AN INTRODUCTION TO EMPLOYMENT LAW
What information do you need to give your employees?
When an employee begins employment with you, you should give them details of their terms and
conditions of employment.
It helps to have this information clearly set out, so that both parties know their rights and
It also helps you to be able to take action if you are unhappy with an employee's performance or
behaviour at work.
The information that you need to provide in an employee's contract of employment includes the
information below. The information asterisked can be contained in the contract but you may prefer
to cross-refer in the contract to a separate document:
The names of the employer and employee;
The date when the employment began;
The date on which the employee’s period of continuous employment began (which
would include any previous employment with a company in your group);
The employee’s salary (employees over age 21 must receive at least the national
minimum wage, currently £5.93 per hour), and confirmation of when it will be paid
(usually employees are paid monthly or weekly in arrears);
The employee’s hours of work (employees are subject to restrictions on their working
hours and must receive certain rest periods every day);
Details of the employee’s holiday entitlement and holiday pay. The minimum holiday
entitlement is 28 days per year, including bank and public holidays (pro rata for part time
Details of the employee’s incapacity/sickness entitlement and sick pay.* The minimum
payment an employee must receive when they are off work due to sickness for 4 days or
more is statutory sick pay (currently £81.60 per week). You can also choose to impose
sickness reporting conditions, including for example the requirement to call a line
manager by 9am on each day of sickness, or a requirement to have a medical
examination with a company doctor;
Details of any pensions and pension schemes.* If you have 5 or more employees you
are required to provide access to a stakeholder pension scheme;
The length of notice which the employee is obliged to give and entitled to receive, in
order to terminate the contract.* Employees must receive at least statutory minimum
notice (1 week for every year of employment, subject to a maximum of 12 weeks'
notice). You may choose to offer longer contractual notice periods to some employees,
depending on their seniority. For example, your General Manager may have a 3 or 6
month notice period, whereas you may want your waiting staff to be subject to
statutory minimum notice. You can summarily dismiss an employee without giving
them any notice (or pay in lieu of notice), but usually only in circumstances where the
employee is in serious breach of his or her employment obligations;
The title of the employee’s job or a job description;
The place where the employee will work;
Details of any collective agreements (with trade unions) which will affect the
Where the employment is not permanent or is for a fixed term, the date when the
employment will end;*
Where the employee is required to work outside the UK for more than one month, any
additional details regarding the employee’s remuneration during that period and the
terms and conditions regarding his return to the UK;*
Details of any disciplinary and grievance rules affecting the employee’s employment (or
directing the employee to where the disciplinary/grievance procedure can be found).*
What else might you want to include?
For senior employees, you might consider including the following clauses:
Garden leave – this allows you to keep an employee out of the workplace during their notice
period. It is a useful mechanism for keeping senior employees, who may have had access to
confidential information, out of contact with your suppliers and business contacts for the
length of their notice period, thus protecting your business.
Restrictive covenants – these prevent an employee from poaching clients or suppliers or key
employees from your business for a period of time, usually between 3-6 months, after
termination of employment. The duration and scope of the covenants must be no broader
than is necessary to protect your business interests.
PILON (or payment in lieu of notice) – these clauses are designed to ensure that you can
make a payment in lieu of notice to an employee without breaching their employment
contract. It ensures that the contract remains intact and so the terms, such as the
restrictive covenants, remain enforceable.
Confidential information – if an employee will have access to confidential information
concerning your business, such as recipes or business plans, you can include wording in their
employment contract to prevent them from using this confidential information after the
termination of their employment.
When should terms and conditions of employment be provided?
Within two months of an employee's start date (regardless of how junior / senior the employee is
and regardless of the hours they work).
What if you need to dismiss an employee?
You need to comply with the notice provisions in an employee's employment contract – unless the
conduct is sufficiently serious to justify summary dismissal (i.e. dismissal without notice or a
payment in lieu of notice).
You also need to comply with the general law:
You must consider the reason for the dismissal. You will need to consider this more carefully for
employees who have over one year's continuous employment1 with you as failure to have a fair
reason (or to follow a fair procedure) can trigger an unfair dismissal claim. This can lead to an
employment tribunal claim capped at around £75,000 – although the actual amount awarded will
largely depend on an employee's financial loss.
Even for employees in their first year of service, you will generally want to explain the reason why
you are thinking of ending their employment.
Dismissal has to be for one of the following fair reasons:
The dismissal relates to the capability or qualifications of the employee; or
It relates to the conduct of the employee; or
The employee was redundant (dealt with in more detail below); or
The employee could not continue to work in the position without breaking a law, i.e. they do
not have a work visa; or
There was some other substantial reason capable of justifying the dismissal of the employee.
This is a more difficult reason to justify but can include a breakdown of trust in the
relationship with the employee, or a failure by an employee to agree to e.g. changing shift
patterns which you need to introduce for good business reasons.
You should also follow a fair procedure, so that the employee has warning about their dismissal.
The ACAS Code of Practice applies to dismissals for discipline or conduct issues. It can be found via
this link: http://www.acas.org.uk/index.aspx?articleid=2175 Failure to follow the Code without
good reason can trigger an uplift in an employment tribunal award by up to 25%.
NB in practice, this is 11 months and 3 weeks, as you must add on the one week minimum notice that an
employee must receive in his or her first year of employment to calculate the year.
The Code suggests that the employee should be invited to a meeting to discuss the issues and
warned about the possibility of dismissal. You should ideally carry out an investigation and give the
employee the chance to put their version of events to you, before you move to dismiss them. The
employee should be given the right to appeal their dismissal.
Certain dismissals are automatically unfair – for example dismissals relating to the employee's
pregnancy, certain health and safety matters, trade union membership and trade union activities.
(Automatically unfair dismissals do not require a year’s service and damages which can be awarded
by an employment tribunal are uncapped.)
How do you dismiss an employee in a redundancy situation?
You must be able to show there is a genuine redundancy. Redundancy includes when:
The business in which an employee works is closing; or
There is a reduced requirement for employees to do work of a particular kind (e.g. you need
to reduce the number of kitchen staff).
You will need to follow a fair procedure. This is not set out in the Acas Code (which does not apply
to redundancy situations). Instead, the courts have set out the process to follow.
In broad terms, a checklist of the procedure you should follow includes:
Be clear on the business reasons for the redundancy.
Consider any alternatives to redundancy. What about asking employees to reduce their
working hours or getting their consent to accept a reduction in pay?
If redundancy is the only viable option, how many employees might you need to make
Do you need to make redundant one or two employees who do specific jobs (in which case
you would consult with them individually) or do you need to select between, say, 10
employees to reduce their numbers by half (in which case, you will need to consider how
you might select between them)
Invite the employee to a meeting to explain why you are contemplating making them
redundant. You should not have made a firm decision that you are ending their employment
at this stage. They should have sufficient time to prepare for the meeting, so give them a
couple of days' notice at least
Invite the employee's views. If you are applying selection criteria, explain what criteria you
intend to use and how you will "weight" it. Criteria might include:
o performance and ability of the employees (ideally with reference to appraisals),
o attendance records,
o disciplinary records.
You might require them to carry out a practical test.
Carry out any selection exercise and feed back to the employees in a further meeting.
Again, they should be invited to a meeting, this time at which they have the right to be
accompanied (by a colleague or a trade union representative).
Communicate decision and any redundancy payment in the meeting and follow it up with a
Employees with two or more years' service are entitled to a statutory redundancy payment.
This can be calculated by keying in the relevant information (employee's age, length of
service and weekly pay) at the following web address:
Consider suitable alternative employment within your organisation e.g. a group company,
including overseas (if there are options available and the employee indicates they would be
willing to consider working abroad).
Offer a right of appeal. If the employee elects to appeal, they should be invited to a further
meeting at which they have the right to be accompanied. The person considering the appeal
should not have been involved in the original redundancy decision and, ideally, should be
more senior than the first stage decision-maker.
Where you are considering making 20 or more employees redundant over a period of 90 days or
less, you are required to consult collectively with the employees via employee representatives (as
well as individually consulting with them). There is usually a minimum timeframe for consultation of
30 days (where there are between 20 and 99 employees) and 90 days (where there are 100
employees or more). Failure to comply with the obligation to consult collectively can trigger
employment tribunal awards of up to 90 days' pay per affected employee.
This note is prepared by Forsters LLP and is based on the law as at August 2011. It is intended as a
general overview of employment law and is no substitute for taking detailed legal advice.