Member Article

A business owner’s guide to contracts of employment

It’s HR focus week at Bdaily. Here, Helen Pedder, head of HR at ClearSky Business, break down the jargon littered within employment contracts.

All UK businesses, regardless of their size, must issue every employee with a contract of employment.

Employers have a legal obligation to provide these written statements within two months of an employee’s start date. Failure to comply leaves your business exposed to an employment tribunal claim and a compensation payout of up to £1,800.

Yet it doesn’t end there. Despite only one employee making the claim, tribunal judges have been known to extend the same payout to every member of staff who hasn’t been issued with a contract of employment.

For example, a small business owner employing just five members of staff could soon be faced with a £9,000 compensation bill; not to mention spiralling legal costs.

Protecting your business

Contracts of employment help to establish the employer-employee relationship, by stating the business’ expectations to all new starters.

These documents are legally binding between both parties and therefore prove a crucial tool in helping to defend your business during an employment tribunal.

Tribunal judges will scrutinise your contract of employment, therefore it’s crucial to invest time and resources during the initial drafting process. Careless mistakes can result in crippling costs, not to mention lasting damage to your business’ reputation.

Drafting a watertight contract of employment

Along with generic details including the employee’s name, job title, salary and working hours, a contract of employment should also detail your company’s HR policies and procedures.

These should cover a rage of matters including holiday entitlement, maternity and paternity, sickness and absence, disciplinary and dismissal, notice periods and much more.

When it comes to drawing up robust and legally compliant contracts of employment, the devil is in the detail.

It’s a time consuming process that can prove particularly tricky for businesses that don’t employ a dedicated HR department.

Seeking expert advice is vital in putting your best foot forward, helping to saving your business both time and money.

This was posted in Bdaily's Members' News section by ClearSky Business .