Legal

Time to spring clean your employment contracts

18 Apr 2018 By Robert Maddocks

Recent regulatory and case law developments mean businesses should take time now to review their contracts, as Robert Maddocks explains

Refreshing your employment contracts annually is what would happen in an ideal world. In reality, very few operate in an ideal world, and many employers simply don’t have the time to do this. 

The onset of the General Data Protection Regulation (GDPR) this May means most businesses will need to change at least some aspects of their employment contracts (in particular, those around consent to process an employee’s data). And they will have to do so in the next few months if they don’t want to run the risk of being non-compliant.

Recent developments such as the changing landscape around employment status, Brexit’s impact on the UK labour market and the removal of employment tribunal fees – which all add up to an increased likelihood of employee disputes – may give shrewd employers pause for thought about broader employment issues too. One of the best ways to mitigate the dispute risk is by having up-to-date signed employment contracts in place. 

With all this in mind, there are several points to think about if you are looking to review your employee contracts:

  • Reviewing your contracts helps to keep them in line with current legislation and changing work practices. This is particularly relevant to the introduction of the GDPR and the requirement to obtain separate consent to process an employee’s personal data. This consent can no longer be implied, so the contract would need to be updated with a separate consent ideally annexed to it. 
  • Update contractual terms as the employment relationship develops. Minor changes can be made by letter, but more substantial amends may require an update of the contract itself. 
  • Keep copies of contracts and letters that amend terms. You may need to rely upon them as evidence.
  • Changes to contracts may damage workplace relations and employee morale; proper management is key. Always ensure there is a business justification ahead of making any changes – never act on a whim.
  • Consult directly with employees or employee representatives informing them of the need for change and, wherever possible, obtain employee consent to the change – preferably in writing. Consider providing another benefit to replace the entitlement being withdrawn. 
  • Be prepared to stretch out your timescale and have a fall-back provision if changes are challenged. 
  • Always include a right to vary terms and conditions unilaterally if necessary, clearly stating the circumstances in which changes can be made. You may not be able to rely on such a clause, but it’ll give you a better starting point.
  • Include provision for garden leave: it can be useful.
  • Consider including restrictive covenants to protect your business from employees. Ensure covenants are specific, focused and reasonable to protect business interests. Be sure to make specific reference to the business, customers, clients, suppliers etc, and include geographical scope. Be sure that the covenants’ duration is no more than necessary, with set off for notice and garden leave. Update the covenants if the employee starts a new position in the company.
  • If you are looking at all your employment contracts, it might be worth asking a professional to audit an example of one of them (or of a few if you have different types) before you begin. They should be able to flag whether anything key is missing so you can then ensure, as much as possible, that this is picked up across all your contracts to ensure consistency.

It goes without saying that if you don’t yet have employment contracts in place for your employees, now would be the perfect time to do so.

Robert Maddocks is an associate solicitor at HRC Law

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