Following the resounding success of the first instalment of our Small Business HR Masterclass, part two is here! This time we are focusing our advice on terms and conditions of employment.
This one is meaty, so grab a coffee and croissant, and get comfy!
(Other snacks permitted!)
Every employee has a contract with their employer, which sets out the terms of the working contract. These terms can relate to working conditions, legal rights, responsibilities and duties, and expectations on both sides. But they are not necessarily written down – this is part of the psychological contract.
As soon as a person accepts a job offer from you, there is a contract of employment. This contract is much broader than would usually be written down, and there are nearly always implied terms. For example, it is implied that your employee will not steal from you. But you wouldn’t necessarily include this in a statement of terms and conditions.
Often, there is terminology confusion with employers calling the written document they provide the ‘contract of employment’. A more accurate term would be a ‘statement of terms and conditions’. That way, it’s easier to remember that the ‘contract of employment’ is much broader than what is written on a piece of paper.
So, here is the second instalment, where we will discuss your terms and conditions obligations.
1. Written statement of particulars
As an employer, you must provide a written statement of particulars to all employees. Since April 2020, this has been a ‘day one’ right, so make sure your employees have this on their first day working with you.
The written statement is made up of a ‘principal statement’ and a wider written statement.
The principal statement must include:
- The employer’s name
- The employee’s or worker’s name, job title and start date
- How much and how often they will get paid
- Working hours and any variations, e.g., weekend or night working
- Holiday entitlement
- Where they will be working and the employer’s address
- How long the job is expected to last for if it is a temporary role
- How long any probation period is and what its conditions are
- Any other benefits
- Mandatory training requirements
For employees, it must also include the date that a previous job started if it counts towards a period of continuous employment.
On the first day of employment, you also need to provide the employee with information about sick pay and procedures, other paid leave (e.g., maternity leave) and notice periods. If you choose to provide this information separately to the principal statement, it must be somewhere easily accessible, for example, in an employee handbook.
2. The wider written statement
Within two months of your new employee starting work, you need to make sure they have a wider written statement. This statement must include:
- Pension information
- Any information about collective agreements, even if it is to say there are none
- Any other rights to non-compulsory training
- Disciplinary and grievance procedures
As an employer, you have a legal duty to provide this information in writing, within the directed timeframes. However, you can decide how you provide this information, and many organisations choose to provide a ‘contract of employment’.
Here at Nectar HR, we call it a statement of main terms and conditions. It simplifies the legal obligations and ensures that your employees have all the required information on or before their start date.
3. Contractual or non-contractual?
This is an element of employment law, which relates specifically to terms and conditions, that is often misunderstood.
Because of this, it is also often overlooked, which is a grave error in judgment.
For example, we already discussed your legal duty as an employer to provide information relating to sick pay procedures. If your sick pay policy is contractual, and you refer to the amount of Statutory Sick Pay (SSP), you will need to update this policy in line with the annual government increases.
This means that you will have to go into consultation with your employees simply to update a number in a policy. And the same will apply to all your family friendly policies.
This can be time-consuming and frustrating for all involved.
If you have an employee handbook, which is a great tool for providing an overview of larger policies and procedures, e.g., disciplinary, then you will need to be cautious that you do not imply that it is contractual in its entirety. For example, setting out more informal rules such as appearance, expected behaviour, car parking arrangements, etc., are commonplace in handbooks. But they don’t need to be contractual.
4. Notice periods
Notice is the length of time that the employer or employee must serve each other to terminate the employment relationship. It can come in to play in various circumstances where the employee is leaving the business.
Examples include dismissal, redundancy, and resignation.
It’s important to know that there is a statutory minimum notice period, stipulated by law, that employers and employees must provide. As an employer, you can provide a contractual notice period if you wish. Just remember that it cannot be less than statutory.
When it comes to an employee choosing to leave your organisation, they are normally required to provide notice in line with their terms and conditions of employment. During their notice period, employees are generally entitled to the same rights and benefits as they had before notice was served. You can ask employees to take holiday as part of their notice period.
You may also agree to a reduced notice period if it suits both you and the employee. And in circumstances where you don’t want the employee to work their notice period, you may be able to pay them in lieu of notice (sometimes known as PILON).
There are instances where failure to comply with notice periods can constitute a breach of contract. This can be on the part of either the employee or the employer and is known as wrongful dismissal.
For you as an employer – for example, if you dismiss an employee without paying their notice pay, you are in breach of contract. The only exception to this is if you summarily dismiss, i.e., dismiss for gross misconduct.
If an employee refuses to work their notice period, they are also in breach of contract, and you could have recourse to claim damages.
5. Additional contract clauses that protect your organisation
Considering the COVID-19 pandemic, many employers found their terms and conditions of employment did not meet their requirements as they had not considered temporary layoff clauses.
This meant that when they really needed to lay off staff, they had to consult with their workforce, which was costly in terms of time, money, and risk.
Similarly, there are other clauses that are important to consider and have as part of your terms and conditions, such as making lawful salary deductions, making reasonable contractual changes, and recovering training costs (e.g., if someone leaves).
It’s important to consider additional clauses that you might need, even if you don’t need them right now. For example, if you are hiring a sales role, you may wish to consider restrictive covenants, to protect your business (and order book!) if the employee leaves. A garden leave clause may also be appropriate in these circumstances.
Join us for the next instalment, where we will talk about recruitment in more detail.
In the meantime, please check out our HR Consultancy Birmingham.