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.

You may feel that legal advice isn’t necessary for a new hire, especially if you have a precedent employment contract you believe is sufficient. However, in our experience, such templates are often outdated and may not accurately reflect current legislation or the specific terms agreed with the new employee. With comprehensive advice at the outset, many potential disputes can be avoided—or, at the very least, the financial risk to your business significantly reduced.

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 must understand the scope and legal implications of each. Our expert solicitors can provide tailored guidance to help you determine the appropriate status for your workforce and ensure compliance with relevant employment laws.

The three main categories of employment status are as follows:

1. Employee – Employees personally perform work for their employer and do not have the right to send a substitute to carry out their duties. To determine whether someone qualifies as an employee, the nature of the relationship between the individual and the employer must be examined, considering factors such as (but not limited to):

1. How you are remunerated
2. The degree of control your employer exercises over you
3. How holiday periods are granted
4. Who provides any required uniform and/or tools.

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.

Employers should be mindful that even in the absence of a written agreement, certain practices may become implied terms of employment through regular ‘custom and practice’ – particularly if the employer is seen to have consistently adopted them.

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