Contracts & Handbooks Explained – Macleod & MacCallum

The Written Contract – Is it necessary and what to include?

Is it necessary? – From a strictly legal perspective, employers should provide their employees with a written statement of employment particulars, within two months of employment commencing. Absent a more detailed document, later being issued, this statement will also likely be considered the effective contract. This is why employers will often choose to provide a more detailed contract over and above an initial statement.

The statement of particulars should contain a number of essential features, including; start/continuous employment date, place of work, job title, normal working hours, pay level (and intervals), holiday entitlement, notice provisions, sickness absence, pension arrangements and disciplinary & grievance information.

If there is any change to these particulars then employees should be notified, in writing, of the change within one month of it taking effect. However, the penalties for employers failing to conform to these requirements are not severe. Relevant employees could raise an Employment Tribunal claim but any award would be limited to a declaration, requiring the employer to provide a valid statement, and an award of between 2-4 weeks (subject to a statutory cap) gross pay. Not, perhaps, the biggest deterrent!

So Why Have One? – Other than the legal requirement/risks identified above there are other good reasons for businesses to provide a proper written statement (and/or contract). For example, any business trying to attract skilled employees may find candidates put off if your statement (or contract) does not provide much detail/information. Certain businesses, including within the professional services industry, may also want additional clauses included, particularly for more senior employees. These might include provisions, such as; post-termination restrictions and garden leave, designed to protect the business (at the outset) from a future resignation/departure. Particularly when seeking to include such provisions, expert advice should be sought to ensure any provisions work from both a practical and legal perspective.

However, it is recommended that employers, from whatever industry, have properly drafted written statements (and/or contracts). The fact is that a contract will exist, by practice, even if it is not written down anywhere. Having a binding written document, capable of being referred back to in the event of dispute, can save much difficulty and potential expense in a later Tribunal.

A simple illustration, is where you have an employee who takes the majority of their leave, in the first few weeks of the new leave year, and then resigns. Absent a relevant written provision, there is no contractual ability to reclaim such holiday pay made and, any attempt to do so, would likely lead to a claim for unlawful deduction from wages. However, a suitably drafted and agreed statement (and/or contract), expressly allowing for deduction of holiday payments, in excess of pro rata entitlement, would resolve this.

The Staff Handbook

Perhaps surprisingly, there is no strict legal requirement to provide any written information in a Staff Handbook (beyond that to be included in any statement/contract), other than in respect of Health and Safety. Employers will often, however, include the detail of (for example) their policies on discipline and grievance and sickness absence within a Staff Handbook. There are also good legal reasons why the following policies ought to be included; anti-bribery, whistleblowing, equal opportunities and data protection (particularly from late May with GDPR).

In terms of setting expected standards of behaviour, the following policies are also recommended for most employers; sickness absence, dress code/etiquette, IT/internet use (including social media), drug and alcohol and anti-harassment/bullying. For example, a breach of any one of these policies could relate back to the detailed disciplinary policy contained within the same document. It is important that Staff Handbooks are clearly referenced, as non-contractual documents, allowing terms to be more easily altered as may be required. This would be particularly the case if (for example) any generous sick pay provisions or redundancy terms were included.

Of course, every industry and workplace is different and there will always be particular policies which might have more significance for certain employers. It is important, however, that your Handbook looks and feels the way you want it to and sets the tone for the business – as well as expected standards of behaviour.

Mac & Mac Employment Team, Euan Smith and Graham Laughton, act for a number of local businesses and can be contacted on 01463239393 or employment@macandmac.co.uk.

Fixed fee arrangements can be agreed for Employment Contract and Staff Handbook work.

February 28, 2018