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As an employer, you must draft your employment contracts correctly. The employment contract is the basis for the relationship between you and your employees, so it is a vital document in your business. The written employment contract contains essential information about your employee’s rights and responsibilities. They can also offer protection should an issue arise. Unfortunately, employers frequently make mistakes when drafting them. This article will explain some common mistakes to avoid when drafting your employment contracts.
Legal Errors in Employment Contracts
Legal errors can be a common mistake in an employment contract. Your contracts should contain legally correct information regarding requirements set out in employment law. For example, when you are paying your employee, this must be at the national minimum wage. There are also other legal requirements:
- entitlement to a specific amount of notice period;
- entitlement to holiday leave;
- working hours restrictions; and
- whistleblowing rights.
The law will override any terms in your employment contract that are inconsistent with them.
Failing to Reflect the Offer Letter
Your employment contracts should always reflect what you have stated in your offer letter to your employee. If the employment contract varies from the offer letter, this could cause:
- disputes concerning which is correct;
- a disappointed employee; and
- a bad start to the employment relationship.
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Contractual Employment Contracts
Whilst the term employment contract has the word ‘contract’ in it; it is not a good idea to make your employee contracts contractual. This is a mistake some employers make. If your employment contracts are contractual, your employee may be able to claim breach of contract if you do not abide by the terms. Furthermore, contractual employment contracts mean that you cannot change the contract without your employee agreeing to the changes.
Weak Restrictive Covenants
Some employers draft restrictive covenants that are unsuitable for the employment contract. A restrictive covenant states what an employee cannot do at the end of their employment, such as not working for a competitor. This can also include confidentiality clauses which most employment contracts should contain. Nevertheless, many employers draft such clauses poorly or neglect to include them.
Importantly, you must be aware that your restrictive covenants can only include what is absolutely necessary to protect your business interests. Otherwise, a court cannot legally enforce them. Therefore, you need to be realistic. Additionally, restrictive covenants should vary between your employment contracts as they are specific to individuals.
Outdated Employment Contracts
Employment contracts are subject to change. Therefore, you must regularly review them to check that they are valid and reflect current employment law. Additionally, as the employer, you may change the employment agreement to increase their salary or reflect a change of address.
Key Takeaways
Employment contracts play an essential role in your business, and as an employer, you will likely come across many of these throughout your business. However, errors in the employment contract can be detrimental to your business. Accordingly, you must ensure that your employment contracts are legally correct regarding your obligations under employment law towards your employees. Furthermore, you must ensure that your consistently review and update them as required.
If you need help understanding common mistakes to avoid in employment contracts in England, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. So call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
You can potentially make many common mistakes in your employment contracts. One of these is making your employment contracts contractual, which means you must follow them strictly, or you could be in breach of contract. It also prevents you from making changes without your employees’ agreement.
You should avoid common mistakes in your employment contracts because they are the key to your relationship with your employees. They state what both your responsibilities are and can be used against you should you face a dispute.
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