Your employees should have a written statement of terms and conditions of employment or a more detailed written contract, however is it relevant to the employee? Do all your employees have the same contract?

There are a myriad of contract variations and as the employer it’s pretty much up to you what you include, as long as it complies with current legislation. For example, you should not include a clause which is discriminatory, forces an employee to do anything illegal, or provides less than the statutory notice period or paid holiday entitlement.

You should consider very carefully what should be included, what is absolutely essential for example this may be a “Garden Leave” or short time working clause. Equally consider what should not be included. For example, you can insist on a level of behaviour by making this clear in a non-contractual “Employee Handbook” as the process of changing your non-contractual rules is more straight forward than changing an employees’ contractual terms.

You should also be aware that other documents may provide evidence of the contract – for example, the job description, correspondence, collective agreements or company policies if they are in the nature of contractual terms. It is advisable to make clear what is and is not considered to be of contractual status.

Custom and practice in your company can also become part of the contract. For example, if employees come to have ‘reasonable’ expectations of receiving a benefit, such as a bonus, an Employment Tribunal or court is likely to interpret it as a contractual entitlement.

The key to a mutually beneficial employment contract is to ensure that you retain flexibility, while establishing certainty. For example:

• Avoid producing a job description which is too detailed, and include a statement that you reserve the right to amend or add to the employee’s duties, or change their place of work, according to the needs of the business.
• Make it clear if benefits such as bonuses and health insurance are discretionary and/or can be withdrawn. Consider taking advice if you wish to offer discretionary benefits as the courts have, in several instances, decided that benefits described in documents as ‘discretionary’ are, in fact, contractual entitlements.
• Ensure that employees do not come to have a reasonable expectation of a non-contractual benefit. For example, if you always give a Christmas bonus, make it clear under what circumstances you will (or will not) pay

Read part 1 here: Do your employees have a contract of Employment?