Contracts of Employment – do I really need them?

Contracts of employment are always an interesting topic for discussion, you would think with around 31.85 million* people in work (*UK Labour Market March 2017) that every business would be slick about employment contracts by now.  We are asked many questions around contracts, from do I have to have them, do they have to be in writing, to why do I need them at all?

If you were asked the following questions, what would be your reply?  Once my employee has started work how long do I have before I must give them a written contract?  If I make a verbal offer is that binding? If I want to change the hours my employees work, can I just write and tell them what the changes are?  Can I end a Fixed Term Contract earlyLike all contracts, there are specific requirements relating to its construction which must be satisfied in order for a valid contract of employment to be formed?

Like all contracts, there are specific requirements relating to its construction which must be satisfied for a valid contract of employment to be formed.  That’s why you need expert help, not only to assist you to meet your legal obligations but also to reduce the risk to your business.

Many business owners are so busy with running the company that contracts either take a back seat or are hastily pulled together.  As a contract of employment is a legally binding agreement between the employer and the employee, which sets out the rights and duties of both sides leaving it until later or pulling something together could be very risky.  Well who’s going to know if I don’t? These days, employees have much better access to support and advice through the internet, their trade union, ACAS, Government web sites, Citizens Advice and no win no fee offers which are very much out there.  Even if you don’t end up at an employment tribunal, just the time taken to sort out a problem with the disruption, and subsequently the cost, that goes with it could be devastating to a business.

In answer to some of the questions above, a contract is formed when the employee accepts an offer of employment from the employer.  All employees must receive a written contract or at least a statement of terms and conditions no later than 2 months after the start of their employment. The contract may be verbal, in writing, or a combination of the two, though some aspects of the contract must be written down.  As an employer, you might find it hard to defend a verbal contract, whereas if it’s written it’s clear to both sides who is responsible and how processes work. Over the life of an employment contract, it is likely that some of the terms of employment will change for example, salary increases or promotions.  These changes are likely to be mutually agreeable, however some changes may be less palatable.  Employers should seek to obtain the employee’s express agreement to any changes.  Some contracts contain a provision which gives the employer the power to amend general terms and conditions, but these clauses should be treated with caution as it’s better to be specific rather than general. If you are thinking about unilaterally changing terms and conditions or terminating and re-engaging on new terms seek HR advice first, it could save you a lot of time and money.  A fixed term contract usually ends because it has been given a specific date, or after a certain event or on completion of a specific task.  If the contract has a specific end date then there is no freedom to terminate early.  If on the other hand the contract ends when a limiting event occurs you need to consider if that event has occurred. Whatever you decide to do you must go back to the contract and see exactly what it says before taking action.