Ok, this is not the most riveting of subjects - but could anything be more important in the employment relationship than a contract of employment?
At it's most basic, the relationship between an employer is that the employer pays an employee and expects the employee to work for that pay. Equally, an employee expects an employer to pay them for the work that they do.
There are lots of good reasons for contracts. First of all, if there's a contract both the employer and the employee know what's expected from each other. The employer knows what they're supposed to pay and the benefits they're giving and employees know what they're supposed to get and what their duties are.
I have seen many good relationships between an employer and an employee break up because no contract was provided - this is often the case with commission and bonus payments.
Another good reason is that contracts, or specifically a "statement of particulars of employment" (which must comply with the Employment Rights Act 1996) has to be provided by law within 2 months of an employee starting work. If an employee is going to be working abroad for a period of 1 month before the 2 month period is up then the statement must be provided before the employee goes abroad.
So what needs to be in the statement? What you'd expect really - things such as pay, notice period, place of work, how the employee will be paid, holiday and sickness entitlements, date employment started etc...
Another good reason for an employer to give an employee a contract/statement is Employment Tribunal proceedings. If an employee brings a claim in the Tribunal and an employer has not given the employee a statement that complies with the Employment Rights Act, the Tribunal can award between 2 and 4 weeks' pay (currently capped at £400 for a week's pay). Also, it is not a good start in Tribunal proceedings for the employer if they haven't given the employee a contract!
Contracts should not be just left to gather dust in the filing cabinet. If there is a change to the contract, e.g. the employee has been promoted, has received a pay rise or more holidays, these should be appended to the contract. In some cases, an entirely new contract should be issued. It is not so unusual, even in large companies, for an employee to have worked their way up to a senior management role without the contract having ever been changed.
I generally advise that if at all possible the contract of employment should be agreed and signed before an employee starts work. That way, both the employer and employee are certain of what to expect from each other.
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Disclaimer
This blog post is intended for information only. It is not intended to amount to legal advice or be relied on in legal proceedings and readers are advised to take specialist legal advice at all times.
