Why is the Employment Contract Important for Key Staff?
At Access HR, we are occasionally confronted with situations where companies were too busy to create and issue effective employment contracts, be they a cut and paste effort, or nothing at all. If you stop for a moment, perhaps think about what the purpose of the employment contract is? The initial response is that it is a compliance matter, start date, rate of ay, annual leave, etc. so the employer has met its legislative obligations under employment law.
Beyond the core terms, the contract is about more than meeting the relevant legislation. A good basic contract will provide for this, and Access HR guides this process for the majority of our client’s employees. Beyond that however, there is a need to consider the deeper content and clauses. If someone is deemed to be a key employee, what makes them key? Would it hurt if they went to a competitor? Have you included realistic restrictive covenants, not only that they must think twice about moving to a competitor, but also a restriction on the possibility of they and another employee leaving to set up in competition to your business? This is a complex area, but a business can give itself a level of protection by drawing attention to this risk, and by doing so in an employment contract, the key employee is recorded as recognising its importance by providing their signature on the contract. Naturally, one hopes that there will not be a need to refer to such clauses, but that hope is better than the hope that it doesn’t arise as there isn’t sufficient protection.
A poorly written contract can represent a failure to protect your business, and potentially at several levels. Given the assurance an appropriately tailored contract provides, a poorly written contract, particularly for a key person in your business is akin to underinsuring a property, and like this costly carelessness, it will most likely only emerge when it is tested in challenging circumstances.
At Access HR, we provide clients with the assurance that the basis requirements in an employment contract are met, but also that we work to identify and support more complex requirements for business owners. Our experienced consultants draw not only on their expertise, but also on our relationship with expert employment law advice through our partners. If this sounds like something you would like to have a no-commitment call with Access HR, reach out to Conor, Ciara or Jimmy today.
