The importance of a written contract of employment and the Employment (Misc. Provisions) Bill
 

The Employment (Miscellaneous Provisions) Bill 2017 is currently before the Seanad and is likely to be enacted soon. SFA has repeatedly raised concerns in relation to various aspects of the proposed legislation which included the late introduction of section 20 of the Bill. If this section is enacted, it would have significant consequences for businesses in relation to the designation of individuals as self-employed. SFA welcomes that Minister Regina Doherty has indicated in the Seanad that she intends to bring an amendment next week to remove this section.

 

The main provisions of the Bill are as follows:

  1. Employers must give employees basic terms of employment within five days of them commencing employment
  2. Zero-hour contracts are prohibited except in situations of genuine casual employment and where they are essential to allow employers to provide cover in emergency situations or to cover short-term absence
  3. A new minimum payment for employees that are called into work but sent home again if no work is available
  4. Banded Hours provisions: a new right for employees whose contract of employment does not reflect the hours they habitually work whereby they can request to be placed in a band of hours that more accurately reflects the hours they have worked over a 12-month reference period
  5. The Bill provides strong anti-penalisation provisions for employees who invoke their rights under this legislation.

The current band widths that were revised in section 16 of the Bill are as follows:

 

Band               From                           To

A                      3 hours or more          Less than 6 hours

B                      6 hours or more          Less than 11 hours

C                     11 hours of more        Less than 16 hours

D                     16 hours or more        Less than 21 hours

E                      21 hours of more        Less than 26 hours

F                      26 hours of more        Less than 31 hours

G                     31 hours of more        Less than 36 hours

H                     36 hours and over      

 

The necessity for a written contract of employment

 

This Bill and the rise in employment legislation in general means that the need for a written contract of employment is essential nowadays and we outline three reasons why you should provide contracts of employment to both existing and new staff.

  1. There is a legal obligation to provide a written statement of terms of employment under the Terms of Employment (Information) Act 1994-2014

Every employer is legally obliged to provide a written statement of terms of employment within two months of an employee starting work and it must include the following information:

  • The full name of the employer and employee
  • The address of the employer
  • The place of work. If there is no fixed or main place of work, it should state that the employee is required to work in various locations
  • The job title or the nature of the work
  • The start date of the contract
  • Temporary contracts must include either the expected duration of the contract or if it is a fixed term contact it must specify the date that the contract ends
  • The rate of pay or method of calculation for remuneration – the remuneration package should provide a breakdown of basic salary, commission, bonuses, allowances, etc. if they apply. If the employee works on a Sunday they must be paid a premium for this and the amount should be included under the pay section of the contract.
  • How often the employee will be paid, i.e. weekly or monthly
  • Hours of work including overtime. This section should also detail work breaks both daily and weekly as well as any shifts if they apply
  • Terms and conditions for paid leave, i.e. annual leave and public holidays but not paid sick leave
  • Terms and conditions for illness/injury and pensions schemes – if you have a sick pay scheme this should be detailed in this section
  • The period of notice obliged to be given by both parties
  • If any collective agreement affects the contract these should also be included. An example of a collective agreement would be an industry specific sectoral employment order.

The written statement of terms of employment should be signed and dated by the employer and employee.

 

As stated previously, if the Employment (Miscellaneous Provisions) Bill 2017 is enacted in its current form, employers will be required to provide employees basic terms of employment within five days of them commencing employment. Failure to do this could lead to a class A fine of up to €5,000 and/ or imprisonment.  

  1. If it is not written in the contract of employment it is difficult to implement or enforce

For example, if a retirement age is not written in a contract of employment, you cannot terminate an employee’s employment purely on the grounds of age as this is discrimination under the Equality legislation. In the case of using lay-off, again if it is not written down it is harder to implement as you would need to get the employee’s agreement to bring in lay off or short term working.

 

Businesses might want to include some or all of the following in a contract of employment if it applies:

  • Probationary period with the right to extend it up to one year but not over a year
  • Short time/lay off/redundancy
  • Flexibility
  • Sick pay scheme
  • Attendance and absence including the right to send an employee to a company doctor
  • Right to search
  • Retirement age
  • Grievance and disciplinary procedures
  • Retirement age
  • Confidentiality
  • Restrictive covenant clauses

It is important to note that all businesses must advise employees of the disciplinary procedures within one month of them starting work. Many businesses choose to include their disciplinary procedures in the contract of employment.

  1. In the case of disputes, the contract provides clarity and security for both parties

If a dispute arises between the employer and employee the contract of employment can provide clarity on these issues that take place internally or externally. For instance, if an employee lodges a grievance internally and it is in writing, the grievance procedures make it clear to both parties what the process is. If a claim to the Workplace Relations Commission is made for example a Payment of Wages claim, the contract of employment is usually the first reference point that will be used to defend a case.

 

Finally, it provides security for both parties as a contract of employment cannot be changed without the agreement from both sides. For example, an employer cannot suddenly change the hours of work without an agreement from the employee. Equally the employee cannot suddenly decide to work Monday to Thursday if their employment contract states they are required to work Monday to Friday.

 

SFA have a number of sample contracts of employment available for permanent, temporary and casual employments which you can avail of here. If you would like further information on any of the above, contact Helen on 01 605 1668 or at helen.quinn@sfa.ie or visit the advice section on our website. 

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