As an employment lawyer I often see employers inadvertently making errors in their employment contracts that could lead to costly disputes down the line. Employment contracts are the foundation of the employer-employee relationship, and ensuring they are accurate, comprehensive, and legally compliant is critical for protecting your business. Below, I’ve outlined some of the most common mistakes and provide practical tips on how to avoid them.

1. Failing to Provide a Written Statement of Employment Terms

Under UK law, employers are required to provide employees with a written statement of particulars of employment by the first day of work. This statement must include key information, such as:

• Job title and description
• Start date and continuous service date
• Hours of work
• Pay and benefits
• Notice periods

How to avoid this mistake: Make it a standard practice to issue a comprehensive written contract to every new employee before their start date. Consider using a checklist to ensure all required terms are included.

2. Using Generic or Outdated Templates

Employment laws and business needs evolve over time. Relying on generic templates or contracts drafted years ago can lead to non-compliance with current legislation or insufficient coverage of important clauses.

How to avoid this mistake: Regularly review and update your employment contracts to reflect changes in law and your specific business requirements. Engaging an employment lawyer to tailor your contracts ensures they are both compliant and fit for purpose.

3. Overlooking Key Clauses

Some employers miss vital clauses that could protect their business, such as:

• Confidentiality clauses: To safeguard sensitive information.
• Restrictive covenants: To prevent employees from poaching clients or joining competitors after leaving.
• Intellectual property rights: To clarify ownership of work created during employment.

How to avoid this mistake: Identify the risks specific to your business and incorporate clauses that mitigate them. A bespoke contract drafted by a legal professional will address these areas comprehensively.

4. Ambiguities in Terms and Conditions

Vague or poorly drafted terms can create uncertainty and lead to disputes. For instance, unclear wording about bonus entitlements or working hours can result in misunderstandings.

How to avoid this mistake: Ensure that all terms are clear, precise, and unambiguous. Seek legal advice if you’re unsure how to phrase a particular clause.

5. Not Accounting for Changes in Employment Terms

Businesses evolve, and so do employee roles. Failing to update contracts to reflect changes in job duties, salary, or working hours can result in breaches of contract.

How to avoid this mistake: Establish a process for reviewing and updating employment contracts whenever there are significant changes. Obtain the employee’s written agreement to any amendments.

6. Ignoring Statutory Rights and Minimums

Some employers inadvertently breach statutory requirements, such as failing to provide the minimum notice period or holiday entitlement.
How to avoid this mistake: Familiarise yourself with the statutory requirements under UK law and ensure your contracts meet or exceed these minimums. Legal advice can help ensure compliance.

7. Overlooking Probation Periods

Including a probation period in employment contracts allows you to assess an employee’s suitability for the role. However, some employers either omit this clause or fail to detail its terms, such as the length of the probation period and notice requirements during this time.

How to avoid this mistake: Clearly outline the terms of the probation period, including how performance will be assessed and what happens at the end of the probation.

8. Protect your interests

Employment contracts are not just legal documents; they are tools to manage expectations and protect your business interests. By avoiding these common mistakes and seeking professional advice, you can reduce the risk of disputes and create a solid foundation for a productive employment relationship.

If you’re unsure about your existing contracts or need help drafting new ones, our team at Franklins Solicitors is here to help.

Please contact our Employment Law team on 01604 936512 / 01908 953674 or email info@franklins-sols.co.uk.

Q: What is a Contract of Employment?

A: A contract of employment is an agreement between an employer and an employee which sets out their employment rights, responsibilities and duties. The employment contract is an important part of starting a new job, as it is there to ensure that both the employer and the employee understand and agree on the same terms and conditions of the employment relationship.

Q: What must be included in a Contract of Employment?

A: Section 1 of the Employment Rights Act 1996 confirms that a contract should include details of:

• Job Information i.e. job title, description of work, start date of the role, place and hours of work;
• Compensation and Benefits – how much, when and at what intervals will the employee will get paid;
• Time off, sick days, Holiday entitlement, Notice Period, and Pension Scheme.

As of 6^th April 2020, both employees and workers will now have the right to receive a written statement from their first day of employment. The statement must now also include working hours, days of work, all benefits and pay package, length of job, sick leave eligibility, probationary period details and any training that they are required to carry out.

Q: Can I change the terms of a Contract of Employment?

A: Once signed, a contract of employment can be changed but only with the mutual agreement of the employer and employee.

An employer can make changes unilaterally but it could result in the employee bringing a claim for breach of contract if it is a change they disagree with. If an employer does want to change the contract, and cannot get agreement from the employee, they could offer an incentive or terminate the existing contract by notice period and then offer the employee the new contract terms. This is a complex area and we would recommend obtaining specialist legal advice before making any such changes.

Q: Is a Contract of Employment enforceable if it is not signed?

A: The terms of a contract may still have been agreed even if it was never signed. A contract can be made verbally or implied through the conduct of the parties. Put simply, to create a contract, there must have been an offer, acceptance of that offer, some consideration paid, and a clear intention to create legal relations between the parties.

Q: Can my Contract of Employment be illegal and unenforceable?

A: An employee will not be able to enforce their rights at work if they have signed what is determined to be an illegal contract of employment. Your employment contract is likely to deemed illegal if, for example, the employee does not have the right to work in the UK or the parties have agreed to a ‘cash in hand’ arrangement without paying the appropriate employee taxes.

Q: What are the different types of Contracts?

A: There are many different types:

• Indefinite Term Contracts – Full and part time contracts are the most common type of employment contract. They are permanent and ongoing positions. After a period of time, employees under these contracts will gain rights such as maternity pay, redundancy pay, the right not to be unfairly dismissed etc.
• Fixed-term contracts – These only last for a specific period of time. Employees on fixed-term contracts enjoy the same rights and benefits as with any other permanent contract.
• Temporary & Agency contracts – Agency staff have their contracts agreed and managed by a recruitment consultancy or employment agency by whom they are controlled, and as such are generally argued not to be employees of the end-user client. Agency workers usually work on a temporary basis and the length of their contract will be flexible.
• Freelancers, Contractors and Zero-hour contracts – Freelancers and contractors are generally considered self-employed and are not entitled to the same rights as permanent members of staff. With zero hour contractors, the employer is under no obligation to provide a number of hours to work, and the employee does not have to accept any work that is offered to them. They are therefore examples of a very flexible workforce.

Q: Are post-termination restrictions (also known as restrictive covenants) enforceable in my contract of employment?

A: Post-Termination Restrictions seek to prevent a person from carrying out certain activity after the termination of their employment. An employer may be worried that the employee will use certain confidential information they have learned, or client connections they have gained during the employment, in order to compete with the business afterwards. To be enforceable, an employer would generally need to show that:

• It has a legitimate proprietary interest that it is appropriate to protect; and
• The protection sought is no more than is reasonable having regard to the interests of the parties and the public interest.

If you would like to discuss the contents of your Employment Contract, or if you have any post-termination restrictions that you would like to receive advise on, call us today on 01908 660966 / 01604 828282 to book an appointment with Ben Stanton, Associate Partner and Employment Solicitor here at Franklins Solicitors LLP or email Ben at ben.stanton@franklins-sols.co.uk.