Employment Contracts

5. Common Issues

5.1 There are legal restrictions on working hours.

• There are detailed regulations regarding minimum daily rest periods, rest breaks, minimum weekly rest periods, maximum weekly hours, paid holidays and health assessments for night workers.These regulations are complex and you should take legal advice if you have particular concerns on these points.

5.2 Entitlement to annual holiday must be set out in the written statement.

• Employees are currently entitled to a minimum of 4.8 weeks' paid annual leave pro rata. A minimum of four weeks' holiday must be taken. The remainder can often be rolled over to the next year.

5.3 In general, you are not entitled to make deductions from an employee's pay packet unless you have a prior written arrangement or you are required to do so by law.

5.4 Dismissing an employee may give rise to a claim for unfair dismissal or breach of contract or both.

• Make sure the contract clearly states the grounds on which you can terminate the employee's employment without notice or with a payment in lieu of notice.Even in cases of gross misconduct, you must comply with the statutory requirements and follow a fair procedure.

5.5 Benefits must be provided on a basis that does not discriminate, either directly or indirectly, between employees on the grounds of sex, race, disability, sexual orientation, age, religion or philosophical belief, or between part-time and full-time employees. This applies whether they are contractual or non-contractual.

• The terms and conditions on which they are provided should be spelt out clearly and unequivocally.
• Even discretionary payments can lead to a claim of unlawful discrimination.

5.6 The employer normally owns the rights to any intellectual property created by an employee in the course of employment. This should be written into the contract.

5.7 Confidentiality clauses should be included in the contracts of directors and other employees with access to sensitive information.

• Employees are under an implied duty not to divulge trade secrets, both during employment and after it has ended.Set out clearly what you consider to be confidential in the written contract.

5.8 Preventing ex-employees from competing with you is difficult.

• To prevent an ex-employee from setting up in business as a competitor, express terms will need to be included in the contract.To be valid, they must be reasonable, for example any such restriction must only be for a specified period, and must only cover a specified geographical area.
• You may also want to include restrictions preventing ex-employees from targeting your customers or recruiting senior staff.
• If challenged, it will be up to you to prove that restrictions go no further than is necessary to protect your legitimate business interests.