Employment law is continually evolving and being influenced by a number of factors; this can mean that employment contracts that were once fit for purpose now lack certain essential elements that protect you and your business. You may not be aware that changes in the law impact your obligations as an employer. There have been various changes in recent years that have affected retirement age, national minimum wage and flexible working.
As an employer and business owner updating your contracts of employment is unlikely to be at the forefront of your mind. You may wonder why updating these documents is important or even necessary. However, your contracts of employment should be viewed as a form of insurance for your business. In the event of any potential claim or employment tribunal, the contracts you have with your employees will be one of the first things to be reviewed. An adequate, up to date and compliant contract can provide a solid basis in a number of different claims.
However, avoiding a claim and maintaining up to date with legislation is not the only reason you may want to update your employment contracts. There are many different things you may find of benefit after reviewing your contracts.
It may be that many of your employees were engaged on different contractual terms. While it is appreciated that certain contractual terms may be different for each employee, such as hours of work, holiday entitlement and post-termination restrictions, it is advised that general terms are uniformed, such as expenses, sick pay and termination. Having employees on different contracts can cause administrative issues in the day to day running of your business because you will need to ensure that you are abiding by all the different terms in each contract. By updating and aligning the contracts, this removes the confusion of having certain members of your team on different contractual terms and will streamline the administrative processes.
It is highly unlikely that the competitive landscape surrounding your business is the same as when you hired your first employee. Your market position and competitors are likely to have differed since your original employment contract was put in place.
For example, post-termination restrictions are an effective way to protect your business from the risk of employees moving onto your competitors and taking your clients, other employees or business processes with them. Restrictions will usually include the time period for which they are restricted, what they are restricted to do and the geographical scope that applies. Any restrictions should be implemented with caution. In the event, these are challenged by a Tribunal, and they are deemed unreasonable, too wide or too excessive a Tribunal will not find in your favour. Post-termination restrictions should be tailored to each individual employee.
Contracts for junior members of staff should not contain the same restrictions as contracts for senior employees. It is key to ensure that restrictions are appropriate and enforceable as they are your best defence in protecting your legitimate business interests from competitors. Restrictions should be regularly reviewed to reflect your business climate.
Update to your employee processes and contractual terms
Another reason you may choose to update your contracts is that a number of key terms are not working for your business. A common complaint often surrounds high levels of employee sickness absence when they are entitled to an enhanced rate. Employees are entitled to be consulted on any changes to their contractual terms, and such changes cannot just be amended with a memo to all staff. By updating your contractual terms and consulting with these changes you are ensuring that all employees have consented to these changes and shall be bound by the terms.
Ultimately while you need to ensure that your contracts comply with the relevant legislation, you need also to ensure that they work for your business. Should you find yourself considering updating your employee’s contract of employment, you should proceed with caution and ensure the correct process is followed. The last thing you want is such change to be counterproductive as you have allowed for potential claims of breach of contract.
We pride ourselves on our proactive approach to helping our clients and offer a review of your current contract of employment for a fixed fee of £250+VAT. The review will include a written report of recommendations and information on recent, relevant legislation.