Consensus HR

Your outsourced HR department.

A spare £25,000 anyone? – Employment Contracts

Published in Blog, Employment Law, General, Handbook

A spare £25,000 anyone?

This is what it could cost a business in a worse case scenario for not providing an employee with a Contract, read on to find out why.

 Why do you need to provide them?

When we carry out Company HR Health Checks on their current HR provision, one of the main questions we always get asked is why they have to have an Employee Contract & what is the benefit to the business on making this reasonable investment when funds tend to be tight?

Here are just a few of the main answers:

An Employment Contract ensures that all of your team are fully aware of the main terms within the business and ensures everybody is fully aware of the main terms of their employment such as:

  • Name of employer and employee
  • Pay and whether it’s weekly, monthly pay etc.
  • Job description/job title
  • Pensions and pension schemes
  • Date employment and continuous employment started
  • Working hours
  • Details of any collective agreements that directly affect the employee’s conditions of employment.
  • Disciplinary and grievance procedures following the Acas Code of Practice.
  • Job location
  • Holiday entitlement
  • Sick leave and pay entitlements
  • Appeals procedure under the Discipline & Grievance.

You are also required by law to provide employees with a written statement of terms and conditions of their employment (i.e. employment contract), within 2 months of them starting to work with you.  If this is not in place, you could be taken to an employment tribunal and fined between 2-4 weeks pay.

More importantly, if you don’t have any terms of employment put in writing for an employee and there is a disagreement later down the line about what was agreed, you could be looking at a breach of contract claim.  Compensation pay-outs for breach of contract claims can be up to £25,000 if taken to an employment tribunal or £50,000 at the High Court.  Definitely not worth taking any risks.

When we write an Employment Contract we ensure all of these areas are included but also look at what else maybe needed to suit the needs of the business such as ‘Deductions from wages’ an area that is often needed when somebody leaves the business, probation period and compassionate leave for families to name a few.