Q I am about to open a new business and plan to recruit 2 full time employees at first. Do I have to prepare contracts of employment for them?
A Once a person commences work for another person or for a company, a contractual relationship exists, regardless of whether or not a contract of employment has been signed. There is no legal obligation on an employer to draft and present a contract of employment to an employee and there is no obligation on an employee to sign a contract of employment. However, The Terms of Employment (Information) Act 1994-2001 (The TEA Act) does require an employer to furnish an employee with a written statement of the terms and conditions of their employment and that statement must be furnished to the employee within two months of the commencement of the employment.
This requirement only applies to someone who is an employee and not to someone who is engaged as a self employed contractor to offer services to a business. The distinction is a subtle but very important one and a full discussion on the differences between a self employed person and an employee are beyond the scope of this short article.
The TEA Act requires quite a considerable amount of detail to be included in the statement of the terms and conditions of a person’s employment. For this reason it is advisable that an employer should spend some time considering the matter and preparing a comprehensive contract of employment. This will not be that much more complicated or time consuming than setting out the terms and conditions of employment. Having a comprehensive contract of employment prepared in advance and discussing it in detail and openly with the prospective employee before the employment starts will create clarity and certainty between the employer and the employee at the earliest possible stage in their relationship. This in turn will avoid confusion and misunderstandings at a later stage that may cause resentment in the workplace and which may lead to expensive and unnecessary litigation between employer and employee. From a purely business point of view employees are much more likely to be valuable assets in a business if they are clear from the outset as to their role in the organization and what is expected of them.
Some of the more important items that must be included in this statement are;
- The statement must set out the full name and address of the employer and employee. This may sound obvious but it might be very important for an employee to understand clearly which of a group of companies is to be the employer and then to make appropriate investigations to make sure that this company is a financially sound company and capable of fulfilling its obligations to the employee.
- The place or places of work must be specified which could be very relevant in circumstances where the employer operates a national brand with multiple outlets throughout the country.
- The job title and a clear description of the work to be carried out by the employee should be recited in the statement. An employer might wish this clause to be drafted as widely as possible. An employee might prefer it to be more restricted. It is important that both employer and employee understand clearly what is expected of the employee before the employee starts the job.
- The date of commencement of the employment and its duration, if it is a fixed term contract, must be included in the statement. Although not required by the TEA Act most contracts will set a mandatory retirement date.
The above are by way of example and are not definitive and an employer should seek legal advice to ensure that the employer complies fully with the legislation.
There are many conditions which apply to employment contracts by implication of law regardless of whether or not they appear in the contract or statement. For example an employer must not engage in bullying or harassment of an employee or treat them unequally.
There are also legislative provisions which cannot be contracted out of in an employment contract such as those contained in the Unfair Dismissals Acts 1997 to 2001 and those contained in the National Minimum Wage Act 2000.
Failure to comply with the TEA Act can lead to a complaint before a Rights Commissioner who has various powers including but not limited to an ability to pay compensation to an employee of a sum not exceeding four weeks remuneration.
Due to the complexity of Employment legislation it is always best to seek experienced legal advice on these matters in plenty of time.
Val Stone is the Managing Partner of Stone Solicitors, a law firm based at 14 North Main Street, Wexford. Stone Solicitors can be contacted on 053 9146144 or by e-mail at email@example.com
Val Stone is an Accredited CEDR Commercial Mediator and a Fellow of the Chartered Institute of Arbitrators.
Visit our website at www.stonesolicitors.ie