Creating Employment Contracts For SME

SME owners with barely a grasp-full of employees might understandably be daunted by the prospect of putting together employee contracts – particularly if they’re not overly familiar with the legal jingo often associated with employment contracts.

However, aside from it being a legal obligation for your SME to provide new employees with a written statement of employment , an employment contract can help lay out the specific details of the job clearly and unambiguously. The written statement of employment you provide for your employees should include the following:

  • The name of both the employee and employer, and when the employee officially starts work with the company.
  • The address where the employee will work on a day to day basis.
  • All details relating to pay should be noted in the contract – basic pay, any commissions or tiers and how bonuses may be paid. The intervals between payments should also be written down (weekly, monthly etc). Any pension provisions provided by your SME ought to be included.
  • The days and hours of work that the employee will carry out his or her duties.
  • The annual holidays that the employee will be granted and holiday pay particulars. Similarly, any details related to sickness pay and leave should be weaved into the contract.
  • Your SME may wish to include any grievance procedures and policies – these are the steps that will be followed should either party have problems relating to the employee or the company. Beyond that, any period of notice regarding termination and probationary periods can be included.

These are pretty simple and logical points that you should be thinking about when employing any new worker – the employment contract just makes you lay them out to the employee so that both parties can agree and sign on the terms of employment.

If your SME is taking that all important first step of taking on a new hire for the first time, here are some things to keep in mind:

  • Due diligence. Employees form the backbone of any company, so the process of taking on staff must never be taken lightly. Performing a background check is key, and must be done before any contracts are signed.
  • Protect yourself with probationary periods. Including a probationary period within the employment contract terms allows your company to “try before you buy” the employee.  It’s a good way of protecting your company against a worker who passes the interview but just does not deliver the goods as promised.
  • Get a legal employment specialist to paw over your contract. For many SME’s setting up a basic contract template that’s checked by a specialist should also work for any subsequent employees hired by the company. It will not cost the earth to get a legal contract analysed by a lawyer, and it can help protect you and provide peace of mind. There are also several legal templates available online – just be sure these are up to date and cover the existing requirements of employment law.

A thoughtful contract of employment that sets out the basics will help reduce the chances of misunderstandings between the employee and employer some months or years down the line – and will help avoid costly, time consuming disputes and disruptive tribunal appearances.