What needs to be in a contract of employment

The Basics Of Contracts

Everything you need to know about what needs to be in a contract of employment and the questions that you as an an owner or working in HR need to cover to protect your business. If you need help in any of the areas below please get in touch and we can help.

First off is your company looking for a Contracts of Employment template
Do you need to review your employment contracts?
Do you need to bring them up-to-date with current employment legislation and best practice?
Do you have specific clauses in the contract relevant to different types of contracts of employment?
- Permanent
- Fixed-term / Specific purpose
- Full-time/part-time
- Casual or zero hours
- Trainees and apprentices
- Young persons
Do you have clauses in your contracts that cover critical areas such as?
- Probation
- The right to search (including devices and computers)
- The right to test for intoxicants
- Conflict of interest
- Other employment
- Directorships
- Restraint of trade and post-termination restrictions
- Right to require the employee top attend a medical practitioner or occupational health
- The use of IT/internet/social media
- The right to disconnect
- Sick leave
- Notice periods
- Place of work and mobility,
- And so on?
Is your contract reflective of the level of the employee? For example, senior management contracts, which usually have additional clauses.
Do you need a Contract for Services for self-employed or independent contractors?

The Terms of Employment

An employer must provide a written statement of an employee’s main terms of employment to an employee within two months of commencing employment.

More importantly, an employer should have a contract of employment in place to protect the employer in key areas and in the event of any future issues and disputes.

For example, does the contract of employment and the employee handbook or the HR policies and procedures, enable you as the employer to:

Vary the place of work (mobility clause)?
Amend the job description?
Monitor the employee’s use of the internet/email/IT or examine their laptop/devices in the event of an issue?
Send the employee to occupational health when you have a concern?
Have the employee tested for intoxicants when you have a concern or randomly (depending on the nature of your business)?

Policies and Procedures

Along with the contract of employment, the employee should also be provided with some very important HR policies and procedures as well as mandatory ones such as disciplinary and grievance.

We recommend that these are a separate set of HR policies and procedures, an employee handbook. They should not as such be built into the contract itself. This allows you to vary and amend the policies and procedures of the organisation over time, whereas if they are within the contract, you will need the agreement of the employee to change anything within the contract.

See our employee handbook section for more information on HR policies and procedures.

Policies such as disciplinary / dismissal should be set out clearly and separately to the contract of employment. The procedures to be followed and the types of misconduct, serious misconduct and gross misconduct should be clearly outlined, to include investigation, hearings, sanctions, appeals, and so on.

The contract of employment should contain a reference to the key policies such as disciplinary/dismissal, probation, bullying/harassment, grievance, and so on. A general reference to the employee handbook should also be contained in the contract of employment. It is also worthwhile referencing the standard operating procedures of the company.

What should not be in a Contract of Employment?

A contract of employment can be changed only with the agreement of the employee.

A key point, therefore, is that certain benefits, which are not required to be stipulated in a contract of employment, should, in general, NOT be provided in the contract, but in a separate policy.

For example, a mistake that employers often make is that, if they have a sick pay scheme, they sometimes provide the details in the contract of employment. This is not required by law, and is not advisable. If there is a sick pay scheme, it should be in a HR policy and procedure, not in the contract of employment. The reasons for this is that if it is in the contract of employment, the sick pay scheme can only be varied and amended with the agreement of the employee. If it is in an employee handbook, it is easier to vary or amend the details of the sick pay scheme. This is just one example, so be vigilant about what is included in the contract. If it is in the contract of employment, it cannot be changed without the employee’s agreement.

Useful Terms

Depending on the industry and the nature and responsibility of the role, it may be useful to consider a range of clauses or terms in the contract. For example:

Use of company car / company vehicle
Use of company laptop / tablet / mobile / devices
Monitoring use of computers / devices
Monitoring use of company mobile phones

Is your company protected if you want to check phone records, computer use, and email or internet history?

Is your company protected if there is an issue with accidents while driving company vehicles, or the use of company vehicles?

Is your company protected if the employee has an accident or is clamped when driving their own car for work purposes?

You should also consider having a clause regarding work permits.

In the event of poor performance or behaviour during the probation period, is there a clear probation policy, which will be followed?

What is the notice term during probation? You may have a 1-month notice period in the contract, but perhaps during probation you may wish to have a lesser notice period.

Retirement age should also be covered in the contract. Many employers have failed to provide for this. If it is not in the contract, then you cannot force or make an employee retire at a certain age.

Other useful clauses to include in the contract of employment include:

Right to search
Right to test for intoxicants
Return of Company prooperty when on leave or on departing the company
Probation policy, probation extension or termination of employment during probation, probation notice period each way
Intellectual property
Confidentiality/Non-Disclosure
Conflict of interest
Post-Termination Restrictions
Data Protection
Notice period each way

When Updating Contracts of Employment

It is important to consider carefully the steps to take if you wish to update employee’s contracts. This can cause great concern and anxiety among employees, even if it is just to bring them in line with current legislation and trends. A careful plan to execute this well is important.

What if an Employee refuses to Sign a Contract of Employment?

You should maintain a signed contract of employment on file for each staff member.

If a staff member refuses to sign a contract, you should maintain an audit trail to demonstrate that they have been provided with a contract of employment, and be able to show what contract that is. Letters/emails to the employee and discussions with the employee will be essential as evidence here.

For new employees it is easier. The new employee should not start without an offer letter, contract of employment and job description – all of which should be signed and dated.

Promotions / Change of Role

When an employee is promoted to a new role or they change their role within the organisation, this is an opportune time to update the contract of employment, and to bring the contract up to the current highest standards.