Many small and micro property businesses take a minimalist approach to legal documentation – in many cases they don’t bother with it!
Whilst this approach may not lead to any particular problems in certain areas of law as far as employment is concerned it is always best practice to ensure that you fulfil the minimum requirements.
HMRC is always interested in the way businesses deduct tax from payments made to their “workers” and of course, there is a risk that employees may take claims to their local tribunal with potentially eye watering financial consequences for the employer if successful.
Mark Shulman is a Consultant Solicitor with Keystone Law and an accredited workplace and employment mediator and provides a user friendly guide to getting employment contracts right.
Employment law is often regarded as a minefield for employers — and it can be! But, there are some basic steps that employers can take to comply with the law and to reduce the risk of challenges by disgruntled employees.
- Do I need a written contract?
No, there are no particular legal formalities that have to be observed for entering into an employment contract. Such a contract may be expressed or implied; they can be made by word of mouth or set-out in writing. In fact there is no legal requirement for an employee to have a written contract of employment at all. But, the Employment Rights Act 1996 does require an employee (whose employment is to continue for more than one month) to be given a written statement containing specified terms within two months of starting their employment.
- What particulars are required?
The written particulars must include details of terms such as job title, pay, place of work and disciplinary and grievance procedures (there are others). The law specifies which of the particulars must be given in a single document and which may be given in supplementary statements or via other reasonably accessible documents — provided that they are referred to in the principal statement (e.g. sick leave and sick pay).
- What about changes to the particulars?
If there are changes to any of the required statutory particulars, employers must give the employee a written statement containing details of the change at the earliest opportunity and in any event no later than one month after the change.
- What if I don’t give the necessary particulars?
Where a Section 1 statement is not provided at all, or if an inaccurate or incomplete statement is given, an employee may make a complaint to an employment tribunal, which can then declare the particulars that ought to have been included (i.e. determine what particulars were agreed between the parties about the relevant matters).
In some cases, a tribunal can make an award of compensation of between 2 and 4 weeks’ pay (subject to a statutory cap on the amount of one week’s pay, currently £475 per week).
- Do I need to provide a full employment contract?
There is no requirement to do so but as the statutory written particulars are only a reflection of certain specified employment terms, most employers will usually want to have a full written contract which sets out more detailed terms and conditions. This could cover additional matters such as those dealing with pay in lieu of notice, permitted deductions from pay, confidentiality requirements and competition restrictions that apply after the employment ends.
In summary, the legal requirements to provide written particulars are both technical and complex. In addition, it is crucial that any written contract of employment is suitable for a particular employee. An employer who is under challenge and who has complied with their legal obligations is likely to be in a much better position to defend claims that hinge on what terms were agreed.
If you would like to find out more, please contact Mark Shulman, Consultant Solicitor Keystone Law.