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Employment contracts: The cost of getting it wrong

Alan Price, CEO BrightHR

A survey by Glassdoor found that almost one in five employees (18%) cited January as the most popular month to change jobs.

With each new hire, employers should have an agreement clearly outlining the terms and conditions of employment, explaining employee rights and what is expected of both parties.

Alan Price, CEO at global HR tech firm BrightHR, says: “Some employers, particularly small business owners, may see contracts of employment as unnecessary work. But this couldn’t be further from the truth.

“Not only is it a legal requirement (s1 Employment Rights Act 1996) to issue a written statement of main terms before the commencement of employment, it’s also in the best interest of both employee and employer to have a physical contract in place to avoid any misunderstandings.

“And with so many changes to employment law expected in the next few months, it’s more important than ever to get contracts of employment right, both at the start of employment as well as ensuring you update them whenever policies and laws change.

“Not having a clear contract can lead to confusion around required working hours, roles and responsibilities, and general workplace conduct. This in turn, can have both financial and reputational consequences at tribunal.

“In Trench v Performance Bar Ltd an employee was dismissed for gross misconduct after liking, commenting on, and sharing a Facebook post which discussed how ‘creepy’ her manager was. The employee was dismissed for gross misconduct due to the post being ‘detrimental to the business’.

“However, the Employment Tribunal found that the employer had no social media or disciplinary policy warning employees that this behaviour is a disciplinary issue and upheld the claim for unfair dismissal.

“Employers should also note that if an employee makes a successful claim to an employment tribunal, they can also be awarded compensation of 2 or 4 weeks’ pay (capped at £571 per week) at the same time if the employer does not have a written contract in place.

“It’s best practise to always provide a written contract of employment and the staff handbook, including any company policy documents, to each employee before they start. Providing all relevant company information to a new starter will help them to grasp the workplace culture, understand the policies, and integrate themselves into their new role.

“It’s also important that further down the line, should any terms and conditions of a role be changed, this is adequately reflected within the contract – with the permission of the employee of course. To change a contract without consent can lead to claims of constructive dismissal.”

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