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Employment Law - Creating the right staff contracts

Practices must ensure that staff employment contracts meet legal requirements.

When welcoming a new employee to the practice, bear in mind that you have legal obligations to meet (Photograph: istock)
When welcoming a new employee to the practice, bear in mind that you have legal obligations to meet (Photograph: istock)

As a GP partner or practice manager, you may have been recruiting staff for years without ever being quite sure of your obligations in relation to documenting the terms of their employment.

Employers often discover what is missing from a contract only when an employee has a grievance or brings a claim against them. Seeking professional advice can help. Meanwhile, here are a few pointers.

Contract of employment
When you employ someone you enter into a contract. You as the employer are taking on someone else, the employee, to do a job for you, normally at your premises.

In return for the work they do, you will pay them. As the employer, you will account to HM Revenue & Customs for tax and national insurance contributions under Pay As You Earn (PAYE) and give the person working for you the necessary tools to do their job.

Statute law stipulates that an employee is entitled to receive, no later than two months after the beginning of their employment, a written statement of the major terms on which they are employed.

Section 1 of the Employment Rights Act 1996 lists these terms (see box below).

WRITTEN STATEMENTS

Practices need to include:

  • Name of employer and employee.
  • Date employment began.
  • Whether any previous employment is treated as continuous with current employment and, if so, when the continuous period is deemed to have begun.
  • Job title.
  • Place of work.
  • Scale or rate of pay or method of calculating it and the intervals at which it is paid.
  • Any terms relating to hours of work.
  • Entitlement to holidays and holiday pay.
  • Terms relating to incapacity for work due to sickness or injury and provision for sick pay.
  • Any terms and conditions relating to pensions, including a statement as to whether the employer has a current contracting-out certificate under the Pensions Schemes Act 1993.
  • Length of notice an employer is required to give and receive to terminate employment.
  • For temporary or fixed-term contracts, how long the contract is likely to run for.
  • Any particulars contained in a collective agreement governing the employment.
  • Specified details if any employee is to work outside UK for more than a month.
  • Reference to a document that records disciplinary rules in relation to the employee.
  • A person to whom the employee can apply to seek redress of any grievance, and the way in which they can apply.
  • The person to whom an employee can apply if they are dissatisfied with any disciplinary decision relating to them.

Source: Employment Rights Act 1996, section 1.

Evidence a contract exists
The written statement is not 'of itself' the contract of employment, but can amount to strong evidence that there is a contract.

It is usual and good practice to ask the employee to sign a form of acknowledgement that they have received a written statement. But asking them to sign to say they agree the stated terms are correct, is frowned on as the employee may unwittingly bind themselves to terms not previously agreed.

Practices are almost always better off building into contracts the section 1 required terms. But what else might you want to include that is not on the list?

Job description
Most practices will wish to set out in a job description the duties that the job actually entails. In the contract, however, you should only refer to the description in a way that builds in any flexibility you need.

For example, you could say: 'the job description may from time to time be amended by the employer and, in addition to the duties set out in it, you may from time to time be required to undertake additional or other duties as necessary to meet the needs of the business'.

Workplace practices
The statutory dispute and grievance resolution rules were repealed in April 2009, so apart from what section 1 requires, there is no need to build into the contract anything about disputes and grievances other than the employer will comply with the ACAS Code of Practice on Disciplinary and Grievance Procedures.

Citing specific workplace practices (coffee breaks, say) can be a double-edged sword as this could indicate that they are expressed, rather than implied, terms. This could leave the employer with less 'wriggle room' on a specific issue than if you had documented workplace practices more informally - in a non-contractual staff handbook, say.

Pay in lieu of notice
A payment in lieu of notice (PILON) clause is often included in more permanent contracts. This enables the employer to terminate the staff member's employment without the individual working out their notice period.

The absence of a PILON clause does not mean you cannot pay off the individual. PILON is treated differently for tax purposes depending on whether there is a PILON clause in place or not.

Without such a clause, the sum due can be paid gross; with it, you must make the usual PAYE.

  • Andrew Firman is a partner specialising in employment law at solicitors Carter Lemon Camerons LLP, cartercamerons.com
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