Employment Contracts: Yes or No?
Recently I've had a few clients talk about their nervousness in growing their team. Perhaps they've had issues with employees in the past.... Or are worried about taking on the wrong person! What if the needs of the business change in the future, or the employee stops performing for some reason?
So I asked Helen Christie of Face 2 Face HR to provide you with some information about employee contracts, because I don't want the lack of a little knowledge to hold you back from growing your business!
Enjoy and please do comment below with your views, experiences or questions.
For many SME’s taking on employees can be daunting. Right from the beginning employees have a whole raft of employment rights that you may not even be aware of.
Often business owners decide to take on someone they know, friends or family, to try and limit the possibility of there being problems - this frequently means they don’t bother with an employment contract. But what happens if your employee starts to take advantage of your friendship, knocking off half an hour early or taking lots of time off?
In any employment relationship it is sensible to be clear from the start what is expected from both sides; a well thought out employment contract is almost like a pre-nuptial agreement - we all think we don’t need one - until we do. By then it’s too late.
"A well thought out employment contract is almost like a pre-nuptial agreement." @HelenF2FHR
The contract should set out how you will work together, hopefully for a long time to come, so getting it right up front can save you a lot of worry, hassle and stress later on.
Do you have to have a contract?
The minimum legal requirement is that you provide your employees with a written statement outlining basic information like pay, hours and holidays. This needs to be done within 2 months of an employee starting work.
There are lots of free templates on the internet that will help you meet this minimum obligation, however be aware that they are designed to cover statutory employment rights only and won’t include things that protect you or your business.
What else do you need?
As a business owner I’m sure you gave plenty of thought to the terms and conditions that govern your client relationships, making sure that you protect your business and the client is clear what to expect without switching them off to your offer. Why wouldn’t you take the same approach to your employees?
Earlier I likened the employment contract to a pre-nup. Think about what you want from the employment relationship, what you need in return and what you think it is reasonable to do for your employee. A good contract will help navigate the ups and downs of the relationship, and can even help you bring it to an end if necessary.
But it’s complicated isn’t it?
It doesn’t have to be. If you get it right, then both sides will be clear from the outset what is expected. It can help you when you need to manage difficult situations because your employees are already aware of what you expect and how you will deal with anything that breaches the contract.
As your business grows the contract will help you to remain consistent with whoever you employ.
No relationship is without ups and downs, so you need to make sure your contract sets out your rights as well as your employee’s rights. This will be essential if and when you do have to make difficult decisions.
It is inevitable that your business will evolve and change over time and that means that your employees will probably have to too; some of them will be adaptable, capable and willing, others won’t. So, whilst you can’t factor in every eventuality, considering up front what you might need in the future and what might happen means you are proactively managing your business and not leaving it to chance.
Once you have set terms and conditions it isn’t easy to change them so it’s essential that you apply some planning and forethought when you are drafting your contract because it will stop you having to potentially cause unrest by trying to change it later.
If you think that you might need to change premises, shift patterns or prevent people taking your client database with them to their next employer, then make provision for it in your contract now.
The employment contract is the most important document you will issue your employees. It will provide clarity for everyone and allow you to manage your relationship with your employees with the minimum fuss. Then you can get on with running your business!
Get in touch if you would like some advice on a contract for your business.
About the Author
I am an HR Consultant with face2faceHR in the North West and I provide tailored HR solutions for SME’s. I aim to help business owners and managers to effectively manage their employees so that they are more productive and more valuable to the business.