5 clauses that you did not realise you NEED in your employment contract
Employment contracts are necessary. We are big advocates of them for a whole host of reasons (and you can read about it here —link to the previous post if we post it —).
However, we have no compiled a list of five clauses that you may not think about having in your contracts of employment but that are absolutely necessary, and why.
1. Garden leave and / or pay in lieu of notice clause
It is not nice to think that sometimes, a business will take on employees and they may not work out for one reason or another. You will have the right to terminate the contract for one of the fair reasons for terminating employment, and your contracts will include the required notice period. We are talking about a step further – an added clauses or two that gives you the right to terminate the person’s employment, giving the right notice, but being able to pay it in lieu of them working in one way or another. There are so many reasons why an employer should want to reserve those rights, for example if they are concerned about having a disgruntled employee working their notice when they know they are leaving.
- Pay in lieu of notice means that their employment is terminated almost immediately when you give notice, but you then pay them what they would have received during their notice period (e.g. 4 weeks’ salary); and
- Garden leave means that the employee is simply not working but is still employed for the duration of their notice period.
2. Restrictive Covenants
We are still these come up a lot – whether they are in the contract or not. Restrictive covenants are restrictions on a former employee for when they leave the employment and for a period of up to about 6 to 12 months, depending on their position and role within the business. These restrictions can prevent who the employee goes on to work for or how that employment or engagement may be. Why would you want it? Literally to protect the business interests and stopping an employee leaving your employment and potentially jumping straight into a competitors’ arms, enticing your top 5 clients or customers to jump ship with them;
3. Deductions from salary
No, this clause does not confer on you the power that you might think it does. Having it in the contract does not mean that you can shave off part of the employees’ wages each month as and when you might want to. However, it does mean that if there is a reason to deduct money from their wages then you can do just that. A great example is where payroll may have accidentally overpaid an employee, so instead of having to have a lot of back and forth with an employee, having the contractual right to make deductions from their salary means that you can, within reason, deduct the sums from the following pay-check and confirm that to them in writing;
4. Right to work in the United Kingdom
Of course, you would not want to risk the wrath of the Home Office by employing individuals that do not have the legal right to work in the UK. Really, no business wants or should risk the fine of up to £20,000 per person that is employed illegally. While you should have an onboarding process for employees that includes checking that they have the legal documents in place that confirm that they can legally work in the UK, having a contractual requirement stating as much in your contract means that if an employee does later have their right to work in the UK withdrawn for whatever reason or it transpires that something was missed and they do not have the right to work in the UK in the first place, you can rely on that clause to terminate their contract of employment;
5. Lay-off Clause
This one is an underrated clause unless or until the business needs to rely on it. A lay-off clause allows a business to temporarily suspend employees from working, lay them off, without paying their wages. This is not dissimilar to the furlough that we have come to know during the Covid-19 Pandemic except that the payment that the Government gives the employees in this instance is quite minimal and lay-offs are encouraged to be kept to an absolute minimal period where absolutely needed.
You may not have thought about these clauses being needed and you may still be on the fence about whether you should or should not have them, so why not have a no obligations conversation with one of our employment experts to explore your business needs and see what assistance we can offer you.
*Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*