Top Tips: Employment Contracts and Policies

Time flies from those early days when you set-up your business and take-on your first employee; but have you paused to think about whether you have appropriate governance and compliance in place around the employment issues facing you now and in the future?  If the answer is “no” you’re probably not alone!

It is good practice and makes sound commercial sense for any business, no matter how large or small, to ensure its contracts and HR Policies are robust, thereby affording appropriate protection all round, both for you as the employer and your employees.

But what are the key issues to consider?

Employment Contract

1. A contract of employment is an agreement between an employer and employee and is the basis of the employment relationship.
2. Most employment contracts do not need to be in writing to be legally valid, but it is better if they are.
3. A contract ‘starts’ as soon as an offer of employment is accepted. Starting work proves that the employee accepts the terms and conditions offered by the employer.
4. Most employees are legally entitled to a Written Statement of the main terms and conditions of employment within two calendar months of starting work. This should include details of things like pay, holidays, working hours and the employer’s rules and procedures for dealing with both disciplinary and grievance issues.  A simple Written Statement of particulars template can be downloaded for free from the ACAS website by clicking here. The ACAS Guide on discipline and grievances at work can be downloaded by clicking here.
5. An existing contract of employment can be varied only with the agreement of both parties.

Point no. 5 is crucial in our experience.  Keep a clear distinction between what goes into the contract and what goes into a HR Policy.  Include a statement in the contract of employment and/or in the policies and procedures themselves to the effect that they do not form part of an employee’s contract of employment. Generally speaking, it is our recommendation that all policies and procedures (and contracts of employment that refer to them) should make it clear that:

1. The policies and procedures do not form part of the contract of employment; and
2. That the employer is free to depart from them in such circumstances as it considers appropriate.

Otherwise, not only is every change to a policy or procedure technically a change to an employee’s contract, which will generally require the employee’s consent, but more importantly, a failure by an employer to follow its own contractual procedure will also equate to a breach of contract upon which the employee may be able to base a constructive dismissal claim and/or in the case of a dismissal, an unfair dismissal claim.

HR Policies

The only legal requirements for employers to have employment policies and procedures are as follows:

• Under the Health and Safety at Work etc Act 1974, employers with 5 or more employees must have a written general Health and Safety Policy; and
• Under the Employment Rights Act 1996, employers are required to give employees a Written Statement of the main terms and conditions of their employment (see above), which includes the employer’s rules and procedures for dealing with both disciplinary and grievance issues.

However, there are also a number of other areas where non-statutory codes of practice recommend that employers implement appropriate policies and/or procedures. A good example of this is the code of practice issued under the Equality Act 2010, which outlaws discrimination and harassment on various grounds, including sex, race, age and religion. This code recommends that an employer should have an Equal Opportunities Policy and gives guidance as to what it should contain. Although the code concerned does not itself have legal status, breaches of it can be taken into account by an Employment Tribunal in determining an employer’s liability for discrimination and harassment claims, and as a result employers would be wise to ensure that they have such a policy in place.

Importantly, policies and procedures dealing with a variety of aspects of the employment relationship can also be an important management tool for employers by providing them with the opportunity to set out the rules and standards with which they expect their employees to comply. If employees do not then comply with those rules or achieve the required standards, the policy can then form the justification for invoking the relevant disciplinary and/or capability procedure against the offending employee(s).

The basic policies and procedures we would expect almost all employers to have are:

• Disciplinary and Grievance Rules and Procedures;
• Sickness Absence Policy;
• Health and Safety Policy;
• Equal Opportunities Policy;
• Anti-Harassment and Bullying Policy; and
• Email and Internet Policy (assuming employees have email/Internet access), including a Social Media Policy.

However, it is also increasingly common to have policies and procedures in place covering the following:

• Maternity/Paternity and Adoption Leave and Pay;
• Time off for Dependants and other emergencies;
• Flexible Working;
• Whistleblowing;
• Drugs and Alcohol;
• Smoking;
• Bribery; and
• Data Protection

What is of greatest importance, is that whatever policies and procedures an employer decides to have, the content of those policies and procedures must be relevant to the nature and size of the employer’s organisation if they are going to be effective.

To be an effective tool for the employer it is crucial that:

• The policy/procedure is brought to the attention of employees in writing
• Any breaches are managed consistently and as envisaged in the policy/procedure; and
• The policy and/or procedure is regularly reviewed to ensure that it remains relevant to the employer’s organisation

For help and support on getting your employment contracts and HR Policies right, please contact:

Adam Davey, Director – Petaurum Solutions

July 2018