Falmouth Chamber of Commerce | for Business in Cornwall

Do I have to give my employees a contract?

The law states that you must give all your employees within 2 months of the start of their employment a statement of particulars of employment. This is a very basic document which must set out the following points:

• Name and address of both parties
• The date when employment began and whether any employment with a former employer counts in terms of continuity of the employment relationship.
• The scale or rates of pay and when it is to be paid and how i.e. Cash, cheque or bank transfer.
• The hours of work and terms and conditions relating to holiday, pensions and sickness
• The length of notice required to be given by both parties if they wish to terminate the working relationship.
• A job title and brief description of the role.
• If the role is not to be permanent the period for which the role is expected to last and if for a fixed date, the date it ends.   
• The place of work or if more than one place an indication of the address and employers address.
• Special provisions if the employee is required to work outside the UK.
• Specify the disciplinary rules which apply or refer the employee to another document (e.g. employment handbook) which contains such rules.

Details of an appeal procedure if an employee is dissatisfied with any disciplinary action.

• Details of a grievance procedure and right of appeal
• State whether there is in force a contracting- out certificate relating to pensions stating that the employment is contracted-out employment (speak to your accountant about this).

Business Link prepared such an example which you can download from their website for free, see the link below. However we advise you to issue an employment contract which will expand upon how your business runs and the individual responsibilities of each employee.

http://online.businesslink.gov.uk/Employing_People_files/Written_Statement.pdf

Is this statement the same as a contract of employment?

No, it is not the same as a written employment contract which usually contains a great deal more information. Depending upon the nature of your business enterprise you may wish to include in your contract details on how certain procedures operate within your organisation such as holiday requests, email and internet procedures, equal opportunity policies, specific health and safety rules and procedures, sickness reporting procedures and sick pay payments.  In particular if you operate a range of employee benefits such as staff discounts on your own products, private healthcare insurance, free parking and childcare vouchers these should be set out in detail in the contract making clear any restrictions or limitations which may apply.

I understand I can restrict my employees from going to work for my competitors and taking confidential information with them? 

Certain businesses such as estate agents, solicitors and hairdressers often impose strict restrictions on employees who wish to move to another employer. These are called restrictive covenants. They restrict where an employee is able to work, with whom an employee works and usually a impose time restrictions on when an employee cannot work in that field within a geographical area. A number of hairdressers for instance cannot work within half a mile of their former employers for a period of six months after leaving.

Certain employers also restrict all former employees from using highly confidential information acquired during their employment such as price sensitive data and client lists. This is a complex area, and as a general rule such information must not be in the public domain. Generally, courts interpret such restrictions narrowly as they reduce the free movement of labour and limit individual freedoms.  If there is any uncertainty in the wording of the contract the benefit of the doubt is usually given to the employee.    

Certainly an employee has no right to copy confidential client lists and details of clients specific business needs.  Before trying to introduce a restrictive covenant you should seek independent legal advice as this area is extremely complex and fraught with uncertainty in terms of the wording of such clauses.

Can I recover all the money I have spent on training my staff if they decide to go to work for my competitors?

The issue here is first to determine if you have a contractual provision which entitles you to deduct such expenditure from an employee’s final wages if they give you notice. If you have no retention clause you cannot make such a deduction as it will be unlawful and you will be faced with an Employment Tribunal claim for an unlawful deduction from wages and breach of contract or a civil claim in the County Court.

Even, if your contract allows, you may not be able to recover all the costs of training. If you provided the training in-house it may be difficult to quantify the costs involved and in any event your business will have already obtained some benefit from the training, therefore to seek a 100% reimbursement will be viewed by the courts as unreasonable.   If the basic training is necessary to undertake the role in the first place it is almost certain you will not be able to recover such costs.

If you agree to fund additional training over and above that normally required to undertake the role that the employee is employed, for you must ensure your contract is sufficiently tightly worded to ensure that you are able to recover such expenses. For instance you may agree to fund an evening class or distance learning course to enable an employee to gain an extra qualification. It is recommended that you provide in your contract a sliding scale over time to recover such expenditure. E.g. in the first year you will be able to recover 100% of the costs if an employee leaves and thereafter for each year/ month worked it shall reduce by a percentage. The reasonableness of such a clause will largely depend upon the nature and extent of the expenditure. In some instances where for instance the training course will provide little or no benefit to the employer it may be wise to ask the employee to contribute a large percentage of the costs themselves.

Do I have to give an itemised statement with each pay packet?

The Employment Rights Act 1996 (as amended) states that all employees are entitled to a written itemised pay statement which sets out 1) the gross pay, 2) the amounts of any deductions such as national insurance, income tax and union dues 3) the net amount 4) where the net amount is paid in different ways the amount and method of payment of each amount.
Is it correct that until my employees have worked for me for 1 year they have no employment rights?

This is not correct, although an employee cannot bring a claim for “Unfair Dismissal” until they have 1 years full service, an employee does have a large number of rights from the first date employment begins. Namely, the right not to be discriminated on the basis of an individual’s age, sex, race, sexuality and disability all apply immediately at the start of employment. The right to a redundancy payment is not obtained until an employee has two  or more years continuous employment.  The rights to request flexible working require at least 26 weeks continuous service.  Therefore if an employee is unfairly dismissed because of their age, sexuality, race, or disability they may be entitled to bring a claim in an Employment Tribunal. Although the maximum award for Unfair Dismissal claims is limited to £65,300, there are no such limits on these types of discrimination claims. Claims based on sex, race and disability have historically been far higher than traditional Unfair Dismissal claims.      

What is Redundancy?

Simply speaking it is a reduction or ceasing of a particular kind of work. This can involve a reduction in the type of jobs required or possibly a complete closure of a business or department. This could also involve a reorganisation of work where a business continues to trade but restructures its workforce to such an extent that different jobs are required and some posts are no longer needed.

Do I have to give my employees a reference if they decide to move to another employer?

No, generally speaking there is no legal obligation placed on an employer to provide a reference. However, for those in the financial services industry such as independent financial advisors there is an obligation imposed by the regulator to confirm the employee is honest and a fit and proper person to conduct investment business. If you are involved in this area you are advised to speak to the regulator before committing pen to paper for further guidance. 

If you do provide a reference it must be true and accurate and a fair representation of the facts. Failure to do so may result in a County Court claim being made for misrepresentation by the new employer and a claim for any losses incurred as a result of employing that person. Also, a High Court claim by your former employee for defamation. Both types of claims can be very expensive to defend.

You need to be very careful when giving references to ensure they contain accurate information.  Always ensure that everything which you state in writing can be backed up by documentary evidence. If you adopt a policy of giving references, ensure you act consistently across your workforce. Do not refuse to give a reference based on a person’s age, race, sex, sexuality, age or disability. Do not forget the employ does have a right to see the reference at a future date. Also be cautious when providing details of an employee’s sickness record where that employee is classified as “disabled” because of the risks of a discrimination claim.

Certain employers adopt a very basic form of reference which simply confirms the following generic information such as employee’s start date, position, number of day’s holiday and salary/pay and benefits package.  If faced with a questionnaire from a new prospective employer proceed with extreme caution in answering the questions. If is often easier to ignore the questionnaire and draft your own response only dealing with those issues you wish to comment upon or simply do a generic reference which is fairly non committal.

Produced by Jeremy Edwards Preston Goldburn Solicitors Falmouth Business Park Bickland Water Road Falmouth Cornwall TR11 4SZ.

DISCLAIMER
This only provides a generic outline of the law as at 12 April 2010, and  does not apply to every factual situation,  and therefore it might not apply to your situation. You must obtain specialist legal advice on the facts of your individual case before you  take any action, and as a result Preston Goldburn Solicitors cannot be liable for any losses you suffer as a result of failing to obtain your own specialist legal advice.