits
Restrictive covenants that apply during and after employment

Other terms such as the dress code, expenses and sickness procedure will typically be drafted in a separate employee handbook or policies introduced from time to time .

Contract Benefits

A clear contract ensures that both an employer and employee knows what is expected of them and what their duties are.

Employers may tailor an employment contract for a wide variety of reasons, including, but not limited to:

Minimising the risk of disputes and tribunal claims
Protecting sensitive information with a confidentiality clause
Controlling when holiday may be taken to avoid a lack of staff at key times throughout the year
Protecting the business reputation with appropriate policies

Contracts and The Probationary Period

Unless otherwise stated, an employee’s full contractual rights will begin from the day they started work.

Employers may choose to include terms which only apply during the probationary period and may be less favourable than those that apply after this time. Once again, these terms cannot affect or be in conflict with statutory rights.

Probationary periods can be extended, but only if the employment contract includes a clause to state this.

Statutory Rights

The rights expressed in a contract will be in addition to those which are statutory. Employees have various statutory rights;

● To be paid at least the National Minimum Wage
● Not to be unfairly dismissed
● Protection from unlawful deductions from wages
● The statutory minimum level of paid holiday
● The statutory minimum length of rest breaks
● Working no more than 48 hours a week, on average, or to opt-out of this right if they choose
● Protection from unlawful discrimination
● Protection for reporting wrongdoing in the workplace – ‘whistleblowing’
● Part-time workers should not be treated less favourably.

Butcher & Barlow LLP

Here at Butcher & Barlow LLP, we can help you to create tailored employment contracts and employee handbooks, giving you the peace of mind that you have covered all relevant information. Our dedicated team can help to prepare documents on a contractual and non-contractual basis, so please get in touch today.