Pitfalls of writing your own Contracts and Handbooks
As Metis HR assess existing contracts and handbooks for clients, we thought we would share the most common pitfalls of writing your own contracts and handbooks. There is a legal requirement to provide a written ‘statement of particulars’ within two months of the employee starting work and most employment contracts will cover this. An employment contract can be formed by no more than a handshake. Or there may be some evidence of an offer and acceptance, consideration, and serious intent to make a legally binding commitment. Therefore, an agreement between both parties on the key terms is all that is required.
Although only certain terms are expressly required by law and others are legally implied. It is good business practice to create a comprehensive agreement for the purposes of certainty, mutual reassurance and the avoidance of a disagreement at a later date.
Those of you that do have written contracts of employment may not appreciate that an Employment Tribunal may override aspects of your contract because working practices are inconsistent with the written contract you may provide your employees. It is important, therefore, that as the employee’s role, position or other contractual clauses change then the contract must also be reviewed and renewed.
However, to save on costs, some employers decide to create their own contracts from a hotch potch – mish mash of clauses made up of other company contracts or what they have found off the internet. These are some of the common mistakes we find in Contracts of Employment and Staff Handbooks that we review.
We find many employers make this common error. Statutory paid minimum leave per year is 28 days (including bank holidays). This must be specified in the contract. Employers may not permit any of this 28 day leave to be carried over into the following leave year, unless under exceptional circumstances. It is the employer’s responsibility to ensure that employees take all their statutory leave each year. If you offer above 28 days’ leave you are offering contractual annual leave in addition to statutory minimum leave. It is vital that arrangements for accruing this and how and when it is allocated are specified in the contract and differentiated from statutory paid minimum leave.
Failure to include a comprehensive deductions clause exposes the employer to an automatic unlawful deduction from wages claim on the grounds that the employer does not have the authority to deduct such things as overpayments or monies owed to the employer by the employee. The absence of this clause may make it difficult to assume the employer’s right to deduct from an employee’s wage.
Maternity Pay and Leave: Parental and Paternity Leave. These are statutory rights and can sometimes be complicated in what the employee is eligible to, their financial entitlement and what you should be doing as an employer. With expert advice you can ensure you won’t be leaving yourself vulnerable to a discrimination claim. We found a recent contract we were assessing to be 6 years out of date with current legislation in the content of this clause!
Right to Work:
We find this clause is regularly missing from a contract. It is critical that you include this clause in the contract and that you ensure checks are successfully completed. It demonstrates you have made appropriate identity checks as required by the Border Agency and is part of your defence against any prosecution for employing people without the Right to Work in the UK. The maximum fine for this is currently £ 2 000.
These are very important policies and procedures that all employers should have. However, we find they are nearly always non-compliant or giving too much information which doesn’t allow for more flexibility for you as the employer. Ensure your policies and procedures follow ACAS code of practice guidelines at the very least and stick to them! Follow your own policies to the letter. The amount of employers who find themselves in hot water when they have carried out a disciplinary on a member of staff and not followed their own procedures is staggering. Always refer to your contracts and handbooks before you act, these policies are there to protect you and your business as well as informing your employees of the standards of behaviour expected.
Would you like more information on the pitfalls of writing your own contracts and handbooks or would like a professional assessment of the compliance of your current HR documents? Call us on 01706 565332 or drop us an email and we’ll get right back to you.
Metis HR is a professional HR Consultancy based in the North West of England supporting clients across the country. We specialise in providing outsourced HR services to small and medium-sized businesses. Call us now on 01706 565332 to discuss how we may help you.