Spring clean your employment contracts and policies

Sometimes with the day to day running of a business it is easy to push aside ‘housekeeping’ matters, such as updating employment contracts and staff handbooks. However, more often than not, we encounter a number of enquiries from employer clients where an issue has arisen with an employee and that employer has a limited number of options because either there is no contract of employment or the contract has not been updated for some length of time. 

Why updating contracts of employment or polices is so important

It is important that matters such as issuing and updating contracts of employment or policies are given some thought as these documents form the basis of the employment relationship between employer and employee. 

By issuing a clearly drafted contract at the commencement of the employment relationship not only will you be ensuring your compliance with the requirement to issue an employee with a written statement of terms, you will also be taking the opportunity to set out key information to the employee about their employment which will help avoid confusion or misunderstandings later on down the line.

Given that we were hit with the pandemic at the outset of 2020, it may have escaped notice that a number of changes were brought into effect, notably in respect of the information to be provided to employees and workers in a written statement of terms (which can take the form of an employment contract). 

New staff employed on or after 6 April 2020 are entitled to a written statement of terms from day one of their employment. Prior to this, employers had two months from the commencement of employment to issue a written statement of terms to a newly employed individual. This also applies to workers. 

Written statement of terms

As well as this, the mandatory information which needs to be included in the written statement of terms has also changed as of April 2020. 

Employers are now required to furnish staff with detailed information in the written statement of terms including; 

• details of any probationary period
• if hours and days of the employee’s work are variable, details of how they vary
• details of paid leave entitlements
• details of benefits, even if there are not any then this needs to be stated, and details of any training which is to be provided

Employers are able to refer staff to employment policies outside of the contract or written statement and which may form part of a staff handbook. 

A staff handbook can be an incredibly useful tool to introduce staff to the business and set out detailed information about processes the business follows. Providing such information to your staff is important not only from a legal point of view but also promotes the working relationship as staff are better informed about the business and how it operates. Both the contract and handbook can adopt the vibe of your business and don’t have to be long and dull. 

Disciplinary and grievance procedures

Matters such as disciplinary and grievance procedures do not necessarily need to be included in staff contracts although the contract or written statement should refer staff to where they can access such policies. 

By having separate policies contained in a non-contractual handbook, this allows businesses to have the flexibility to adapt their policies without having to first obtain the agreement of staff to any changes it wishes to introduce or implement. With that said, when updating or changing any policies, it is always important to inform staff of any changes (and as important that you can evidence you have done so). 

In terms of the risk of not providing an appropriate written statement of terms, it is only possible for an employee to piggyback a claim for compensation for failure to provide written terms to another claim that they are or may be entitled to bring against their employer. The amount of compensation for the breach is dependent on the circumstances but an employee or worker could get up to 4 weeks’ basic pay subject to a statutory cap. 

Alternatively, an employee or worker could make an application to the Tribunal to determine what the actual terms of their contract are and there is a risk that the interpretation of the terms might differ from what the employer envisaged. 

Why you need to review your staff contracts

Even if you have contracts in place for your staff, it is important to review them to ensure that they meet your business requirements. 

For example, if you have senior members of staff who are privy to confidential information and/or have developed relationships with key clients or customers of your business, do you have anything in place to help protect your business should they leave? 

Carrying out a review of your employment contracts is a good opportunity to assess whether the terms are legally compliant and are suitable for the employee or worker concerned. 

Did you review these provisions on promotion? 

A review is also a chance to create some business uniformity where staff have been engaged on different terms (subject to any legal restrictions preventing changes) which can make HR a bit of a headache! By updating and aligning your contracts, this will remove the confusion of having staff on different contractual terms and will assist with your administrative processes. 

If you are thinking of updating your contracts and policies as part of a spring clean then our employment lawyers would be happy to assist with carrying out a review and providing you with recommendations to help best protect and benefit your business. 

If you would like to receive further information about updating contracts of employment or discuss any other employment matter then please do get in touch with our employment team.