Most employers and employees alike are aware of the importance of the contract of employment. This is the document which sets out the rights, entitlements, obligations and responsibilities of both the employer and the employee in relation to the employment relationship. For the most part this contract is fairly straight forward and deals with everyday issues such as the place of work, job title, commencement dates, remuneration, annual leave and hours of work to name a few. However, far to often employers can find themselves in an insidious position by having a poorly drafted employment contract or even worse still no contract at all! Under the Terms of Employment (Information) Act, 1994 as amended by S.44 of the National Minimum Wages Act 2000 and S.18 of the Industrial Relations (Amendment) Act 2012 every employer is obliged to provide their employees with a written statement setting out the minimum terms of the employment. While the Act states the item’s which must be included in the “statement” it falls far short of addressing all of the issues surrounding the employment relationship. This is why every prudent employer should go one step further and have a robust and detailed contract of employment for every employee. Far to often it is only when the employer/employee relationship breaks down that the employer will truly realise the importance of the employment contract. While a properly drafted employment contract can be the saving grace for an employer against a disgruntled employee a poorly drafted one can be the noose with which the employer is later hanged if there is a dispute.
Perhaps one of the most important aspects of any employment contract are the notice periods, probationary period, grievance and disciplinary procedures. These tend to be the ones that are of the most importance when an employment relationship breaks down and these are the ones that I will briefly address in this article. Under the Minimum Notice and Terms of Employment Acts 1973 to 2005 all employees are entitled to a minimum period of notice. However, a prudent employer should ensure that he has a detailed notice period section provided for in the contract of employment. At a minimum he should ensure that the notice period complies with these Acts. However, a prudent employer will ensure that the notice clause in the contract also deals with other aspects such as payment in lieu of notice, garden leave etcetera. This will ensure that there will be no ambiguity in relation to the notice period and it will hopefully prevent an employee from later taking a claim in relation to inadequate/unreasonable notice of termination.
Another important aspect of the employment contract is the treatment of new employees who are under a probationary period. There appears to be a common misconception amongst most employers that because an employee is on a probationary period that the same rules do not apply to them. This is a fallacy which can unfortunately entrap unsuspecting employers. The probationary period is integral to every employment relationship. It’s the “bedding in period” and it is the time when the employer and employee get to familiarise and assess their new surroundings and their suitability to one another. The probationary period should be no more than 1 year. However, generally it would last for 6 months. While an employee who is still on probation may not be able to take a claim for unfair dismissals as they would generally not have the required service under the Unfair Dismissals Act 1977, they are still entitled to fair procedures. This appears to be a situation that most employers are unaware of and one which tends to catch out some employers. In order to prevent any potential claims an employer should ensure that they have a clear and detailed probationary period clause in their contract of employment. This clause should clearly set out that while on the probationary period the general terms of the substantive contract, including the grievance and disciplinary procedures do not apply to the employee who is on probation. It should also set out clearly what notice and procedures should be followed when terminating the employment of an employee who is still on probation. The most important thing to remember in this situation is that fair procedures are afforded to the employee. This will help prevent the employee from later taking a claim.
The final aspect of the employment contract that is to be discussed in this article is the grievance and disciplinary procedures. A grievance and disciplinary procedure should at a minimum be included in the employment contract. However, it may be more prudent to have a far more detailed one in a separate policy which is referred to in the contract. The grievance procedure is extremely important as it gives the employee a way to resolve matters of concern to them which affect their employment. If there is no grievance procedure in place then the disgruntled employee could claim that they had no options open to them to resolve their issues. If followed correctly and adhered to by the employer it should also help prevent a claim for unfair dismissals if the employment relationship breaks down.
The above is a guide to the main aspects of an employment contract which employers and employees alike should review carefully in every employment contract. Please note that the information provided above is for information purposes only and should not be regarded or relied upon as legal advice.
