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Contracts of Employment

ARTICLE ORIGINALLY PUBLISHED APRIL 2008

David Wright has 25 years experience in human resources and is the employment law and practice advisor for Habia.

He travels the country advising salons and provides employers with essential documents like contracts of employment and disciplinary and grievance procedures.

Here is his advice for dealing with contracts of employment.

The issues concerning you and your team are likely to be the same whether you have one small salon or a chain of larger salons. In this new series, we will look at issues such as recruitment, terms and conditions of service, sickness and discipline issues. In this article, we look at contracts of employment.

Who should have a contract of employment?

All employees - permanent, part-time, and temporary staff - should have one. The law requires they have one within eight weeks of taking up the post.

However, I would advise issuing a contract prior to an employee starting work.

The contract specifies the basis of the appointment and your expectations; it ensures that the employee clearly understands them prior to starting work.

What should be included?

A contract is a binding document on both parties and should be carefully worded. By law, only the following needs to be included:

  • Start date.
  • Job title.
  • Place of work.
  • Remuneration.
  • Hours of work.
  • Holiday entitlement.
  • Sick pay arrangements.
  • Disciplinary and grievance procedures.
  • Pension arrangements.
  • Notice arrangements.

However, I recommend you also consider including:

  • A probationary period.
  • A facility to recover training costs.
  • A facility to recover overpayments.

I have seen contracts that run to 20 pages, but beware trying to include a paragraph to cover every possible eventuality. It makes much more sense to have a separate set of salon rules.

Many salons use contracts that have been produced for other industries or downloaded from the internet. However, when they come to use them they often discover that neither they, nor the employee, actually understand what the content means.

How long can a trial period last?

It's entirely up to the salon. The key issue is that after 12 months service an employee has the right to go to an employment tribunal and claim unfair dismissal.

A probationary period is probably your most valuable business tool. Three months probationary period is probably too short; why give yourself 12 weeks to decide if an employee is up to the job? In my view six months is more reasonable.

Have you considered setting new employees targets? For example: 'by the end of your probationary period your column will be earning a specified amount, your client retention will be a specified percentage'. You could consider having a clause giving you the facility to extend the probationary period.

Can I have a clause with a facility to recover training costs?

In short, yes, but it needs to be carefully worded and needs to specify what is recoverable, over what period and how you would recover the money.

How else might I use my contract to save costs?

The notice that an employer must give an employee is defined in law and is one week for each year of service. However, the notice you require from the employee is entirely up to the salon and is defined in the contract.

Many salons quote a month but, in my experience, salons don't want staff remaining on the premises and they are paid for not working their notice. Why not ask for one week's notice? Some salons only ask for 24 hours.

Similarly with holiday entitlement set to increase to 28 days in 2009, you might have a clause where you can fix a week's leave to coincide with a quieter period of the year, for example, February.

What happens if staff don't sign their contract?

My initial advice would be to ensure the contract is given to prospective employees before they begin working and therefore avoid the problem ever occurring.

If the employee is unhappy with any of the clauses and the problem cannot be resolved, then effectively the employee is declining the offer of employment.

If the employee has started and refuses to return their contract and the problem cannot be resolved you should write to the employee stating that: "as you are continuing to work and receiving the benefits of the terms and conditions of the contract I am assuming you have therefore accepted them." It is not an option to say they accept only selected elements of the contractual offer.

My staff don't have a contract of employment but we all understand the agreement. Is this a problem?

It certainly is. All employees are entitled in law to a written statement of particulars or a contract of employment. However, far more significantly, if you have a problem with an employee and it ends up at an employment tribunal you are almost defenceless.

Indeed, the absence of a contract and/or disciplinary procedure can result in any financial penalty being doubled.

Of equal importance, your business is probably missing an opportunity. A contract isn't just an annoying piece of administration; it is a tool that can be the most valuable document in your armoury for maximising the utilisation of your workforce.



David Wright Personnel

Phone - 01302 563 691

Mobile - 07930 358 067