3rd January 2014

Get Fit For ’14

Is your business fit for 2014?  If not, now is the time to consider implementing a fitness plan which should ensure that your business stays healthy and up-to-date throughout 2014 and beyond.

The starting point for any such fitness regime should be your employment contracts.  Generally employers should review their employment contracts every two years or so.  If you have not refreshed your existing contracts for some time, you should consider doing so this month.

What is the existing position regarding employment contracts? 

The law requires employers to issue its employees with a compliant statement of terms and conditions within two months of the commencement of employment.  This statement of terms and conditions (or employment contract) requires to be in a written form and requires to contain certain basic information.  This basic information includes hours of work, rate of pay, notice, holiday and pension provisions.

What are the sanctions for non-compliance?

It is not uncommon for an employer to either fail to issue the contracts within the two month period or fail to include all of the specific criteria in their contracts.  An employer who fails in either of these respects could be liable to pay compensation of two or four weeks’ wages to each employee.

Do the contracts need to be signed by employees?

The legislation states that an employer merely requires to “issue” its employees with a compliant contract.  This means that, strictly speaking, an employer does not require to get its employment contracts individually signed by its employees.  However it is always best practice to get your contracts signed by your employees so as to avoid any dispute in the future as to their issue.  Additionally, if your contracts allow for you to deduct monies directly from an employee’s wages, you will require to obtain your employee’s written consent for such lawful deductions.  A signed employment contract can also serve this purpose.

What happens if any of the terms of the contract change during employment? 

This is another common pitfall for employers.  The law states that, if there is any change to the basic information contained in the employment contract, the employer requires to provide the employee with written confirmation of this change within one month of the change taking effect.  Again a failure to either confirm the variation in writing or to do this within one month of the date of variation can result in a fine of two or four weeks’ wages.

The good news for employers is that they do not require to go anywhere near a treadmill to ensure that their business remains healthy during 2014.  Instead employers should carefully consider the content of their contracts.  In addition to the essential information, employers might wish to take legal advice about including restrictive covenants, clauses regarding repayment of training costs and bonus structures in their contracts.

Ultimately employers can retain good health by ensuring that their employment contracts act as a versatile tool for managing their employees throughout the year and maintaining their business in peak, fighting-fit condition.

If you wish to obtain a quote for drafting or reviewing your contracts, you can make contact with me or one of my colleagues in the employment team.

Simon Allison
Partner – Employment Law 

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