Employee Life Cycle: Step 3 Contract & Handbook

1.Why do you have to provide a contract?

  • Section 1 of the Employment Rights Act 1996 states:
  • “Where an employee begins employment with an employer, the employer shall give to the employee a written statement of particulars of employment.” and
  • “The statement must be given no later than 2 months after the beginning of the employee’s employment.”;
  • It is a useful tool for managing staff effectively;
  • It prevents misunderstandings;
  • Employees will know what is expected of them; and
  • Failing to issue a written contract prevents you from specifying rules or conditions to which your employees must adhere.

A contract of employment is the beginning of a relationship between the employer and employee, so it is integral that the employment contract accurately sets the scene and expectation of both parties for the duration of the term. It is important to have well drafted employment contracts as an employer as this forms the foundation of the employment relationship you have with your employees.

Having well drafted employment contracts at the start can prevent time consuming disputes later on. It can also reduce the risk of grievances as each party is aware of their rights and duties. Should any issues arise then having well drafted policies can assist to effectively manage the issue to achieve resolution.

2.What should a contract contain?

  • Name of employer and employee;
  • The date the employee’s employment commenced;
  • The date on which the employee’s continuous employment began;
  • Pay and the intervals at which remuneration is paid (weekly/monthly);
  • Hours of work;
  • Holiday entitlement;
  • Holiday pay;
  • Job title or a brief description of the work the employee is employed to do;
  • Sick leave and pay entitlements;
  • Pensions and pension schemes;
  • Notice periods;
  • Where the employment is not intended to be permanent the period for which it is expected to continue or if it is for a fixed term, the date when it is to end;
  • Job location;
  • Whether any collective agreements affect the terms and conditions of employment;
  • If required to work outside the UK for a period of more than 1 month:
  • The period for which they are required to work outside the UK;
  • The currency in which remuneration will be paid;
  • Any additional remuneration payable to them and benefits they will receive; and
  • Any terms and conditions relating to their return to the UK.

3.Recommended contractual terms

To make your life easier as an employer there are a number of clauses which we recommend to include in your contracts to protect your position and make your life easier, for example, deductions from wages, payment in lieu of notice, and garden leave. We can provide you with a checklist of recommended clauses or we can review and update your contracts to make your job easier.

4.Failure to provide a written contract

If you fail to provide a written contract of employment an employee can make a claim to the Employment Tribunal. A failure to provide a contract can lead to an award of 2-4 weeks’ pay compensation in the Employment Tribunal. An employee cannot bring a standalone claim for a failure to provide a written contract of employment however they can tack it on to a substantive claim, for example, an unfair dismissal claim.

5.Common problems for failing to provide a contract of employment

Common problems for failing to provide a contract of employment are:

  • Misunderstandings;
  • Disgruntled/unhappy employees;
  • Stress;
  • Anxiety;
  • Anger;
  • Frustration;
  • De-motivation;
  • Absence from work;
  • Poor morale;
  • Poor employee relations;
  • Loss productivity;
  • Poor performance;
  • Insecurity;
  • Complaints;
  • Grievances;
  • Resignations;
  • Disputes;
  • Damage to reputation; and
  • Tribunal claims.

6.Changing particulars of employment

 If you make any changes to an employee’s contract of employment:

  • You must give the employee a written statement containing details of the change at the earliest opportunity;
  • No later than one month after the change (section 4 of the Employment Rights Act 1996).

You must inform and consult employees regarding any changes to their contracts.It is important that you inform and consult with your employees when making changes to their contracts of employment otherwise you could face a constructive unfair dismissal claim.

7.Why provide a handbook?

  • It is a matter of good practice;
  • It sets out the standard expected of employees;
  • To assist the running of the business;
  • To reduce legal risk by making sure employees and managers understand the legal rights and responsibilities;
  • A useful tool for managing staff effectively;
  • Prevents misunderstandings;
  • Prevents disputes/conflicts;
  • Can assist in disputes/conflicts;
  • Helps to ensure fairness and consistency;
  • Creates a structured work environment;
  • Helps build company loyalty;
  • Failing to issue a handbook prevents you from specifying rules or conditions which your employees must adhere to whilst they work and makes it difficult to enforce disciplinary action; and
  • An Employment Tribunal will look to your policies and procedures.

Risks

A handbook can be your downfall if poorly written as it can:

  • Create a hostile work environment; and
  • Legally bind you to promises you did not even intend to make if not careful.

Do not let the risks scare you off. With the right advice an employee handbook can establish a solid relationship between you and your employees but also one that keeps your best interests in mind.

A comprehensive staff handbook is essential for an employer as you can set out your policies, procedures, and rules in more detail. Prevention is always better than cure and a good employee handbook can do just that; avoid unwanted and unnecessary employment disputes, by clearly communicating an organisations policies and procedures.

Having well drafted handbooks at the start can prevent time consuming disputes later on. It can also reduce the risk of grievances as each party is aware of their rights and duties. Should any issues arise then having well drafted policies can assist to effectively manage the issue to achieve resolution.

Ultimately, employee handbooks need to be clear and user friendly otherwise the handbook will lose its effectiveness.

8.Compulsory policies required by law

  • Disciplinary procedures and rules;
  • Grievances procedures;
  • Information about pensions (if not in your contracts);
  • Health and Safety (if 5 or more employees);
  • Whistleblowing

9.Policies recommend for strong legal reasons

  • Bribery;
  • Equal opportunities;
  • Data Protection; and
  • Whistleblowing

10.Recommended policies

 We recommend that you have the following policies in place (please note that this is not an exhaustive list):

  • Equal opportunities;
  • Anti-harassment and bullying;
  • Dress code;
  • Expenses;
  • Data protection;
  • IT and communication systems;
  • Social media;
  • Homeworking;
  • Adverse weather and travel disruption;
  • Health and safety;
  • Sickness absence;
  • Stress;
  • No-smoking;
  • Substance misuse;
  • Anti-corruption and bribery;
  • Whistleblowing;
  • Disciplinary procedure;
  • Disciplinary rules;
  • Capability procedure;
  • Grievance procedure;
  • Maternity;
  • Paternity;
  • Adoption;
  • Shared parental leave;
  • Parental leave;
  • Time off for antenatal/adoption appointments;
  • Time off for dependants;
  • Compassionate leave;
  • Flexible working;
  • Company car;
  • Time off for public duties;
  • Time off for training;
  • Redundancy; and
  • Retirement

A comprehensive staff handbook is essential for an employer as you can set out your policies, procedures and rules in more detail.

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