Why you shouldn’t use employment contract templates in the UK
Employment contracts in the UK are one of the most important documents any business owner will get drawn up, so it pays to get them right!
There are a lot of employment contract templates available online and they’re usually free, or at least cheap, but that doesn’t mean they’re designed to do the job.
Those cheaper options are tempting, of course, but they are also a huge waste of time and money, because they generally don’t do the job they were designed to do.
What is an employment contract?
An employment contract is a legally binding document that outlines the expectations, rights and obligations that will govern the relationship between an employer and an employee. There are different types of employment contracts that are designed for specific situations, such as contract or seasonal employment. These contracts ensure that your business is protected and that employees have a clear understanding of what’s expected of them in their role.
Why is an employment contract important?
As a business, the reason you put employment contracts in place is to protect your organisation should something go wrong between you and your employee(s). This means that the contracts you sign should reflect the nature of your business and foresee specific potential issues that could arise in the future.
If you don’t have an employment contract in place there are still implied terms that automatically form part of a contract even if they are not written down, by not having clarity on what these are you have no idea of the risks your business may be exposed to.
If there is nothing clearly agreed between you and your employer regarding a particular issue, it may be covered by an implied term – for example:
Employees not stealing from their employer
Necessities of the job such as a driving license
Providing a safe and secure working environment
By putting an employment contract in place, you mitigate risk and give yourself peace of mind.
Why are bespoke employment contracts important?
All businesses are unique, there may be similarities across industries but all have their own way of doing things, which means all employment contracts should be unique too.
We often find that it’s the thinking behind putting an employment contract in place that’s missing for a lot of businesses. No business should be thinking ‘I need a contract’. The problem is not that you need a contract, the problem is that you need your business to be protected and clarity on the expectations you have for each person employed by your organisation — a contract just so happens to be the best way to do that.
Imagine you’re looking for a roof for your house because you want to stop the rain coming in. The problem you want to solve is the rain coming into your house and ruining everything inside. Therefore, you need a roof. However, if you buy a cheap roof off of the internet that doesn’t fit your house and still lets the rain in — you’ll have spent a lot of money and got nowhere nearer to solving your problem.
The same goes for employment contracts, you need to make sure they are the right fit for your business so that they do the job they need to should it come to it.
Contracts are a key part of creating the right culture for your business
The way you handle each encounter with your employees builds your company culture. When you get a template that isn’t relevant to your organisation you are missing out on the first step in creating the right culture for your business.
A bespoke employment contract is an opportunity to authentically protect the needs of your business and show your employees that the relationship between them and the company is being taken seriously.
From a legal compliance perspective, an employee has a contract with you as soon as they accept an offer of employment. By not putting a contract in place ASAP the business concedes control of agreed terms regarding how the employer and employee will work together. It can be difficult to try and renegotiate these terms further down the line.
Employment contract templates are too generic
Templates or DIY contracts generally provide a broad overview of each clause rather than specific details. Whilst this may appear a good solution, generic clauses may not account for role-specific requirements where they need to.
A template contract may be more specific in an area that is not relevant to your organisation or too broad in an area that is a specific risk to your business. That’s why it’s important to tailor each of your employment contracts to the specific role they are being created for, otherwise you run the risk of not complying with the employment law and could end up in a serious employment dispute that could impact your financial performance as a business.
Employment contracts can be ambiguous
When the specifics are missing an employee may find it hard to understand their obligations and duties. A legal agreement should be clearly understood by both parties. Confusing information in an employment contract may lead to disputes between employers and employees and if an employee doesn’t understand a particular clause in their employment contract, it will likely be you as the employer that pays the penalty.
How can you make sure you have the right employment contracts in place?
Take time to reflect on the organisational culture you want to create, the risks your business is uniquely exposed to and who you’re going to be giving the contract to.
For example, most internet research says that a senior employee should give at least three months’ notice to your business before they leave. However, if you are working with data that is very sensitive do you want to give someone three months’ notice when you know they have already signed out of your business? In this case just having a line about being able to pay notice in lieu of working notice in the contract may be the difference between someone leaving well and not disrupting the wider team (or influencing them) and someone causing a lot of problems for your business.
Being able to reflect on what can go wrong is key so that you can create a document that directly addresses those concerns, be that a contract, policy or process.
Remember to review your contracts regularly too, changes to legislation can mean that your employment contracts no longer meet minimum standards. Contracts should also reflect any changes to an individual’s role or changes to the business as a whole.
How does Gingko People approach employment contracts and how can we help you find the best solution?
We take a people over process approach. We know the rules inside out and we know how important employment contracts are for both parties. When done right, employment contracts are a source of motivation, of genuine employee engagement and of mutual respect.
We don’t use any employment contract templates, although we do have an agreed structure for most of our legal documents to ensure consistency across the business. We listen to you, our clients, we clarify the outcome needed and then populate the document with the right clauses and specific details based on your requirements and our experience of what can go wrong.
We do this day in day out, we know how it works and we know what’s needed to give you peace of mind. As experts in human resources and employment relations, we take the stress and confusion out of creating employment contracts and provide clarity for both you and your employees.
If you’ve been searching for the perfect employment contract template, stop looking and come and chat to us about putting the right practices in place that will reduce risk for your business.
