Employment contracts & documentation are critical to your organisation's workforce legal risk management.
Where you are looking to amend the terms of an employment contract, perhaps in response to structural or policy change within the organisation, careful handling will also be critical to ensure employees’ rights are met.
As part of your HR risk management efforts, documents should be reviewed regularly to help ensure that they continue to comply with the law and continue to reflect the obligations of the employee and the employer. This in turn can prevent workplace disputes and claims for breach of contract or employment law.
Conducting reviews however can be challenging for in-house teams given the extensive and varied nature of the documents, from the employee handbook to individual policies and specific forms for everyday procedural use.
Reviewing employment contracts and HR documentation on a regular and proactive basis is best practice to mitigate risk and avoid non-compliance in key areas including:
Policies Organisational policies, such as a disciplinary and dismissal policy, grievance policy and health & safety policy, may be included within a staff handbook or act as separate policies. Additional policies may be necessary to cover additional areas of people and talent management, such as personal e-mail and internet usage, details of company benefits and workplace surveillance.
Amending contract terms There could be many reasons why an organisation may be looking to vary contractual terms, from changing duties, hours, pay rate, job title or place of work to harmonising contract terms. Specialist advice is recommended particularly where an employee does not agree to the proposed new terms.
Types of contract As different types of employment become commonplace, including fixed term contracts, and as flexible working agreements are fast becoming the norm, employers are exposed to greater risk in ensuring each contract of employment is legally compliant and provides sufficient clarity of terms and protection of the organisation’s interests.
Right to work All UK employers must conduct specific document checks before employing an individuals. The checks are prescribed by the Home Office and must be conducted properly to verify that every new employee has valid permission to carry out the work being offered. This applies to all employees, regardless of nationality. Where the worker has time-limited right to work, the organisation must conduct further checks to confirm continued lawful status. Failure to meet these duties is costly, with substantial fines for employers per breach.
DavidsonMorris’ employment lawyers work with employers from across the UK to help ensure their HR contracts and documentation are compliant, supporting effective risk management and facilitating positive working relationships across the organisation.
We support at every stage of the employee lifecycle, from recruiting to onboarding and verifying right to work through to ongoing HR management terms and policies.
We can help:
We can also help where there are issues relating to employment status, and determining whether an individual is employee, director, worker, consultant, freelancer, to ascertain their rights and your obligations. Contact us for advice.
When it comes to the employment lifecycle, there are a number of different employment documents that will need to be drawn up and retained across the employment lifecycle.
In some cases, the provision of a document may be a mandatory legal requirement, such as a written statement of employment particulars, or making and retaining copies of right to work checks on all employees, regardless of nationality.
In others, the provision of or access to a particular document might be to ensure that the employee fully understands their employment rights and responsibilities, from the employee’s individual written contract of employment to workplace policies and procedures applicable to the entire workforce.
At the end of the employment relationship, there may also be employment documents to record any agreement reached between the employer and employee, such as a settlement agreement on termination of employment on mutually acceptable terms.
As with any aspect of the employment lifecycle, there are a number of documents relevant to the recruitment process, including drawing up the job specification, placing a job advertisement and providing those responsible for hiring with clear selection criteria.
The job spec, job ad and selection criteria all play a key part in creating a suitable candidate pool and finding the right person for the role. For example, attracting top talent is not always just about salary, where the inclusion of employee benefits, such as enhanced annual leave or flexible working arrangements, are key incentives that should be included in any ad or job spec. Equally, care must be taken with wording used in recruitment paperwork, where the job description must be specifically targeted to desirable applicants.
When it comes to both the job spec and job ad, as well as the selection process, care must also be taken to ensure that any documents are fair and non-discriminatory, where employers are at risk of unlawful discrimination, even during the recruitment process.
Under the Equality Act 2010, allegations of discrimination are potentially far-reaching, from the way in which a job role is advertised to the way in which a successful candidate is selected, where all job applicants have a right not to be unlawfully discriminated against because of any one of the protected characteristics under the 2010 Act. These include age, race, religion, disability, gender reassignment, sex and sexual orientation. For example, when writing a job advert, an employer cannot ask how old someone is, or use phrases like ‘highly experienced’ or ‘recent graduate’, unless these are specific requirements of the job role, otherwise risk discrimination on grounds of age. Equally, an applicant or shortlisted candidate must not be asked about their religious beliefs or sexual orientation.
At this stage of the employment lifecycle, it is important for employers to have in place clear workplace policies to provide guidance for those responsible for hiring within the organisation, including a workplace policy on equality and diversity. In this way, the employer can help to ensure that their recruitment personnel do not fall foul of the law.
It is also important that any applicants can access documentation outlining their rights when applying for a job, including for those suffering from a disability. This is because employers are also under a statutory duty to make reasonable adjustments for applicants who may be disadvantaged by reason of their disability, for example, arranging for an interview to take place on the ground floor or providing a disabled parking space.
When it comes to onboarding, this process is far more reciprocal. At this stage, the employer will require a number of documents from the successful candidate, including proof of identity and evidence of their right to work, as well as being obliged to provide a number of documents to their new-starter, including the contract of employment.
There are all different kinds of employment contracts, where much may depend on the nature of the employee’s job role and their level of seniority. Many organisations have standard contracts for junior members of staff reflecting just minimum statutory rights. For example, under the Employment Rights Act 1996, an employment contract may make provision for the minimum period of notice on termination of employment or the minimum payment in the context of redundancy. However, for more senior employees, the contract may include enhanced provisions relating to notice, redundancy and various other rights.
There may also be different types of contracts for part-time staff, as well as those working during term time only, for example, in a educational environment, or on a zero hours basis.
However, regardless of the nature or level of the employee’s role, care must be taken when drawing up any employment contract. As the primary document setting out legally enforceable terms that govern the employment relationship, and where those terms cannot usually be changed without the employee’s agreement, this must adequately reflect the parties’ respective rights and responsibilities from the outset. If either party breaks one of these terms, this can amount to a breach of contract for which legal redress can be sought.
A contract of employment does not have to be in writing although, by law, all employees are entitled to a written statement of employment particulars. This is not an employment contract, but should set out the main conditions of employment when someone starts work.
Under the Immigration, Asylum and Nationality Act 2006, all UK employers are required to conduct prescribed right to work checks on any new employee. This is because employers have a responsibility to prevent illegal working by ensuring that anyone employed by them is not prohibited from undertaking work in the UK by reason of their immigration status.
An employer can check a new starter’s right to work in one of three ways: by using the services of an Identity Service Provider (IDSP), by using the online Right to Work Checking Service or by conducting a manual document check. The way in which a right to work check is conducted will depend on the new-starter’s nationality and the way in which their immigration status is held. For example, IDSPs can only be used to digitally verify the identity of British and Irish nationals, while an online check will be suitable for migrant workers whose immigration status is held in digital format, such as those with eVisas.
However, in all cases, the employer will be required to take and retain a copy of the right to work check. It is only by having this documentary proof that an employer will be able to establish a statutory excuse against any hefty civil penalty. If an employer is found to be employing an illegal worker where they are unable to evidence a prescribed right to work check, they could be fined as much as £20,000 for each worker without lawful immigration status. The employer also runs the risk of being prosecuted if they employ someone when they know or have reasonable cause to believe that they are not allowed to work in the UK, where this offence is punishable by an unlimited fine and up to 5 years’ imprisonment.
When it comes to right to work checks, the employer should securely retain the necessary data, in electronic format or hard copy, for the duration of employment, plus 2 years. A follow-up check may also be needed for those with time-limited permission to be in the UK.
In addition to any policy on equality, diversity and disability — which should cover the entire employment lifecycle, not just the recruitment process — there are various other workplace policies and procedures that should be put in place. These include a policy on health and safety, as well as written disciplinary and grievance procedures.
There are several other workplace policies that can bring significant legal protections and practical benefits for an employer, including a policy on sickness absence, annual leave and flexible working arrangements. However, policies must be tailored to the nature and needs of the organisation. Any employment documents that have little relevance to the workplace, or promise things that do not happen in practice, can cause significant problems in the event of any dispute, not to mention undermining employee engagement and morale. Workplace policies are about creating a fair and efficient workplace, where employees know what is expected of them and what they can expect in return from their employer.
Under the Health and Safety at Work etc Act 1974, all employers are under a statutory duty to ensure, so far as is reasonably practicable, the health and safety of their employees at work. Additionally, the law provides that every business must have in place a policy for managing health and safety in the workplace, where any organisation employing five or more employees must document its health and safety procedures in writing.
This policy should set out the general approach to health and safety in the workplace, explaining how the employer will manage the health and safety of its staff and those visiting its premises. It should provide details of the practical arrangements in place, including risk assessments, employee training and using safety signs or equipment. It should also include who will do what and when, identifying those people within the workplace with responsibility for health and safety, including designated first aiders.
All employers have a duty to supply employees with details of the disciplinary rules and procedures for disciplinary action and appeals that apply to them. While many larger organisations will have separate policies to deal with issues of misconduct and poor performance, smaller businesses will often have a policy that sets out the procedure for dealing with both, although their grievance procedures should be set out separately.
The disciplinary policy should set out in detail the standards of conduct expected of employees and the procedures that will be followed for dealing with any misconduct or poor performance, as well the possible sanctions that may result from disciplinary action, including summary dismissal for gross misconduct. In contrast, the written grievance procedure should explain how staff can raise their own complaint, within a formal context, as well as what steps will be taken to investigate and resolve any grievance raised.
In respect of both disciplinary and grievance procedures, these must meet the minimum requirements prescribed by the statutory ACAS Code of Practice. This provides practical guidance for employers and sets out principles for handling disciplinary and grievance scenarios at work. Employers are not legally bound to follow this Code, although its guidance will be taken into account by an employment tribunal if the employee lodges a claim against the employer. Further, the tribunal will also be able to adjust any award made by up to 25% for unreasonable failure to comply with any provision of the ACAS Code.
When an employee leaves there are again number of documents that may come into play, including settlement agreements.
A settlement agreement is a legally binding document, regulated by statute and settling any claims arising out of the employment relationship. It is essentially a written agreement in which an employee will agree to waive their right to bring certain claims before the employment tribunal, typically in return for a lump sum cash payment and a favourable reference on termination of their employment.
Settlement agreements are designed to document the terms upon which the parties to any workplace dispute have decided to resolve that dispute without recourse to tribunal proceedings. However, this type of agreement can also be used in the absence of any existing dispute, for example, to bring the employment relationship to an end on agreed terms, subject to the employee not pursuing any unfair dismissal or other tribunal claim.
There are strict statutory requirements when it comes to the content and procedure surrounding settlement agreements, where any failure to follow these requirements can invalidate that document. As such, as with any other legal documents for employment law purposes, specialist employment document advice should always be sought.
Non-disclosure agreements (NDAs) are also sometimes used in relation to contract termination, such as to agree to keep the terms of a settlement agreement confidential.
There are a number of different stages in the employment lifecycle, from recruitment through to termination of the employment contract, all of which will require different types of documents to be drawn up in writing and retained by the employer.
Your employer may request several different documents from you when starting a new job, including your passport as evidence of your identity and to prove your right to legally undertake work in the UK.
In England and Wales, the law around employment contracts is governed by both statute and common law where, absent any express written provision, there are minimum statutory requirements that will be implied into a contract, such as minimum notice periods.