Contracts of employment – why does your business need a good one?

Oct 1, 2018 | Terms and Conditions

Many small employers still take the view that employment contracts for staff are an irritating legal requirement, or a constraining document which reduces their flexibility as an employer. In fact an employment contract is not a legal requirement at all, but it is absolutely invaluable as a management tool to small business owners, and can make a huge difference to how effectively a small business manages its people.

Your minimum obligations

Whilst issuing a proper employment contract to staff isn’t a statutory obligation, as a minimum legal requirement you must issue employees with a written ‘statement of particulars’ containing information about some of the main terms of employment.

Technically you can meet your legal requirements by putting that basic information on a bit of paper yourself, or by using a free template you could download from somewhere on the internet.

Why you need something better

Just meeting your legal requirements doesn’t get you any of the benefits a well-drafted contract can bring.  Just as you wouldn’t resort to the lowest common denominator in relation to any of the major commercial decisions of your business; why do it with your staff, your most valuable asset?  You have an opportunity with a contract of employment to do more than meet your legal requirements and to build in all sorts of useful wording.

Define the relationship you want from the start

The contract (written or otherwise) will govern the relationship between you and your employees. If you draft it right to start with, you get to set the tone of that relationship exactly how you want it to be. You get to decide how you want things to work and you get to think ahead in terms of how a contract could work for you in the future, rather than just ticking a box. A good contract gives you a framework for the employment relationship as you want it to be.

A well-drafted contract will enable, not restrict you

Many people think writing lots down will constrain you. In fact it will enable you to manage staff in the way you see fit and with clarity of expectations on both sides.  It can help drive the right behaviour from your employees, avoiding problems arising in the first place, and it will support you when you need to make tough decisions by building your right to make those decisions into the contract.

Look to the future

Your staff might be with you a long time and you don’t know at the start how your relationship with them is going to develop or how the business might grow and change. The contract you issue at the start will remain in force for the duration of the employment and amending terms and conditions or imposing new ones isn’t straightforward and risks souring relationships with valued staff. A little forethought and some decent drafting at the beginning saves all that.

A well drafted contract will guide business owners in managing their staff effectively, helping avoid as far as possible problems arising in the employment relationship and giving managers the tools to deal with them quickly and effectively when they do.


If you want some advice about a contract for your business, do get in touch.