Employment Contracts, Staff Handbooks and Employee Status

The employment contract is likely to be the most important agreement entered into between the employer and employee as it provides the terms governing the contractual relationship between the parties and will govern the legal duties and responsibilities that the parties have agreed to each other.

An employment contract will consist of the documented terms agreed, but will also consist of certain implied terms (please see further below), and there are also a number of core statutory rights that will feature in any employment contract.

Whilst you may not consider that you require advice for a new hire, and have a precedent employment contract which you consider to be fine, our experience shows that very often these precedents are not up-to-date with current legislation, and do not fully reflect the proposed agreed terms with the new employee. However, and with comprehensive advice at the outset, it is our experience that either a subsequent dispute could have been avoided, or the financial exposure to the business minimised.

With our expert advice, we can minimise the risks of future disputes arising, and ensure you and your business interests are protected.

Why is the status of my employees important?

The legal employment status of an individual can significantly affect the rights of that individual. It is therefore of vital importance to employers that they engage with their workforce in the correct manner, and thereby defining the correct status of the employee.

There are three main categories of employment status, and employers will need to ensure that they are aware of the remit, and implications, of each. Our expert solicitors can guide, and advise, you on the same, and help you to determine which is suited to your particular circumstances.

The three main categories of employment status are as follows:

1. Employee – Employees will be personally undertaking work for the employer, and without the right to provide a substituted individual for their services. In order to determine whether an individual is an employee, the relationship (between employee and employer) will need to be examined, for example, in terms of the following:

1. How the individual is renumerated
2. The exercisable control by the employer over the employee
3. How holiday periods are granted
4. Where there is a uniform and/or tools required, who provides the same.

2. Worker – Workers will, generally, give personal performance under the employment contract, however may be able to substitute another individual to undertake their services. Workers tend to include those performing casual or agency work and freelancers, as well as those on zero hours contracts.

3. Self-employed – Self-employed individuals generally enter into contracts with employers to provide a service for a client for a set fee, effectively running their own business. They do not get paid through PAYE and, ordinarily, do not have the right to holiday pay. They do not have the same responsibilities and rights as other employees and/or workers (as the contract for services should provide for the same), however are provided with protection under health and safety legislation.

The distinction between the aforementioned three statuses of employment is important as each category of status is afforded different protections to the others (generally speaking employees have greater rights than a worker or someone who is self-employed).

Employers must therefore be in a position to prove the status of an individual, if necessary, as this can affect the rights of that individual. The fact that an individual is considered to be self-employed for tax purposes would not necessarily mean that any employment tribunal would determine the same status.

What documents form the contract with my employees?

Not all contracts are required to be in writing (in that they can be agreed orally). However, and in the employment setting, an employer is required to give an employee a written statement setting out the basic particulars of employment.

Often, employers will seek heightened protections, such as confidentiality agreements and restrictive covenants, within the employment contract. These are terms with which we can assist with the tailored drafting.

Whilst the employment contract documents the contractually agreed terms between the employer and employee, employers should still ensure that they have policies and procedures in place to protect their business interests and to seek to achieve their commercial goals. Properly drafted policies, procedures and staff handbooks are important from both a human resources, and risk management, perspective. Our specialist lawyers can guide you through the process of drafting, and updating, policies and procedures.

What terms are implied into employment contracts?

Whilst there are the express terms, as documented in the employment contract, there are also implied duties that are placed upon employers and employees. For employers, for example, these include a duty of care to protect employees from foreseeable harm and a relationship of confidence and trust. For employees, these include not to disclosure trade secrets of the employer and to follow reasonable instruction.

One thing that employers must be careful of in respect of implied terms is that, even where there is no written agreement, a particular practice (of the employer) may give rise to implied terms, through regular “custom and practice” if the employer is considered to have adopted that practice.

We can provide comprehensive advice on the terms implied in your employee contracts and assist with updating them if needed.