Categories
Employment Law

How to Draft an Employment Contract-What Express Terms Should Be Included?

An employment contract in Irish employment law is made up of implied terms and express terms.

employment-contract-express-terms

Implied terms fall into 4 categories:

1. Those implied by statute

2. Terms implied by custom and practice

3. Terms implied by law

4. Terms implied by collective agreements in unionized employment.

There is nothing the employer can do about these implied terms. However, the express terms-agreed between employer and employee-are a matter for negotiation and agreement between the parties.

What express terms should be included in a contract of employment? (Note: there are some terms which must, by law, be included in a statement of the terms of employment which must be given to an employee under the Terms of Employment (Information) Act 1994. There are other terms which are strongly advisable. And there are yet more terms to consider depending on the particular role)

1. The Parties

Who the employer is is a vital term and it may not be entirely clear unless set out in the contract.

2. Job Function/Description

The temptation for the employer here is to have as widely drafted a job description as possible. However, this can cause problems if the need for redundancy arises as the employee may claim that their job description requires them to carry out duties different from those which the employer wishes to make redundant.

3. Hours of Work

The hours of work term of the contract should deal with

• Overtime (paid or not)

• Shifts

• Breaks.

The most important piece of legislation in this area is the Organisation of Working Time Act, 1997.

It is advisable for the employer to also provide for the right to lay off or place employees on short time (there is no general right in law to do this).

4. Place of Work

It is advisable for employers to have a geographical mobility clause in the contract as an express term. Here is an example:

The company reserves the right when determined by requirements of operational efficiency to transfer employees to alternative work and it is a condition of employment that they are willing to do so when required.

However, the employer must act reasonable and responsibly in this regard.

5. Exclusive Service

Decisions in Irish employment law have held that employees have the right to work for another employer in their spare time. However, this work could not conflict with their duties of confidentialiy and loyalty to their employer.

6. Probation

Any probationary clause should not exceed 12 months. It should also provide for an extension of the initial period (say 6 months) and should have a notice period less than outside the probation period.

Reference should also be made to the disciplinary procedures of the company not applying during the probation period. However, if this is the case, then a probationary policy should be drafted by the company setting out what procedure will apply during the probationary period.

Even though an employee is on probation, s/he is still entitled to fair procedures and natural justice when it comes to termination.

The wording of the probationary period is also important. The District Court in Ireland has held that the following clause gave rise to an entitlement to the employee to be paid for the remaining 5 months of a probationary period when he was dismissed after one month:

The first six months of this contract shall be a probationary period.

This one clause is a good example of why you should have a legal professional draft any contract of employment you require.

7. Term of Contract

The term or duration of the contract is only applicable for a fixed term or specified purpose contract.

8. Salary/Pay

This, clearly, is a very important clause in any contract of employment. Setting out basic salary is straightforward; bonuses and commissions can cause problems if not set out clearly.

The employer will seek to have the payment of a bonus at his/her discretion; employees will be keen to see how they can become entitled to a bonus.

Termination during a bonus period should also be clarified and agreed.

9. Holidays/Annual Leave

Minimum holiday entitlements are provided for in the Organisation of Working Time Act, 1997. (See how to calculate holiday entitlements)

However, this clause should also make provision for when holidays can be taken as well as recognising that any extra holidays would be over and above the statutory entitlement to holidays and public holidays.

10. Company Car

The entitlement to a company car should be set out in this clause with clarity as to the make, model, value, etc. allowable.

11. Sick Pay

The sick pay clause will set out whether the employer operates a sick pay scheme or not. There is no general entitlement to sick pay in Ireland.

However, this entitlement may be implied from custom and practice in the workplace.

The employers may operate a sick pay scheme or an income continuance plan or health care insurance entitlements.

This needs to be clear from the outset in the employment contract as sick pay is an area which causes great difficulty for both employer and employee in the absence of clarity.

12. Pension

If a pension is part of the remuneration package, reference should be made to it in the contract and if there is a company pension scheme it is important that an employee is not excluded in such a way as to leave the employer open to a successful claim for direct/indirect discrimination.

13. Retirement Age

There is no statutory retirement age in Ireland (save for in the public service and a small number of industries). For this reason, a retirement age should be spelled out in the contract.

It is worth noting that just because there is a retirement age specified in the pension scheme does not mean that there is an implied retirement age in the contract of employment.

14. Grievance Procedure

The method of processing grievances in the employment should be referenced here. Employees should be bound to exhaust the internal grievance procedure first before resorting to outside bodies.

The statutory code of practice, Industrial Relations Act, 1990 (Code of Practice on Grievance and Disciplinary Procedures) (Declaration) Order, 2000 (Statutory Instrument 146/2000) contains the principles to be applied by the employer in any grievance and disciplinary procedure.

15. Disciplinary Procedure

Employers should have a disciplinary procedure to ensure fair procedures and natural justice where necessary.

SI 146/2000 sets out the basic principles which any disciplinary procedure should follow. These include:

• What will happen to deal with a complaint/allegation

• How many stages will be followed in each event

• The employer’s right to choose which stage to commence the procedure and the penalty to be imposed

• The right of representation of the employee

• Whether there is a right of appeal to any decision taken to impose a penalty.

 

16. Restrictive Covenant

This clause deals with the right of employees to compete with their former employer once they have left employment with that employer. There are 2 aspects to any ‘non compete’ clause:

• The common law entitlement of the employer to protect trade secrets and confidential information

• The Competition Act 1991.

Regardless of the express term in any contract of employment dealing with this area, the Courts recognise the common law right of the employer to protect confidential information and trade secrets-even when the employment relationship is terminated.

However, there is no common law restriction on an employee competing with a former employer once she leaves employment. This is why a ‘restrictive covenant’ is a good idea in the contract-to protect, for a reasonable time and over a reasonable geographic area, the employer’s legitimate interest.

This is not a restriction on normal trade or general competition post-employment though; it must be a restriction to protect a specific legitimate interest.

However, if the employer breaks or repudiates the contract, he will generally be unable to rely on any restrictive covenant in this connection.

17. Termination of Contract

The notice period for termination of employment is a critical clause. If there is none and the contract is silent in this regard, then ‘reasonable’ notice must be given by the employer.

This will vary from contract to contract depending on a number of factors such as job function, length of service, age of employee, custom and practice, etc. In short, what is ‘reasonable notice’ in each case will depend on the facts of the individual case, bearing in mind the factors outlined above.

It is strongly advisable for the employer to specify a notice period in the contract in order to avoid a claim for wrongful dismissal.

Unless it is stated in the contract, notice does not have to be in writing; but it does have to be clear and unequivocal.

Notice given during times of leave or illness is valid, except for during maternity leave which is protected.

The notice period in the contract cannot be less than that provided for in the Minimum Notice and Terms of Employment Act, 1973 (as amended).However, if an employee is dismissed for misconduct s/he loses his/her entitlement to notice.

The employment does not come to an end until the end of the notice period, even where a person is not required to work the notice period and has been ‘paid off’.

18. Search Clause

A search clause is commonly used in many contracts allowing the employer to search the employee’s locker, baggage, vehicle, etc.

Without this search clause, any search, without consent, could be considered to be an assault.

19. Patents, Inventions, and Copyright

Unless there is agreement to the contrary, any copyright in material which is made by the employee in the course of employment is the property of the employer. The same principle applies to research and development work carried out which leads to an invention.

20. Share Options

A share options clause may be necessary. Provision should be made for the employee moving location or changing job function.

21. Bullying and Harassment

An anti-bullying and harassment policy should be appended to the contract of employment as the employer is obliged by law to prevent bullying and harassment occurring in the workplace.

22. Internet and email

Reference should be made to the company’s policy on internet access, email and internet use. A separate policy in this regard should be provided by the company to the employee.

23. Resignation of Office or Directorships

Resignation from offices held, including directorships, should be provided for in the contract of employment.

24. Proper Law

The law governing the contract should be spelled out and is very important where an employee may be required to work abroad.

25. Other

Other clauses which may be included, depending on the specific requirements of the employer, may include

• Wearing of uniforms, dress code

• Punctuality and attendance

• Responsibility for tools, property, uniforms, clothing, boots, etc

• Requirement to hold a driving licence

• Compassionate leave

• Parental leave (subject to statutory entitlements)

• Work standards

• And more.

If you are an employer and you don’t have existing contracts of employment for your employees, or you are concerned about the contracts you do have, we provide a professional, cost effective contract review and drafting service. We also provide staff handbooks containing the policies and procedures you need for your workplace including grievance, disciplinary, dignity at work, and health and safety at a minimum.

Simply use the contact us form to make an enquiry.

If you are an employer, you may be interested in our employment law services for employers which are designed to give you peace of mind in this area and allow you to spend your valuable time running your business.

Categories
Employment Law

Changing a Contract of Employment in Ireland

Changing or varying the terms and conditions of a contract of employment can only be done with the agreement of the parties.

An employer is leaving him/herself open to a successful claim if he imposes changes to a contractual entitlement unilaterally.

It is worth noting that agreement can be express, implied, or by acquiescence. (See also amending the terms of employment)
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Trade Unions

What about variation of the terms of employment through the trade union negotiating on behalf of the employee? Generally employees will accept changes negotiated on their behalf by their trade union.

However a trade union cannot bind those members who have made it clear that they will not be bound by the changes-see Goulding Chemicals Ltd v Bolger [1977], Irish Supreme Court.

Custom and Practice

Some contracts of employment will have terms of employment implied into them by custom and practice of the employment or industry. For this to happen the custom must be“so notorious, well known and acquiesced in that the absence of agreement in writing it is to be taken as one of the terms of the contract between the parties” O’Reilly v Irish Press [1937]

Contractual Right to Vary

Many employment contracts will contain a term reserving the right to the employer to vary or alter the terms and/or conditions of the contract. However this does not give teh employer the right to make unreasonable changes and courts and tribunals will always look to see if the change was necessary and reasonable.

It is important to note that if an employee does not object to a change and works away under the changed terms he/she may be held to have implicitly agreed to the changed terms and conditions.

On the other hand an employee could argue that he/she was simply being co-operative and this did not imply approval of the change. The best way for an employer to counter this is to bring any proposed change to the attention of the employee; if he/she does not he cannot slip changes in “under the radar” and claim acquiescence by the employee.

It is worth noting also that where an employer is entitled in law to make changes to contracts of employment employees are still entitled to engage in trade disputes to attempt to bring about change. This is the case even in companies where unions are not recognised as the Labour Court can be asked by the union to investigate the dispute.

See also how to cut wages and salaries.

Employers-How to Avoid Costly Employment Claims

Categories
Employment Law

Do You Make Costly Mistakes in These 13 Areas as an Irish Employer?

Being an employer in Ireland is a difficult challenge at the best of times.

There is a huge body of employment law which places fairly onerous obligations on the employer.

There are key areas of possible friction for you as an employer and which can lead to costly and expensive mistakes in your dealings with your employees.

Lets take a look at some of the most common ones.

Key areas of concern for an Irish employer

1)      The Contract of employment

This is a critical area to get right from the outset and to prevent problems arising in the future. Watch out for implied terms as well as the express terms you agree with your employee. (See contract of employment for more information)

2)      Payment of wages

The Payment of Wages act 1991 governs the payment of wages by an employer to the employee.

And it’s easy to fall foul of its provisions if you are not careful.

3)      Time and leave entitlements

This area covers rest periods, sickness of the employee as well as holiday entitlements and maternity periods and is an area of friction between employer and employee. The Organisation of  Working Time Act, 1997 and various EU directives have a lot to say in this area.

4)      Discrimination and equality in the place of work

This is another huge area of law with rights and entitlements arising from the Constitution, EU directives and our own Irish legislation such as Employment Equality Acts.

Many employers get caught out, not by direct discrimination but, by indirect discrimination.

5)      Health and safety

Health and safety law places some very serious obligations on the employer and there are common law obligations as well as statutory obligations. Breaches of health and safety law can lead to criminal convictions for you as an employer.

6)      Transfer of undertakings

This covers situations where one business buys another in which there are employees. The Transfer of Undertakings Directive govern this area.

7)      Unfair dismissals

Need I say more? This area also covers constructive dismissals and has proven to be an area of considerable cost and expense to employers. A necessary line of defence in relation to claims for unfair dismissal is good grievance and disciplinary procedures which follow best practice.

8)      Redundancy

If you wish to make an employee redundant it had better be a proper redundancy and the procedure for choosing an employee for redundancy must be fair and non-discriminatory. Read more about redundancy law here.

9)      Trade union recognition/disputes

The above are broad areas of employment law which commonly lead to costly mistakes and expense for you as an employer if not handled correctly. You might be interested in further employment law articles which spell out some common misconceptions and mistakes that cost employers in Ireland.

10) NERA Ireland

Getting ready for a NERA inspection can be time consuming and expensive if you do not follow some essential steps to ensure you are compliant as an employer. Learn more about the work of NERA and take a  look at the handy employers’ check list.

11) Part time Employees’ Working Conditions

Not understanding the protections that part time employees enjoy is also something that many employers overlook or take for granted. Learn about part time employees’ rights here.

12) Fixed Term Contracts

Fixed term contracts and the danger of a contract of indefinite duration (CID) arising against the employer’s wishes is quite common also. Learn more about fixed term contracts here.

13) Changing the Contract of Employment

The employer needs to be aware of what he/she can and cannot do when it comes to altering the terms and conditions of the contract of employment.

Always seek the advice of a legal professional if you wish to ensure you do not leave your business exposed to the spectre of costly employment related claims.

If you have a question or concern, please use the contact form below. We respond within 24 hours, guaranteed.
Employers-How to Avoid Costly Employment Claims

Categories
Employment Law

The Contract Of Employment-the Essentials

employment contract ireland

The contract of employment in Ireland is made up of both express terms and implied terms with the Terms of Employment (Information) Act, 1994 stipulating that certain basic information must be given to the employee in writing.

This includes the names and addresses of both employer and employee, the place of work, the title of the job, pay, any terms relating to sick pay, periods of notice and many other basic details.

Implied Terms

In every contract of employment, written or otherwise, there are 4 categories of implied terms which fall under the headings of

a) terms implied by custom/practice(depending on the industry)

b) terms implied by statute (right to redundancy, right not to be unfairly dismissed, right to notice, right not to be discriminated against as per Employment Equality Acts, right to breaks, annual leave, holidays as per Organisation of Working Time Act, 1997, protective leave including maternity leave, payment of wages as per Payment of Wages Act 1991, atypical workers such as part timers and fixed term workers protected by the Protection of Employment Acts, health and safety provisions as per Health and Safety at Work Act 2005)

c) terms implied by law (employers duty of care and employees duty of trust and confidence)

d) collective agreements in unionized employment.

 

Express Terms of Employment

The express terms of employment are those terms clearly agreed between the employer and employee and can be oral or in writing.

Terms of Employment (Information) Acts

The Terms of Employment (Information) Acts 1994-2001 provide that employees must be given a statement, signed by the employer, of certain of their terms and conditions of employment within 2 months of their employment.

What must be included in this statement?

  • The names of the employer and employee
  • The address of the employer
  • The place of work (This can be a thorny issue if you need the employee to move to another location or provide geographical mobility in the course of employment and it has not been provided for in the contract of employment)
  • Hours of work (this needs to be clear about shifts, overtime, work breaks, lay offs, short time, and so forth)
  • The job title or nature of the work for which they are employed (Drafting this too widely can give problems when it comes to redundancy; drafting too narrowly can lead to practical, on the ground difficulties)
  • The date of commencement of employment (when does employment start is an important question as most statutory entitlements will be dependent on the length of service)
  • The duration of the contract and expiry date if the contract is a fixed term/temporary contract
  • The rate of pay or method of calculation (the salary package and the breakdown between basic salary, commission, bonuses, allowances, and so forth should be set out)
  • How often/the intervals at which pay will be paid
  • Terms and conditions re paid leave (what is the position re holidays and is there extra days over and above those set down by statute in the Organization of Working Time Act,1997)
  • Terms and conditions re illness/sickness or injury and pensions (what is the situation re sick pay; there is no general right to be paid while out sick but the contract can provide for it expressly or custom and practice of the industry/job can imply it but this may need to be proven if questioned)
  • The period of notice obliged to be given by both parties
  • If any collective agreement affects the contract
  • Times of breaks/rest periods both daily and weekly
  • The company’s pay reference period.

In addition to the above statutory minimum terms and conditions it is prudent and advisable for the employer to include other terms in the contract dealing with

  • Short time/lay offs
  • Illness pay
  • Retirement age
  • Time off work
  • A probationary period (cannot exceed one year)
  • Bullying and harassment procedures
  • Grievance and disciplinary procedures (a specified disciplinary procedure should be in place and a copy of this together with the grievance procedure should be given to the employee along with the contract/letter of offer)
  • Company car
  • Share options
  • Retirement age (should be specified by the employer)
  • Any restrictions re competition and setting up against the employer in the future using trade secrets/contacts. Note that common law implies a duty of loyalty in the employment contract; common law also protects confidential information and trade secrets in the absence of an express or written term in the contract covering this area. However there is no common law barrier to soliciting for business done by the employer once the employee leaves the employment. (Restrictive covenants and termination of employment are dealt with in greater detail elsewhere on the site.)
  • Email and internet use
In addition to the above, the employer must give new employees, within 28 days of starting employment, a written summary of the procedures to be used should it be necessary to dismiss them.

As an employer you need to be clear what terms and conditions are obligatory in the employment contract as a result of the Terms of Employment (Information) Acts and the additional terms and conditions which might be advisable and prudent for the employer.

Legal advice is recommended as the consequences of a badly drafted contract with an employee will be far more costly than the cost of having a properly drafted contract of employment by a legal professional.

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Employers-How to Avoid Costly Employment Claims