Why It’s a Good Idea to Update Your Employee Contracts
When was the last time you gave your employee contracts a check-up? With laws and regulations changing often, it’s super important for your business to keep those contracts fresh and up-to-date. We sat down with our team to answer some common questions about employee contracts.
How often should employee contracts be reviewed and updated?
Ideally, your employee contracts should undergo an annual review to ensure they align to current legislation and the company’s needs. There’s no strict requirement for contracts to be reissued, we recommend reissuing them when you make any changes and highlighting these with your team.
When should an employee contract be updated?
Consider updating and issuing a new contract in the following instances:
- – Promotions or new job roles
- – Disputes requiring negotiation for new terms
- – Organisational changes such as mergers, reorganisations, redundancies, or relocations
Top Tip: Remember, changes to contractual terms with an existing employee usually require agreement, unless the change is driven by law such as adjustments to minimum wage or enhanced employment rights.
We also advise when you’re increasing benefits, like an increase in holiday allowance, that you let your employees know about this change. It may be easier just to make contractually, but it is better all round to be open and transparent with your staff.
Who should handle the writing and updating of contracts?
Whilst it may be tempting to write contracts yourself, it’s best to leave it to the professionals. HR or legal professionals who are familiar with contractual requirements and employment terms and conditions should be the ones to review and update employee contracts.
What is often overlooked in employee contracts?
Several critical clauses can be overlooked, including clear provisions on overtime, post-termination restrictions, and protection of confidential information and intellectual property rights. It’s easy to miss some of the finer details, which is why we always recommend a HR or legal professional writes your employee contracts.
Top Tip: Certain clauses such as mobility clauses or restrictive covenants need to be drawn up with particular care to ensure they can be relied on in the future.
If employee contract terms were discussed verbally, do these still count?
Yes, any terms agreed verbally are as legally binding as terms that are written down. It is helpful if you put everything discussed and agreed in writing too.
Should employee contracts be bespoke for every company and employee?
There’s no problem in using a basic contract template – it would be impractical to write a contract from scratch every time! However, this basic template should include all the necessary legal clauses and requirements of the company and what it offers to the employees.
Leave spaces in the template so you can add the specific requirements for that employee and their role, i.e. hours of work, pay, location, job title etc.
You can add bespoke clauses if needed, specific to the individual or role. For example, clauses for company cars, commission structure, restrictive covenants, and so on.
What problems will I encounter if employee contracts aren’t updated?
As employment law is continually evolving, this can mean employment contracts that were once fit for purpose can lack essential elements that protect a business and pose significant risks:
Legal compliance
Changing employment laws may render old contracts non-compliant, potentially breaching legal requirements.
Disputes
Outdated contracts complicate dispute resolution and can leave businesses vulnerable during legal proceedings. The employee contract will be one of the first documents that is checked during a dispute!
Business stability
Contracts serve as insurance for businesses, ensuring key terms protect company interests and adapt to changing needs.
What legally needs to be in an employment contract?
Whilst it’s good business practice to know what’s required in an employee contract, a HR or legal professional will be able to advise on, or draw up, contracts to save you missing some of the crucial elements we’ve discussed.
They’ll be looking to include
- – Employer’s name
- – Employee’s name
- – Start date
- – Date that ‘continuous employment’ started for an employee.
- – Job title and brief description
- – Employer’s address
- – Places and addresses where the employee will work
- – Pay, including how often and when
- – Working hours, including which days and how their hours or days can change
- – Holiday and holiday pay, including an explanation of how it is calculated if the employee leaves
- – Sick leave and pay
- – Any other paid leave
- – Any other benefits, including non-contractual benefits such as childcare vouchers or company car schemes
- – Notice period
- – How long the job is expected to last (temporary or fixed term)
- – Any probation period, including its conditions and length
- – If the employee will work abroad, and any terms that apply.
- – Training that must be completed, including training the employer does not pay for.
Top Tip: Items can also be provided in a supplementary statement, or the employee can be told where to find it, i.e. a company handbook. This can include terms and conditions for pension schemes and collective agreements. Your HR team will be able to advise you on where best to place all of the important information for your employees.
Employee contracts are more than legal documents; they’re the cornerstone of successful employer-employee relationships. By giving them a regular review, drafting them carefully, and sticking to legal requirements, you’ll protect both parties and create a workplace that’s stable, productive, and happy!
If you still have some questions or need a hand with your contracts, book a free 30-minute chat with us today. We’re here to help!