Now we know that this is not the most exciting of topics but the topic of employment contracts can become exciting when you want to rely on them to protect your business and find out that you can’t!
Employment law and employment law interpretation change constantly but when was the last time you updated your contract? Has your contract been reviewed to check that it still meets the demands of your business?
1. What Do You Need to Consider?
For many of our clients they had a solicitor draw up a contract when they first set up the business and they’ve been using it ever since. For others, they downloaded something from Google when they first set up the business and have been using it ever since.
In either case, there are some key things that you need to check:
- Is your contract up-to-date?
- You’d be surprised how many contracts we come across that still reference a normal retirement age even though that became illegal in 2006! Your contract should be reviewed, preferably by a professional every 12 months to make sure that it reflects current law.
- Has your business changed?
- If you’re relying on a contract that hasn’t been reviewed for quite some time then is possible that it doesn’t reflect your current business needs. Does it cover things like short-term lay off, mobility clauses, use of private vehicles? Do the post-termination obligations reflect what you actually want to protect your business against after an employee leaves.
- Is your pension clause up to date?
- Pension rules have changed considerably and you need to ensure that your contract reflects auto-enrolment requirements.
- When did your employees last sign a contract?
- You should be re-issuing contracts to employees whenever there are significant changes in their role. This is particularly important if you want to rely on post-termination restrictions.
2. Issuing New Employment Contracts
Many companies choose not to update their contracts and they fear the re-issuing them to employees will be a complex process that will take up hours of time and they also worry about whether or not they are allowed to make changes.
Yes, you do need to follow a process when you update contracts, particularly if you make changes, however in most cases it really isn’t that difficult. The complex consultations arise more when you are looking to make fundamental changes to terms and conditions.
As an example, if you were to decide to stop paying over time that you’d always paid or remove holiday entitlements that people have had, this can be more difficult. If the changes are to ensure that your contract is legally compliant then the process is really quite simple.
The alternative is that you don’t update the contract and you are then in a position where they don’t offer you the protection that your business needs. It really is worth a small amount of cost and work to make sure that this very important document is up-to-date and reflects your requirements as it’s likely that it will save you a lot of cost and work at a later date!