Employment Contracts

by Kate Russell

Introduction

There are a number of excellent reasons for ensuring that you have a good contract of employment in place.

  • Compliance – as an employer you’re under a legal duty to provide a written statement of the main terms and conditions of employment within eight weeks of an employee starting work with you.
  • Employees know what their rights and responsibilities are and what will happen if things go wrong.
  • It means that both you and your employees know what to expect.
  • A good contract delivers clarity, transparency, certainty and will help you run your business more effectively.
Tip

Do make sure that your written statements are reviewed about three years. There’s no legal requirement to do so, but it is very likely that the requirements of your business will have changed in that time and it will certainly be the case that technology and social customs have changed. These have an impact on your work environment and should be reflected in the contract.

One obvious cause of the need to review statements is that new technology brings advantages to our businesses, but it also brings risks. We have to identify and manage the risks and communicate our requirements to our employees. In 1999, Norwich Union were sued for libel and had to pay £450,000 in damages. (Libel is a written untruth – causing damage to the reputation of an individual or company.) This came about because a Norwich Union employee sent an email suggesting that a competitor, Western Provident Association, was in financial difficulties and under investigation by the DTI. This was an untrue statement. Norwich Union had no email policy. They hadn’t identified and attempted to manage the risks. As a result they were liable for the employee’s inaccurate email and had to pay substantial damages.