Contracts of Employment - What Employers Need To Know

Running a business has never been described as easy. In the current phase of the economic recovery, many employers are finding that growth in your business will often bring with it the need to employ more staff to cope with the increased activity.

Depending on the type of industry you are in employing staff may be a relatively straightforward process, although what is often more difficult is to find staff with the right levels of expertise and the ability to learn quickly and maintain the standards of the business you run. 

In this regard, it makes sense to have a good contract of employment in place so that employees know exactly what is expected of them at all times during their employment.  By the same token and to avoid businesses from exploiting their staff and treating them unfairly various types of employment legislation are in place to protect the rights of employees whilst they are employed with your organisation. 

Is There A Difference Between A Contract Of Service Vs Contract For Services?

An employment contract is a highly regulated contract of service. It can be distinguished from a contract for service where an independent contractor might agree to fix a broken window, install an electrical appliance or fix your computer. 

Whilst it can at times be difficult to distinguish between contracts of service and contracts for service, as a general rule of thumb, if someone performs regular work and receives a regular wage or salary from an employer it would be safe to assume that the person is engaged in a contract of service.

This may appear to be a moot point, however is in reality very important, because if a person is deemed to be engaged in a contract of service then they are recognised by law as an employee and will gain the benefit of a host of common law, statutory and constitutional rights. 

If you are not sure what type of relationship you have entered into it would be a good idea to seek clarification and record your intentions in writing

Why have a contract of employment?

A contract can be a contract of employment even though it is not written down, however, it is to the benefit of both the employee and their employer to record the main provisions of the contract in writing. At Poe Kiely Hogan Lanigan, we would always advise employers to provide a written contract on the hiring of a new employee or a significant change in terms of employment.

It is important to note however that employers and employees should be aware that under the “Terms Of Employment (Information) Acts” the basic terms of employment should be provided to an employee in writing within two months of the commencement of their employment. 

This is oficially referred to as ‘Statement of Terms of Employment’ and is a legal requirement in Ireland. If you are an employer and you appoint a new person to a role you will need to ensure that you provide them with a Statement of Terms of Employment at your earliest convenience and at a minimum within two months of their commencement with you. In practice the document is often referred to as an Employment Contract.

What Does A Contract of Employment Actually Need?

It should also be noted that it is not sufficient to simply note down the main terms you can think of, as the legislation sets out the information which must be provided in a Statement of Terms of Employment. These include:

• The full name of employer and employee
  
• The address of the employer
• The place of work
• The title of job or nature of work
• The date the employment started
• If the contract is temporary, the expected duration of the contract
• If the contract of employment is for a fixed term, the details 
• Period of notice to be given by employer or employee
• Hours of work
• Details of rest periods and breaks as required by law
• The rate of pay or method of calculation of pay
• Pay intervals
• Details of paid leave
• Sick pay and pension (if any)
• Details of any collective agreements that may affect the employee’s terms of employment 
• The pay reference period for the purposes of the National Minimum Wage Act 2000
• That the employee has the right to ask the employer for a written statement of his/her average hourly rate of pay as provided for in the National Minimum Wage Act 2000

Failure to comply with this provision may be harshly punished by the Workplace Relations Commission (WRC) so if you have recently employed someone in your business, make sure you issue them with this document within 2 months and that you include each of the points mentioned above. 

Prudent employers will also seek to include additional provisions in contracts of employment such as grievance procedures, general conduct requirements, anti-compete clauses, and health and safety policies. These can be incorporated in the contract itself or by referring to policy documents such as a “Staff Handbook” in the contract. 

Some other obligations on an Employer under a contract of Employment:

As has been previously mentioned, employment is a heavily regulated area, mainly in order to protect the rights of the employee. This means that there are several other aspects of legislation which place additional requirements on an employer.  These include:

• Payment of Wages Acts
  The Payment of Wages Act requires employers to provide a payslip to each employee which should set out all deductions from their wages/ salary.  Employers should be aware that only certain deductions are allowed by law such as personal income tax, USC, trade unions subscriptions, etc.  There are provisions for unlawful deductions to be heavily penalised by the WRC.
  
• Organisation of Working Time Act
  The Organisation Of Working Time Act sets out maximum working hours and minimum rest periods.  It also imposes an obligation on employers to keep detailed records of their employees working time e.g. start time, finish time, hours worked and leave taken.  Failure to keep such records is an offence.
  
• Safety, Health & Welfare at Work Act
  The Safety, Health & Welfare at Work Act imposes an obligation on employers to provide a safe place of work.  In this regard, it is therefore required that employers prepare and circulate safety statements and risk assessments for all work activities to be carried out.  Breaches of the provisions of this act are offences which can be prosecuted by the Health and Safety Authority or the Director of Public Prosecutions.
  

Summary

To grow and scale your business it is inevitable that at some point you will need to employ people to take over key tasks. Whilst some industries are more labour-intensive than others the rules remain the same and several key items of legislation exist (and are regularly updated) in order to protect the rights of employees.  It is important that you make yourself familiar with the key aspects of this legalisation and try to stay abreast of any amendments or changes which may be forthcoming throughout the year. In this regard, the first place to start assessing your standing in relation to employment legislation is to review your contracts of employment and any handbooks which exist.

At Poe Kiely Hogan Lanigan we have many years experience advising employers to ensure their operations are compliant with employment legislation and defending any claims which may arise from employees. Similarly, we often advise employees in relation to their employment position and on what their next steps should be.  

Should you wish to speak to one of our employment law solicitors on a confidential basis to understand the options available to you, please click the button below to book an appointment.