When hiring your first employee, the most important piece of documentation is the employment contract. Without it, your business is exposed and could be vulnerable to disputes and issues in the future.
An employment contract also provides your employee with piece of mind and reassurance about their role and your business.
Legally, contracts do not need to be in writing to be valid but obviously it is better for all parties if they are. Most employees however are legally entitled to a Written Statement of the main terms and conditions of employment within two calendar months of beginning work.
What is a Written Statement?
It is not in itself a contract, but is evidence of a contract and it does set out the basic information that both parties need to know. All employees are entitled to this if their contract lasts at least one month or more. The government website has a downloadable template you can use. The written statement sets out expectations and gets you off to a great start.
It should include:
- Employer and employee names
- Start date of employment
- Job title with description
- Details of pay
- Hours and location of workplace
- Holiday allowance
- Notice period
- Pension scheme (see auto-enrolment below)
Create or template?
Employment contract templates can be downloaded from online sources such as ACAS or you can contact an HR consultancy like ourselves, to create a compliant and bespoke template specifically for your business. If you’re looking for more detailed clauses such as post termination restrictions, mobility (ability to relocate an office), deductions from wages, intellectual property or to cover a more complex remuneration package, perhaps made up of commission or bonuses, then you will need a bespoke contract and will need to outsource this to a third party.
When does a contract become valid?
The contract starts as soon as the employee accepts the offer of employment, and by starting work the employee has effectively accepted the terms of conditions on offer.
Once your new employee has accepted your offer and signed their contract, and you have become an employer for the first time, there are a few other items you may need to be thinking about. Firstly, Workplace Pensions Auto-enrolment. Following changes to the pension rules, all employers need to give their employees the option to join a workplace pension scheme.
The employees that must be auto-enrolled into your new pension scheme will:
- be aged between 22 and State Pension age
- earns more than £833 per month (£192 per week)
- work in the UK.
Many small companies opt to work with an Independent Financial Adviser to set up their Workplace Pension. Others may subscribe directly to NEST, the National Employment Savings Trust which was set up by the government to make sure that every employer would have access to a high-quality workplace pension scheme for auto enrolment. Even if you just employ one person, you must provide a workplace pension for your employee. The Pensions Regulator has a useful guide available to download for free.
Download our free Employers-Guide-to-Hiring-and-Managing-Staff.pdf (88 downloads) .