Top Tips On How To Draft Your Employment Contracts To Avoid Common Employee Disputes
When it comes to saving time and money, nothing beats a pre-emptive strike when it comes to avoiding employee disputes. Having strong, solid policies in place right from the start of an employment agreement can save you a mountain of trouble in the long-term.
Why is this? Because ultimately, human beings are complex, irrational creatures, therefore, each employee you have has a unique way of seeing the world. This is great when it comes to creativity and innovation, but can be disastrous when it comes to employment law issues such as discrimination and unfair dismissal, as these are very subjective matters.
Employee disputes are costly in many ways. These include:
- Lost productivity
- Legal costs
- Your businesses reputation
- Stress and worry
This article aims to outline how you can draft your employment contracts, handbooks and policies to avoid employment conflicts arising in the first place.
Having an employment contract in place is not compulsory. As soon as you take on an employee, both of you are governed by certain statutory rules, which are designed to protect an employee. Some examples of statutory employment rights include:
- A statement of terms of employment (in writing) within two months of commencing work
- Anti-discrimination legislation
- The minimum wage
- Maternity leave
- Health and Safety requirements
An employment contract cannot exclude statutory rights. However, what an employment contract can do is expand on rights and benefits offered by legislation and set out clear expectations for the relationship between the employee and you, the employer.
An employment contract can be verbal, however, in order for clarity, and to mitigate the opportunity for disputes to arise, it is best to have a written employment contract, which is signed by both parties.
Express and Implied Terms within an Employment Contract
All employment contracts have both express and implied terms. Express terms are terms which are written down (or verbally communicated) in the agreement. Implied terms are terms which are implied in all employment contracts, whether or not the parties wish to include them or not. Examples of implied terms are:
- Trust and confidence – This requires employers and employees not to conduct themselves, without reasonable and proper cause, in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee
- Fiduciary duties – All employees owe a duty of fidelity to their employer. Examples of a fiduciary duty include; not to work for a competitor organisation whilst in employment and not to make a secret profit
Implied terms act as an umbrella over the express terms of the contract, governing the conduct of the parties. They provide a baseline of behaviour that employers and employees can expect of each other.
The terms detailed below are all express terms.
Key Terms in an Employment Contract
To mitigate the opportunity for a dispute to arise, your employment contracts should be diligently drafted around the following areas as they provide extremely fertile ground for grievances to flourish:
The reason these areas cause the most disputes between employers and employees is because the procedure in which they must be managed is very detailed and strict. Therefore, if the company policy for dealing with these contentious issues is not clearly set out in the employment contract and, where appropriate, the staff handbook, miscommunication can easily arise and certain steps required by law can be missed.
Let’s look at these issues in detail, and how your employment contract can avert misunderstandings and disputes.
According to the latest figures available, in 2012, 46,300 claims accepted by the Employment Tribunal were regarding dismissal. A well-drafted employment contract should outline the dismissal procedure, (or refer the employee to the staff handbook if the procedures are contained there), outline the right to suspend an employee on full pay if an investigation is taking place and the rights of appeal.
A proper redundancy procedure would normally consist of:
- A written intent to maintain job security where practicable
- Details of the consultation process
- Guidance on the selection criteria used to make redundancies
- Details of severance terms
- Details of how the employer will help affected employees find work
Proper consultation is vital when making redundancies. Discussions must be had with employees or their representatives with a view to agreeing on:
- Ways to avoid redundancies
- Reducing the number of people to be made redundant
- Mitigating the effect of the dismissals
Having a clear policy surrounding redundancies can help ensure managers fully understand how to conduct the procedure, in what is often a stressful and emotional time.
Nine characteristics are protected from discrimination under the Equality Act 2010. These are:
- Gender reassignment
- Marriage and civil partnership
- Pregnancy and maternity
- Religion and belief
- Sexual orientation
Your employment contract and/or staff handbook should clearly outline your organisations policy towards discrimination, situations where discrimination can arise (such as advertising for vacant positions), how your protect employees from it, and the process that will be followed if an allegation of discrimination is made.
It is vital to have a proper discipline procedure outlined in your employment materials. You need to state the following clearly:
- your disciplinary rules
- your disciplinary and dismissal procedure
- the name of the person that they should appeal to if they are unhappy about a disciplinary or dismissal decision
It is also worth outlining what constitutes gross misconduct which can result in instant dismissal because if these are not clear then a dispute can easily arise.
A Staff Handbook
As with employment contracts, staff or company handbooks are not compulsory by law, but they provide an ideal way to set out your organisations policies in one place. Every business is different, so your staff handbook will be unique to your business. However, all handbooks should include:
- Equal Opportunities Policy
- Disciplinary Rules and Procedures
- Grievance Procedure
- Health and Safety Policy
A good employment lawyer will take the time to understand your organisation and draft your employment contracts and staff handbooks accordingly. By having clear and concise material in place before you take on staff, you will be well on your way to having a happy, productive workforce who have few grounds to raise a grievance.
To find out more about employment contracts, please click here, or why not call our office to make an appointment on 020 3588 3500.
If you would like to make a comment on this article, please feel free to jot your thoughts down in the comments section below.