Bridge HR articles

WHY PROFESSIONALLY DRAFTED CONTRACTS ARE BENEFICIAL TO EMPLOYERS

With many employers looking to make savings where they can as the cost-of-living crisis continues to bite, we have been asked several times why an employer should hire a professional employment lawyer to draft their contracts, rather than seeking cheaper alternatives, such as using online tools or obtaining basic documents. We know that many employers are aware of their legal obligation to provide a document to their employees on day 1 covering basic information, and often that is as far as the document goes. It focuses on providing the employee with the legal minimum. However, we would suggest that the document can be far more useful than this, and be drawn up to work for you, the employer. In our experience:

1. Professionally drafted contracts consider a wide array of issues and avoid problems which could have been avoided by having someone consider the business needs and draft the contract to cover a wide range of eventualities; and
   
   
2. An employment law solicitor will be able to produce a document which does more than simply comply with the legal minimum required, but actually works for the business, giving protection against various possibilities and often saving money in the long run.
   
   

How contracts can work for you

A well-drafted contract should put you in the driving seat, and save you both time and money in the future.

As an example, the High Court has recently made a finding that a bonus “clawback” clause in a contract was upheld, thus meaning that the employee in question had to forego the recently paid bonus after he left employment shortly after.

The employee in question received a basic salary and a very high discretionary annual bonus, which had a condition attached to it that he must remain in employment for 3 months – including not having given or been given notice to terminate his employment – after the date of the bonus being paid. As he had a 3-month notice, this effectively meant the employer would benefit from the employee’s services for a full six months after paying the bonus. The employee had resigned just over halfway through this period and was thus required to repay it. The High Court upheld this, and the bonus was forfeited.

There are few things more frustrating for an employer than to pay out a large bonus to a good employee and have them hand in their notice and go to work elsewhere a few months later. If your contract has covered this in advance, you will be in a position to do something about it. If not, then usually there is nothing that can be done once the event has happened.

Other areas where contracts can be used to help you as employers include:

1. Confidentiality
2. Restrictions
3. Company property – return and payment for damage
4. Sick pay – especially any company sick pay
5. Bonuses/Benefits
6. Holidays
7. Deductions
8. Intellectual Property protection
9. Social Media rules

Takeaway Points for Employers

Your contracts can be some of the most useful documents you have, if you regard them as a business tool to be invested in, rather than a legal obligation to simply produce to “tick a box”.

By regarding them as an investment, they can save you money and time (and legal fees!) and ensure that when the unexpected happens, you are in the best position to deal with it.

Without them, you are often in a position where have to pay out costs you could otherwise have avoided, or are unable to take actions which you would like to.

The focus of our contract work is on helping you keep control of your business and avoid costly issues later down the line.