Employment contracts - essential terms and protections for employers

Employment contracts form the foundation of the employment relationship, establishing legally binding terms between employer and employee. While contracts set out fundamental terms, they are often prepared in tandem with staff handbooks and workplace policies to create a comprehensive framework. While handbooks and policies can be updated unilaterally by employers to reflect changing business needs, contractual terms require employee agreement to modify. Careful consideration is essential as to what belongs in the contract versus policies.

Whether in the employment contract or a policy, some of the key protections employers should consider include :-

• Protecting confidentiality and trade secrets - employees regularly have access to sensitive commercial information that, if disclosed to competitors, could seriously damage business interests. While basic confidentiality obligations are implied into all employment contracts, these are often insufficient to protect modern businesses, particularly given the ease of data transfer and storage on personal devices. Furthermore, after employment ends, protection only extends to true trade secrets without express provisions.

• Intellectual Property Rights - many employers mistakenly assume they automatically own all IP created by their employees. However, while employers generally own IP created in the normal course of employment, the position becomes complex with inventions, creative works, or IP created outside normal duties or working hours. Without clear contractual provisions, valuable IP rights could belong to the employee or have disputed ownership. Essential IP provisions may include full IP assignment and automatic transfer of all current and future rights to employer.

• Restrictive Covenants

• Disciplinary process - essential steps, rights of appeal and potential outcomes.

• Sickness provisions - notification requirements and sick pay entitlements.

• Remote Working Provisions - the rise of remote and hybrid working has fundamentally changed how many businesses operate. This creates new challenges around supervision, performance management, data security, and health and safety compliance. Essential terms commonly include specific health and safety standards for home working environments, clear allocation of responsibility for providing and maintaining equipment, expense coverage and reimbursement policies, comprehensive requirements for handling sensitive information remotely, performance monitoring and privacy expectations, working hours and response time requirements and defined circumstances requiring return to office-based working.

• Notice and Garden Leave - the period between resignation/dismissal and departure creates significant business vulnerability. Employees may have reduced motivation to perform but still have access to sensitive information and business contacts. Key provisions include specific notice requirements for different termination scenarios, PILON calculations for calculating payment including benefits treatment, garden leave terms.

• Holiday treatment - how annual leave accrual and taking operates during notice

Common additional employment terms which may be relevant

• Bonus arrangements - clear metrics for eligibility, calculation methods and payment timing

• Share schemes - specific participation rules and detailed leaver provisions.

• Flexible working - framework for requesting and implementing working pattern changes.

• International work - terms governing overseas working including tax implications.

• Benefits package - detailed provisions for all additional benefits and qualifying conditions.

• Healthcare - scope of coverage, eligibility requirements and treatment during absence.

• Performance reviews - structure of review process and link to pay/progression.

• Social media - guidelines for professional and personal social media activity

• Data protection - comprehensive GDPR compliance requirements and obligations

Employment terms and policies should be reviewed regularly to ensure they remain current with business needs and legal requirements, while maintaining consistency with company policies and procedures.