The legal relationship between employer and employee is largely one of contract, but also reflects employment legislation and common law principles. Statue sets out the minimum legal requirements that must be met. However, in many cases, the contract between the employer and employee will provide for better terms and, where this is the case, the more favourable contractual right will apply. Whilst a contract of employment is not a requirement in itself, employees are entitled to a written statement which contains various prescribed details about their employment, as set out below.
That said, a well-drafted statement or employment contract can enable employers to anticipate issues arising in the course of the employment relationship, pre-empt disputes and assist to protect the employer’s business, for instance if the employer and the employee part company.
It is not uncommon for cases to come before the Isle of Man Employment & Equality Tribunal (the “Tribunal”) where the terms of the contract are not adhered to or they are inconsistent with the legal requirements. The absence of a written statement, though, attracts particular legal liability and is sometimes raised as part of a Tribunal claim by a disgruntled employee (i.e. to add to their “firepower” and maximise their claims). See, for example, our previous article on the Tribunal decision of Deborah Wendy Lace v Langham Limited, where the Tribunal penalised the employer for failing to provide written terms within the prescribed timeframe, emphasising this was a “serious breach of the statutory obligation”.
A further aspect of the requirement to provide written terms and particulars of employment (which is quite often overlooked) is that a statement must be issued within four weeks of the employment commencing. The primary purpose of the written particulars is to provide information plus avoid misunderstanding and mismatched expectations with the hope of reducing conflict in the future. It is also important that the written statement is reviewed regularly and updated as necessary. No end of disputes have arisen because a change in role, responsibilities or working practices has not been reflected in the contractual documentation. Moreover, it can significantly affect the employer’s negotiating position on such matters as, for example, restrictive covenants and ownership of intellectual property which may ultimately be business critical!
The written terms and particulars must include:
- names of the employer and employee;
- date employment began;
- date when ‘continuous employment’ began (which is relevant for accrual of statutory rights);
- job title;
- whether the employment is permanent or “limited term”;
- place of work;
- scale or rate of remuneration or the method of calculation;
- intervals at which remuneration is paid;
- hours of work and any terms and conditions relating to normal working;
- holiday entitlement, including any entitlement to bank holidays and holiday pay;
- any sickness and pension entitlements;
- notice entitlement of both parties with respect to termination of employment;
- any collective agreements which directly affect the terms and conditions of the employee;
- details as to any work required outside the Island which will last longer than one month, including duration of such work and the currency in which the employee is to be paid and any additional benefits;
- any disciplinary rules and procedures, including who the employee can appeal to if they are dissatisfied with any disciplinary decision (this may refer to a document which is reasonably accessible to the employee); and
- a specified person to whom the employee can apply for the purposes of seeking redress of any grievance.
Whilst there are certain provisions which must be included within in a written statement, as set out above, there are also provisions you may wish to include that can create a lot of value in terms of anticipating issues and protecting the employer’s interest at the outset of the employment relationship. For example, an employer may look to include provisions relating to remote working, garden leave, payment in lieu of notice and (as mentioned above) restrictive covenants and intellectual property. A well drafted contract can save an employer time and money in the long run!
Any changes to the written particulars must be notified to the employee in writing within four weeks of the change.
A copy of the contract must be kept for a minimum of 6 months after the end of the employment – so hang fire on shredding! From a practical perspective, employers may wish to retain a copy of an employee’s contract for longer than this following termination to reflect the period within which claims can be brought in contract before they become time barred.
Just as a reminder, employment legislation prevents workers signing away or giving up (also known as waiving) their statutory employment rights. The only exception is where the employer and employee have entered into a compromise agreement conciliated by a Manx Industrial Relations Officer.