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The benefits of giving my employee a contract of employment?


It always surprises me at the sheer number of employers who have never issued their employees with a contract of employment. It is often because they do not think they have to; or they can’t be bothered or think it is too difficult.

Whilst it is a legal requirement to provide your employee with a contract of employment one of the biggest advantages you get when you give your employee a contract of employment is that right from the outset, you are laying out the specific standards that you expect from employees working for you and it lays the foundation for disciplining or dismissing an employee who is not meeting those standards.  

In circumstances where employees are working and developing trade secrets, you may want to protect this information and the best way to accomplish this is to include a confidentially clause in your contract.   The contract will dictate that certain material is not disclosed to outsiders or used outside of your business.  You may even want to consider including clauses specifying how information is used within your business.   Even more important, having a clause in your contract that specifies what, if any, information the employee can take with them when they leave. 

You may also want to control or limit an employee from competing against your business for a period of time after they have left your employment by having restrictive clauses in your contracts. 

Employment contracts can also be used to entice the best employees into your company – and then keeping them by limiting the reasons an employee can use to leave your business!

Remember, that an employment contract works both ways – not only does your employee have obligations to fulfil, but you do too.  A good employment contract will spell out exactly what you expect the employee to do (the parameters of their role) and will spell out what your employee can expect from you (normally to pay them!).

So let’s consider some of things you may wish to include in a contract of employment:

  • Roles and responsibilities of the job holder.
  • Specific working processes and procedures.
  • Whether you want your staff to work overtime and whether it is it paid or guaranteed.
  • When lunch breaks can be taken and whether they are paid or unpaid.
  • Rules for when staff can take holiday and the authorisation procedure for submitting holiday request.  Some businesses close down at set times during the year and you may want your staff to take their holidays during this period.
  • If you have several workplace locations, you may wish to have the flexibility of being able to deploy your staff at any location.
  • If your staff need to wear a uniform, you may wish to set out what happens if they lose or they damage their uniforms.
  • If you have paid for training, you may wish to have a repayment schedule, if they leave after a specific period after having received the training.
  • You may want to have specific rules and procedures in place if you provide a company vehicle e.g. if they have an accident or whether they can use it for both private and business use.
  • If you are subject to any form of external regulation, OFSTED, CQC, you may want to have detailed procedures in place to ensure your employees comply with such regulations.
  • You may want to consider (in limited circumstances) to restrict your staff if they leave and join a competitor.
  • You may want to protect company confidential information, client or supplier lists etc.

This is not an exhaustive list but demonstrates the value and protection a contract of employment can provide to your business. It can set out your specific working practices, lay down standards of behaviour and conduct, confirm what your staff can expect in terms of pay and other benefits and lay down how you will deal with certain work place issues such as punctuality, absenteeism, underperformance and inappropriate conduct.

Having these clearly set out in a written form or online provides you with the assurance and protection that, should you need to address any issues, you have a clear legal basis to take action.

ACAS have reported that simple misunderstandings over what is or what is not in a contract are one of the main causes of employment tribunal claims. Having a contract of employment in place minimises any confusion in respect of the precise terms and conditions of employment.

As a minimum the law requires that you to provide your employee with certain minimum legal information, which is often referred to as a ‘Section 1 statement’. This should be provided within two months of their start date.  To remind you what you need to include in a Section 1 statement please click here.

This article is intended as a guide and for general information only and is not a substitute for taking specific legal advice relating to your situation. For specific advice regarding this or any other issue relating to employment law, please do not hesitate to contact us.

Angela Clay

A qualified employment law solicitor and our managing director, Angela has unparalleled legal expertise and decades of experience and knowledge to draw from. She’s a passionate speaker and writer that loves to keep employers updated with upcoming changes to legislation, and is a regular guest speaker on BBC Leicester Radio.