Legal/Finance
First step to a good working relationship
13th March 2008
Clear contracts are vital for a happy workforce, says Julie Taylor, of Gardner Leader.
Employing and managing staff can be one of the most difficult aspects of running a business, especially given the constant changes to employment law and the sensitive nature of the issues.
Many employers recognise that employing and retaining the right people is crucial to the effective operation of their business and, therefore, managing employment processes and having effective procedures can be key to ensuring a happy and well-informed workforce.
The first step towards managing this relationship is to have a clear contract, defining both your own and your employee’s obligations. In fact, all employees and workers must be provided with a written statement setting out the key terms of their employment within the first two months of their employment. This is very important and if this is not provided within the first two months, employees may be entitled to an additional four week’s pay plus any compensation that they are awarded at an Employment Tribunal.
The statement of terms must set out the following information:
- Names of both the employer and employee and commencement date of employment. The latter is usually straightforward, but can be more difficult to determine where there has been a transfer of a business. This date is also important to the calculation of any Employment Tribunal award.
Where an employee has accepted a new position with a new contract, you may need to provide two dates. One confirming the date they joined the company, which would be the date their continuous employment began, and the date that they started in their new position on new terms.
- Job title and a brief job description. This is fairly self-explanatory and should make it clear to the employee what their role is.
- Rate of pay. This should also include the frequency and manner in which the employee will be paid.
- Hours of work. Care should be taken here to ensure that the Working Time Regulations are complied with.
- Place of work. This can cause difficulties if incorrectly drafted. Be aware that a relocation of your business could require the consent of all your employees if this clause refers to one specific place of work.
- Notice period. The amount of notice an employer is required to give an employee of the termination of their employment is subject to statutory minima. This statement can provide for more notice to be given, but not less.
- Holiday entitlement. Employees, workers, part-time staff and agency workers have the right to 4.8 weeks’ paid holiday each year. This can include public holidays as there is no statutory entitlement to paid leave for public holidays.
- Sickness provisions. All employees are entitled to statutory sick leave, however, if a company has an established practice of enhancing this, it is preferable that this is set out in detail either in this statement or in a specific policy referred to by this statement.
- Pension. Employers are obliged to offer access to a stakeholder pension scheme if they have more than five employees.
- Miscellaneous. There are several other key requirements that must be specified in this statement and it is important that the document fully complies with the current statutory requirements.
Gardner Leader regularly advises a wide range of companies on both drafting new contracts and updating their existing contracts of employment. This can be a difficult area of law and good legal advice is essential.
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