Employers Safeguard Your Business

Employers Safeguard Your Business

If you are a business owner, you will no doubt be focused largely on your target customers and how best to market and sell your products or services to them, while keeping costs at a minimum, especially in this economic climate. An important piece of advice we give is not to cut corners when it comes to your employees. Well drafted contracts of employment and employee handbooks are critical in safeguarding your business. Money set aside for legal services in this area will be well spent, especially if an issue or dispute arises.

In our experience, one of the biggest concerns, especially with small businesses, can be the lack of a written employment contract. This presents difficulty to employers on two levels. First, it is a violation of the Employment Act 2000 (the “Act”) (130 KB PDF) which requires all employers to provide their employees with a Statement of Employment. Second, in the event of a dispute, the lack of clear, written terms leads to “he said, she said” situations, making it more difficult to prove matters one way or the other.

The Act sets out the minimum requirements for a Statement of Employment, such as job title and brief description of the work, the wage to be paid, normal days and hours of employment, length of notice the employee is obliged to give, etc. Employers would do well to be aware of these and other requirements. It should be noted, however, that the Act provides only the bare minimum requirements. We always recommend a well drafted employment contract covering many other matters which are important in the employment relationship.

By way of example, a probationary period is not required by the Act, but we strongly recommend one be included to give flexibility to the employer so that they can release the employee during the period if the employment relationship is not working. Failure to include a probationary period means that the employer can only rely on the termination provisions under the Act or risk an unfair dismissal claim being made — something which no employer wants to deal with!

Employment contracts can also contain useful provisions relating to confidentiality which may be applicable in certain commercial contexts. In addition, restrictive covenants are important tools which are used to limit an employee’s actions during and after their employment. They can play an important role in deterring or preventing an employee from entering into competition with their employer or from taking customers with them when they leave. Unfortunately, we have seen instances where not having these terms in place, especially for management level employees who have access to important customers or “know-how”, has been devastating to the employer’s business.

Employee handbooks are also helpful because they set out the company’s policies, including matters such as dress code, grievance procedures, data protection policies, etc. A handbook is an invaluable tool that outlines clear policies and procedures for all employees, and thus, establishes some level of certainty in the workplace. Both handbooks and contracts of employment are documents that must grow and adapt with your business. It is important to review and update them periodically.

Remember to ensure that you have in place well drafted contracts of employment and employee handbooks to safeguard your business.