Contract of Employment: 5 Tips for Employers and 5 for Employees*
We set out why it is important for both the Employer and the Employee to have agreed and signed the Contract of Employment prior to employment commencing.
From an Employer’s perspective the benefit of having a Contract of Employment agreed and signed off prior to the employment commencing employment is as follows:
- If negotiations and disputes arise in respect of a particular term of the contract, it gives the Employer time to address the issue, or if it is not possible to agree a particular term, the Employer is in a better position than a case where an Employee has commenced employment and a dispute arises.
- Having a contract in place prior to commencement ensures that an Employee knows what the position entails and there is less risk of a dispute arising.
- If the Employer has the contract dealt with prior to the Employee starting and for example remuneration has to be negotiated, this will assist an Employer as early as possible knowing how this new Employee’s remuneration package will affect the company budget. Having a contract agreed and signed in advance of employment commencing, is better for the Employer from a planning point of view, for example if the new Employee is a Manager, this may have a big impact on other Employees within the company.
- If an Employer gives proper consideration to having Employees contracts dealt with prior to taking them on, they are more likely to engage the services of Employment Law Solicitors, or a good HR Company to ensure the drafting of appropriate contracts. This will lessen risks on an Employee being able to bring a claim against the company for not having proper terms and conditions of employment in place. Equally as the Employer must give written notification within 5 days of an Employee starting setting out certain matters and within 2 months of other matters all these Statutory Obligations will be covered.
- If an Employer has the contract in place prior to the Employee taking up the position, it is a better assurance that if the Employee is going to end up rejecting the employment then an Employer knows sooner rather than later. This means they are more likely to take their time, in selecting another candidate for the role. An Employer should not fee as pressurised by time to find a replacement.
From an Employees perspective the benefits for having a Contract of Employment agreed and signed in advance of commencing employment is as follows:
- The Employee is in a better negotiating position at this time, having key terms of the contract agreed prior to taking up the position means the Employee’s in a stronger position, and less likely to be coming from a position of feeling it’s too late I have to get on with it now, for example the Employee may have left another position to take up the new role. If in that type of scenario, Employee’s often adopt an attitude of I need to make this new job work, regardless of the fact that there may be a term in their contract that they are not happy about.
- If an Employee has the contract agreed and signed in advance, they are more likely to arrange to have legal advice taken prior to signing it. We regularly have clients in who have signed contracts and 90% have never read the contract, and/or there is an unfavourable term in the contract. The difficulty with this is it is quite common for there to be a clause in the contract, setting out a person should seek legal advice prior to signing. The client is now in a much more difficult position than if they had taken the time to obtain legal advice prior to signing.
- The Employee who has agreed and signed the contract prior to commencing, knows from the outset what the role will entail, or as is often the case the contract may be quite vague on what the role entails. This does not always cause a difficulty as certain jobs, it would be quite apparent what would be considered the normal duties of a particular role. However, the same does not apply for every position available out there. If it is the type of position, that the duties and functions are not clearly discernible now would be a good time to seek to agree with the Employer in writing about what the position entails.
- Certainty, it gives an Employee much more certainty about what the remuneration package will entail. We often have clients in who have come for advice. And they do not know what the agreement or what their actual benefits are for example the issue of a bonus often causes difficulty, as does pension rights. This is the time to look at these terms, it assists employees with planning for their future.
- An Employee should look at the negotiations and the manner in which an Employer deals with the possible Employees request to have the contract agreed prior to commencement. This should serve as an indication as to how an Employer will handle issues with an Employee going forward. As in most relationship, the manner in which parties conduct themselves from the beginning is usually setting the tone for the rest of the relationship. Therefore, if you are in a position where an Employer is quite dismissive, and not wanting to engage in any real discussions, take this as a sign of how an Employer may deal with any matters effecting the employment relationship going forward.
Lastly, we would set out that having terms and conditions of employment agreed in advance instils a greater confidence in both parties to the relationship thus ensuring both are getting off on the right foot.
Published in Lawyered Law 16th March 2021.
*Before acting or refraining from acting on anything in this guide, legal advice should be sought from a solicitor.
*In contentious cases a solicitor may not charge fees or expenses as a proportion or percentage of any award or settlement.