Employment contracts are a crucial, yet often overlooked, aspect of the employer-employee relationship. At Consult HR, we see firsthand how these documents shape decisions for business owners on a daily basis. Unfortunately, many business owners either neglect to implement formal contracts or rely on outdated versions that no longer meet current needs. In this post, we’ll explore why employment contracts are so important, how they set clear expectations and protections, and share essential tips to help you avoid common mistakes and maximise the benefits of these foundational agreements.

1. Why have contracts?

An employment contract is far more than a list of job duties; it establishes clarity and legal protection. A thorough contract will cover essential areas like job responsibilities, salary, benefits, working hours, and policies on confidentiality and data protection and many more. This clarity prevents disputes, ensuring that both parties know what to expect from the outset.

Contracts also offer legal protection.  From our experience, the reality is the contract becomes most important when a conflict arises and is put under the microscope.   

The first thing we say to clients seeking advice is: “Let’s take a look at what your contract says”. When this answer isn’t clear, which is normally due to a poorly written contract, employers face unnecessary risks.

2. Avoiding Common Pitfalls

We see recurring mistakes in employment contracts that leave businesses vulnerable:

• Using Outdated Contracts: Relying on an old template risks non-compliance and potential legal exposure.
• Lack of Customisation: Every business is unique.  Whilst it is tempting to use documents from another company, we do not recommend it. It is essential that you have a contract and policies drawn up that are bespoke to your business requirements.
• Missing Key Clauses: Critical clauses, like probation periods, non-compete, deductions from pay and notice periods, are sometimes left out, creating complications if an employee underperforms or leaves to join a competitor.

3. Is it legally binding?

Employees should receive a written statement of terms and conditions of employment within the first 8 weeks of commencing employment. Failure to issue such a document can result in additional compensation awards of between 2 and 4 weeks pay.  It may also be surprising to know that verbal agreements can be legally binding, otherwise known as ‘custom and practice’.

4. Regular Reviews Are Essential

Contracts should never be “set and forgotten.” With the recent consultation of the ‘Good Jobs’ employment rights bill we are likely to see some movement and changes in employment legislation in Northern Ireland. Therefore, going forward, keeping up to date with employment law and updating contractual documents is important.  To receive regular updates join our e-mail list by logging into the website on www.consulthr.co.uk and insert your details in the pop up box.

5. Have you considered HR Software?

Once the employment contract has been signed by the employee, you should store these in a safe and secure location where only authorised individuals have access.

You may want to consider using software to conveniently store all your employment documents in one safe place and move towards a ‘paperless’ system to save you time, where you can approve holidays in an instant, check if an employee has signed a contract and it is on file, send a general communication to all staff in minutes.

At Consult HR our clients have access to such software. Some of the functions include:

Please get in touch if you would like a demo!

If you need help with your employment contracts or you are interested in the HR Software feel free to reach out to julie@consulthr.co.uk or call on 07858089006.