5 Reasons how your contract can protect your business

Contracts. They are not often documents that you particularly want to read. More often than not, people think they are too long or too wordy or just too boring. Business owners will also sometimes consider it an unnecessary expenses.

In employment relationships, the parties sometimes are even less fussed about these documents because, really, employer want to get the new person on board and embedded into the workplace and the employee just wants to get started with the new role and new challenge that they have agreed to take on.

Bear with us. We are here with your friendly reminder as to why contracts are important, why you need to have them in place and why having the right document will be a benefit to the business as opposed to a hindrance.

1. It clarifies expectations

Your contract will set out the hours and days that the employee is expected to work. This manages expectations and ensures that everyone involves knows what they need to do and when. Your employee cannot feign innocence when they are pulled up for not working past 2pm on a Friday because the contract will clearly state that their contractual hours ends at 5pm (for example);

2. It sets out your rights as the employer

Sometimes, things just do not work out with an employee but you want to make sure that things are done correctly. The right clauses in the contract will give you the right to terminate their employment but put them on garden leave or pay them in lieu of notice (if you do not want them to work their notice). You may also want to consider lay-off clauses that will allow you to temporarily lay-off staff if there is a shortage of work, this is not dissimilar to furlough, just without the substantial Government’s contribution;

3. Sets out the expected engagement

This may seem obvious but sometimes parties do not want to contract indefinitely – so if you want to have a contract that is for a fixed term, you need to have the right documents in place. If you simply agree that the employee starts on 1 November and there is nothing to suggest a fixed term, you could end up in a bit of a bind when it comes to ending the engagement. In short, this allows for the parties to define the relationship;

4. You know how to break up

A little like a pre-nuptial agreement before a couple gets married, having an employment contract means that the parties know how they can walk away and terminate the relationship with the least negative impact – this means that they will know what notice needs to be given and at which point so that it is not leaving the other party in a lurch; and

5.Post-termination expectations are set out

This one is a little like the breakup example – after the employment has ended, you will want the employee to still have obligations of confidentiality and, depending on the industry, you may even want them to have some restrictions as to who they can work for or what that might look like (known as restrictive covenants) so that you protect your business interest, while not restricting their ability to earn a living.

Protecting the business is quite paramount, you have put in a great deal of effort to build or grow or improve the business (and sometimes all three) so why would you not look to ensure that it is protected on all fronts and minimise the risk of Employment related claims by having something as simple as the right contract in place? Do contact us for a no obligations conversation with one of our employment experts to explore your business needs and see what assistance we can offer you.