Employment Contracts - Periodic review recommended
It is good practice to periodically review staff contracts to check that they are up to date in terms of legislative changes and also that they appropriately protect the employer’s position for that staff member.
Many employers produce a contract upon commencement of employment and then don’t look at it again unless and until the relationship is under threat. These contracts sit in personnel files gaining dust but as time passes these contracts may not be fit for purpose.
In many organisations an employee may start their career in a relatively junior position but, over the years, be promoted to a senior level. As a junior employee it is likely that the contract may:
- Be basic;
- Contain a relatively short notice period;
- Not contain a detailed “Confidentiality Clause” or Intellectual Property protection;
- Not include post termination restrictions or only contain clauses that prohibit competitive acts for a very short duration.
By way of example, you take on a staff member as a junior employee but after 10 years they have worked their way up to a Sales Manager. Their contract has not been updated other than letters confirming variation to salary and job title. That person could leave, set up in competition or go to work for a competitor and you are unlikely to have any or adequate protection to prohibit this built into their employment contract.
We recommend staff contracts are reviewed upon promotion/change of job role and on an annual basis. Often it makes sense to do this at appraisal time. This means that the contract can be reviewed and either an updated version or a side letter can be issued ensuring the contract remains appropriate for the staff member’s role.
Posted on 03/09/2015 by Ortolan
