Essential guide: Employment contracts and policies

If an employer does not have appropriate contracts of employment or employment policies, it faces a greater risk of becoming embroiled in potentially expensive and disruptive employment disputes. Furthermore, an employer will not have in place robust protection against a former employee who tries to damage its business by taking its confidential information, intellectual property rights and customers.

Although an employer is not required to issue a full written contract, it is required to provide an employee with certain mandatory minimum written particulars of employment, including his/her job title, place of work, remuneration, hours of work, holiday and holiday pay, sickness and sick pay, pension and notice period. For this reason, it is customary to simply issue an employee with a written contract of employment, which deals with all (or nearly all) aspects of the employment relationship.

There are many advantages in having a written contract of employment. For example, they may be used so as to:

  1. Clearly set out pay and benefits in a way which properly awards and incentivises employees while at the same time maintaining some flexibility so as to ensure that certain benefits (especially those arising out of pension or share schemes) do not place an unsustainable burden on an employer in future;
  2. Allow an employer to issue an employee with a shorter period of notice during a probationary period;
  3. Give the employer the unilateral power to make certain changes to terms and conditions in some circumstances (usually an employer needs to obtain the employee’s consent);
  4. Impose confidentiality and intellectual property provisions on employees with access to sensitive business information and/or involved in the development of key company products; and
  5. Impose post-termination restrictions on employees who are in a position to generate goodwill with the employer’s customers and other key business connections (such as those employees involved in sales/marketing roles or senior employees with an important business role).
On termination of employment employers need to give and are entitled to receive, minimum notice in respect of all employees who have at least one month’s service. Employers are required to give such employees a week’s notice after the first month’s service and then an additional week for every year of service up to a maximum of 12 weeks. By contrast, employees are required to give an employer not less than a week’s notice after one month’s service. 

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