Five Common Employment Contract Mistakes Employers Make in England and Wales

An employment contract is one of the most critical documents when managing your staff. This is because an employment contract outlines your employee’s rights and obligations in the workplace. This includes your employee’s various entitlements under employment law, such as pay and leaves entitlements. However, a poorly drafted employment contract could give rise to a dispute between you and your employee. This article will explain five common employment contract mistakes employers make to help you avoid facing a dispute in the employment tribunal. 

1. Failing to Update Employment Contracts In-Line With the Law

Employment law is renowned for changing frequently. As a result, you must be aware of any legal changes that will affect your relationship with your employees. However, employers often forget to ensure their employment contracts reflect current employment law. For example, a contractual term may provide:

• a salary that does not meet the National Minimum Wage;
• a notice period that is not within the lawful minimum timeframe; and
• an entitlement that does not provide employees with the legal minimum, such as leave entitlements. 

If a contractual term is inconsistent with your employee’s minimum legal entitlements under the law, this could give rise to a dispute.

2. Lack of Consistency Between the Offer Letter and the Employment Contract

When you make a prospective employee an offer of employment, the offer letter should detail information about their role. If the person accepts the offer, you should transfer the details in this letter into the employment contract. A common employment contract mistake that employers make is not keeping the two documents identical.

If your offer letter is widely inconsistent with the employment contract, your employees may be confused and let down by differing terms. To avoid this mistake, you should ensure the lawyer who drafts your employment contract has access to the offer letter and all other accurate information they require.

3. Including Inflexible Contract Terms 

While you may initially think that including contractual terms can better secure your employees’ rights, employment laws and business models are prone to change. Some issues that arise when you add strict contractual terms include: 

• your obligation to follow the contract by the word, which could give rise to a breach if you fail to uphold your obligation; and 
• if you want to amend your employment contracts, you can only do so with your employees’ permission.

To avoid this mistake, you should state in your employment contracts that your employee must follow your business’ policies. Importantly, you should state that you can amend these policies as you see fit. 

4. Failing to Protect Your Business’ Interests

While your employment contracts are predominantly in place to protect the relationship between you and your employees, it is essential that you also draft employment contracts to protect your business’ interests. For example, your employment contracts should have:

• well-drafted confidentiality clauses; and
• post-employment restriction clauses. 

5. Spelling Errors 

While not directly related to employment law, making spelling errors in your employment contracts is a common mistake employers make. However, making these minor mistakes can have huge repercussions. For example, imagine if your employment contract contained an extra zero in your employees’ wage. Although employment tribunals may look at this reasonably and see that it is an obvious mistake, they can still be strict regarding errors made. Therefore, you should read through your draft employment contracts carefully before finalising them and if possible, get them proofread. 

Key Takeaways

Carefully drafting your employment contracts is important to avoid common mistakes. Employment contract mistakes might ruin the relationship with your workers and escalate to an employment tribunal dispute. For this reason, you should:

• keep up to date with changes in employment law;
• ensure your letter of offer is mostly consistent with your employment contract;
• include flexible contract terms;
• protect your business’ interests through confidentiality clauses and post-employment restrictions; and
• avoid spelling errors.

If you need help understanding common employment mistakes made by employers in England and Wales, 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.

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