As an employer, you’ll need to provide a contract within two months of someone starting work, or within one month of any contractual changes taking effect.
Your contracts should set out the terms and conditions of your employee’s employment, such as hours, holiday entitlement and their rights. It’s a legal document and is binding until the contract ends, or the terms are changed.
You will need to make sure that it covers certain minimum information – if you don’t it can result in awarding employees two-four weeks’ pay.
If crafted well, contracts are a very useful tool for your business.
How can our contract solicitors help?
We can help you achieve all of this, and our specialist team has all the advice and drafting skills you need to get the most suitable contracts in place for your business. There are certain clauses which a contract must contain, and we can advise you on all the legal aspects of creating and understanding contracts; protecting your business and your employees’ rights.
- Contract formation and reviews
- Advice on termination of employment
- Post termination restrictions
- Advice on changes to terms and conditions of employment
- Advice on TUPE
Contract formation and reviews
You must have a written contract in place for your employees. We recommend that you review this on a periodic basis to ensure it is up to date, and always upon any change in role within the business. This is particularly so when someone is promoted. The employee is developing and the contract should develop with them.
It’s important that you capture suitable terms for your senior executives and so this will usually be set out in a different form contract which covers an extended notice period, enhanced expectations during employment and business protection covenants.
Termination of contract
Whether it’s the employer or employee bringing the contract to an end, there are a variety of factors that need to be considered, for example:
- What notice period applies and how will this be dealt with?
- Are there any procedures that need to be followed?
- Do I need to justify any dismissal decision?
- Do any post-termination restrictions apply?
- Has business property (including confidential information) been protected?
Post termination restrictions
It’s essential to protect the use of your business’ valuable information from employees both during employment and after it has ended. The best way to do this is with a restrictive covenant.
A restrictive covenant is a clause in a contract which prevents your employee from utilising your information, or from doing certain things, for example:
- Using your information
- Trying to do business with your customers
- Poaching your employees
Here’s what you need to know:
- It is important for a business to have restrictive covenants it can rely upon after employees have left
- A restriction can only be enforceable if it protects a legitimate business aim and is no wider than necessary
- Businesses often fall foul of poorly drafted restrictions
- We offer fixed/capped fees for preparing/reviewing restrictions
- Our experienced contract solicitors can assist you with enforcing restrictions
Our specialist team can help with drafting restrictive covenants and review existing contracts to ensure your information and intellectual property is legally protected.
Changing terms and conditions of employment
We understand how important it is for you to keep your employees and your workplace happy. So if you’re making changes to the terms or conditions of an employee’s contract you’ll want to get it right.
It’s not unusual for contract terms to change and the majority won’t cause a problem, but sometimes an employee might not like the changes you’re making. We can advise you on how to make the change legally binding, with as little disruption as possible.
There are initial steps to take if you’re considering making a change to an employment contract.
The first is to decide if the planned change involves making amendments to the contract itself, or whether the change falls within existing terms. We can talk you through express, implied and incorporated terms, and those terms, such as benefits that are stated to be non-contractual, that won’t be part of the contract.
You’ll also need to consider if there’s a contractual right to vary the term, which can mean you don’t have to amend the contract because:
- The existing terms are broad enough to cover the proposal
- There is a specific right to vary the contract in this way
- The contract gives the business a general power to vary its terms.
You’ll need to be very clear on this, as any ambiguity will go against the business if someone makes a claim. Plus, general flexibility clauses can probably only be used to make minor administrative changes that are not detrimental to the employee.
How to implement a binding change in terms
If after considering the above you still need to make a contract amendment, we can talk you through the options available and help to make the process as smooth as possible. The most important thing is to have a consultation process to allow open discussion about the terms of employment.
The employee may agree to the proposals verbally or in writing although we would strongly recommend any consent is confirmed in writing.
For this to be binding, the employee must receive some form of benefit in return. In many cases, the employee’s continued employment is enough.
Unilaterally imposing the change and relying on the employee’s implied agreement
This is more likely to work if there’s an immediate practical effect on the employee (for example, a pay cut) and they continue without objecting. But never assume that silence indicates implied agreement, especially if there’s no immediate impact on the employee. If the business imposes the change it will be a breach of contract. The employee can:
- Comply with the new terms but work “under protest” and claim for breach of contract or unlawful deductions from wages (if this is the case). If the change is substantial, the business may be deemed to have dismissed the employee, so they could bring a claim for unfair dismissal
- Resign and bring a claim for constructive dismissal
- Refuse to work under the new terms (for example, where there is a change in duties or hours)
Dismissing and offering re-engagement on new terms
This approach avoids some of the risks described above. However, as a result, the employee may be able to claim either:
- Wrongful dismissal, unless the business gives the appropriate period of notice (or makes a payment in lieu of notice)
- Unfair dismissal, unless the business can establish a potentially fair reason for dismissal and show that it acted reasonably in deciding to dismiss the employee for failure to agree to the change
Refusal to accept changes
If, with our help, you’ve done everything you can to make changes that are fair and considered and an employee still refuses to agree this will usually lead to “some other substantial reason” for dismissal, provided there’s a sound business reason for the change.
If you are considering insourcing or outsourcing where TUPE applies, our specialist TUPE Solicitors are available to guide you through the necessary regulations.
TUPE (the Transfer of Undertakings (Protection of Employment) Regulations 2006) means that “affected employees” are automatically transferred from one employer to another in certain circumstances. It also ensures their terms of employment and continuity of service remain intact.
TUPE applies to a “relevant transfer”, which can be where:
- A business or part of a business is sold
- Work is outsourced from a client to a contractor
- Outsourced services are transferred from the original contractor to another contractor
- A client brings the outsourced services back in-house. Employees transfer to the new employer on their existing terms of employment and with all related employment rights, powers, duties and liabilities. Old age, invalidity and survivors’ benefits under occupational pension schemes are excluded.
- The new employer steps into the shoes of the transferring employer in relation to the transferred employees. Any acts or omissions committed by the transferring employer are treated as having been done by the new employer.
- Employees who object to the transfer do not automatically transfer to the new employer. Their contracts will instead terminate on the transfer date, unless they resign sooner.
- Any changes to an employee’s terms of employment are void if the main reason for the change is the transfer itself, unless there is an economic, technical or organisational reason requiring changes in the workforce (ETO reason) for the change.
- However, it is possible to make changes to transferring employees’ employment terms if the reason for the change is permitted by the terms of the contract.
- Employees are entitled to enhanced protection against unfair dismissal. Any dismissal of an employee with the qualifying period of service is automatically unfair where the main reason for the dismissal is the transfer itself, unless there is an ETO reason for the dismissal.
This enhanced protection also applies if:
- An employee resigns in response to a serious breach of their contract
- Or the new employer makes a substantial change in the employee’s working conditions which is detrimental to them
- Employers can be ordered to reinstate, re-engage or compensate the dismissed employee if their complaint is upheld by an employment tribunal.
The transferring employer must provide specified information to the new employer at least 28 days before the transfer. If the transferring employer fails to comply with this duty, the new employer can apply for compensation based on the losses suffered, with a minimum award of £500 for each employee to whom the information was not provided.
The transferee must then provide ‘measures’ information to enable the employer to inform and consult.
Both parties involved in the transfer are usually obliged to inform and (if appropriate) consult recognised trade unions or elected employee representatives in relation to their own employees who may be affected by the transfer. If there are no existing representatives, they must be elected by the affected employees for the purposes of consulting over the transfer. An exception applies to employers with fewer than 10 employees.
Certain information (for example, the reason for the transfer and where it is expected to take place) must be provided to the representatives long enough before the transfer to enable the transferring employer to consult with them about it. Although the duty to inform always arises, the duty to consult only arises where an employer envisages taking measures in relation to affected employees.
Employers that use agency workers should provide certain information on their use, for example, the:
- Number of agency workers the employer uses
- Parts of the business in which agency workers operate
- Type of work agency workers carry out
Failing to comply with these obligations can expose both parties involved in the transfer to up to 13 weeks’ uncapped pay for each affected employee. There is joint and several liability between the transferor and transferee.
If you would like any more information, please get in touch by filling out the form below.