Brief Guide to Contracts of
Employment
(This is a brief guide only and should not be considered as a comprehensive guide to an employer’s contractual
obligations)
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Prepared by
CollierBroderick Management Consultants
Tel: +353 1 8666426
Fax: +353 1 8666457
E-mail: enquiries@collierbroderick.ie
Web: www.collierbroderick.ie
Disclaimer
Whilst every care has been taken by CollierBroderick Management Consultants to ensure that the information
contained in this guide is accurate and up-to-date, as the guide is for information purposes, the contents of these
pages should not be relied upon as a substitute for your own independent HR or legal advice. We recommend
that you always consult a suitably qualified HR or legal professional on any specific matter before relying on any
information in this guide.
No responsibility or liability is accepted by or on behalf of CollierBroderick Management Consultants or anyone
associated with its production for any errors or omissions in the guide, nor for any use the information may be put
to.
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A Guide to Contracts of Employment
Introduction
When conducting audits, we find that one of the key documents which is consistently missing
from many employee files is the Contract of Employment. This is surprising as it is this – the
Contract of Employment – which governs the key terms and conditions of the employment
relationship between the employee and the Company.
By law, within 2 months of the employees start date an employer must furnish an employee
with a ‘Statement of Terms of Employment’ as per the Terms of Employment (Information)
Act, 1994.
Items to Consider
Firstly, you should consider what type of contract of employment you wish to give to your
employee. Options include:
- Permanent Contract / Contract of Indefinite Duration
- Fixed-Term Contract
- Specific-Purpose Contract
- ‘Zero-Hours’ Contract
- Casual Contract
Remember, terms of employment are not just for full-time employees. Part-time and casual
employees must also be furnished with their terms of employment within 2 months of their
start date.
Once you have decided on which type of contract you wish to apply, you should then
carefully consider what clauses / terms and conditions you wish to include.
There are a number of different clauses which need to be considered when formulating a
Contract of Employment. For example, while employment legislation [such as the Terms of
Employment (Information) Act, 1994; Organisation of Working Time Act, 1997; Minimum
Notice and Terms of Employment Acts, 1973-2001, etc] dictates that certain terms and
conditions of employment must be included in a contact of employment, terms and conditions
of employment may also be derived or dictated by codes of practice, custom and practice,
the requirements of the Company, Employment Regulation Orders (EROs) and Registered
Employment Agreements (REAs). Therefore, it is not enough for an employer to simply
follow employment legislation when formulating a Contract of Employment.
Contract Clauses
While a number of contract clauses are required by law, others may be included at the
discretion of the Company.
As previously noted, the Terms of Employment (Information) Act, 1994 states that an
employer must provide an employee, within 2 months of commencing employment, with a
‘Statement of Terms of Employment’ containing:
The names of employer and employee;
The address (or principal place of business) of the employer;
The place of work or specifying that employee is permitted to work at various places;
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The title of the job or nature of work for which the employee is employed;
The date of commencement of employment;
The duration of any temporary or fixed-term contract;
The rate or method of calculation of remuneration and pay reference period for the
purposes of the National Minimum Wage Act, 2000;
That the employee may request from the employer a written statement of the
employee’s average hourly rate of pay for any reference period;
Whether remuneration is payable weekly, monthly or otherwise;
Any terms or conditions as to hours of work including overtime – this includes
specifying hours of work or weekly working hours;
Any terms or conditions relating to paid leave (other than sick leave);
Any terms of conditions relating to incapacity for work due to sickness or injury and
paid sick leave;
Any terms of conditions relating to pensions;
The period of notice which the employee must give or receive to terminate the
employment;
Details of any collective agreement affecting the terms and conditions of employment
(i.e. any Employment Regulation Orders (EROs) and Registered Employment
Agreements (REAs)).
In addition to the above terms, if an employee is working abroad, he / she is also entitled to:
The period he / she will be working outside the State;
The currency in which they will be paid;
Any other benefits in kind or cash that will be provided;
The terms and conditions applicable on the employee’s return home.
While the above terms and conditions must be included in the Contract of Employment, a
Company may put additional terms and conditions into the Contract of Employment which
will clarify the employment relationship and / or what is expected of each party. For example,
such clauses may relate to:
1. Exclusion of Unfair Dismissals Acts, 1977-2001: Where a fixed-term contract or
specific-purpose contract is being given, the provisions of the Unfair Dismissals Acts,
1977-2001 should be excluded from the natural termination or completion of the
contract.
2. Probation: Specifically, the Company should include a probation period in all
contracts including the right to extend this period and to terminate employment if
necessary.
3. Flexibility: Either as a specific clause or incorporated into other clauses, the
Company should seek to dictate that the employee must be flexible in terms of
location, duties and hours or work.
4. Bonus: While an employer should give details of any bonus the employee will receive,
if the bonus is performance driven, the Company should refer the employee to a
Performance-Related Bonus policy in the Employee Handbook or separate letter
issued them which contains the terms and conditions of the scheme.
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5. Annual Leave: The Organisation of Working Time Act, 1997 sets out minimum
entitlements and terms and conditions relating to annual leave. However, nowadays
numerous Companies give employees additional annual leave either in an effort to
attract top calibre staff or to retain / reward staff. As such, for clarity an employee’s
entitlement, as well as any terms and conditions relating to the taking of annual leave,
should be included in the Contract of Employment.
6. Garden Leave: While the Company must, by law, give details of the employee’s
notice period, it should also reserve the right to place the employee on garden leave
and pay in lieu of notice.
7. Absence Due to Illness: While a Company is obliged to give details of terms and
conditions relating to sick leave and pay, the Company should also include the right to
check the validity of medical certificates it receives, to request an employee to attend
a medical practitioner of its choice and the right of the Company to receive a report
from any medical which the Company requests the employee to attend.
8. Exclusive Service: Employees have a right to work for another employer in their
spare time, provided this does not conflict with their duties to their employer and does
not result in a breach of the maximum weekly working hours as stated in the
Organisation of Working Time Act, 1997.
9. Grievance and Disciplinary Policy and Procedures: The Unfair Dismissals Acts,
1977-2001 provides that an employer is obliged to furnish an employee with a copy of
the disciplinary policy and procedures within 28 days of commencing employment.
However, as the grievance and disciplinary policy and procedures may change over
time, best-practice would dictate that these provisions and not incorporated in the
Contract of Employment. Instead, an employee should be referred to the Company’s
Grievance Policy and Disciplinary policy contained in the Company’s current
Employee Handbook. Furthermore, the Company should note that the terms and
conditions contained within these policies form part of the employment relationship
and agreement.
10. Bully and Harassment: An employer should state, at the very least, that bullying,
harassment and sexual harassment are all unacceptable forms of behaviour and that
complaints will be dealt with under the disciplinary procedure. In addition, the
employee should be referred to the Company’s Bullying and Harassment Policy /
Respect and Dignity at Work Policy in the Employee Handbook. Furthermore, the
Company should note that the terms and conditions contained within these policies
form part of the employment relationship and agreement.
11. Referral to Other Company Policies: The Company should refer the employee to
certain policies contained in the Employee Handbook (such as the Misuse of
Substance Policy, Diversity Policy, Health and Safety Policy, Safety Statement,
Smoking Policy, Company Property Policy, Use of Company E-mail, Internet and IT
Policy, Use of Own Vehicle for Work Policy, Use of Company Vehicle Policy, Use of
Office and Company Mobile Phone Policy, Dress, Grooming and Personal Hygiene
Policy, etc) and should note that the terms and conditions contained within these
policies form part of the employment relationship and agreement.
12. Confidentiality: It is imperative that the Company outline the need for employees to
maintain confidentiality in relation to Company and client business, information,
products and services. In addition, the obligations of the Company (and thus the
employee as a representative of the Company) as dictated by the Data Protection
Acts, 1988-2003 should be outlined.
13. Intellectual Property: Simply put, ‘intellectual property’ refers to creations of the mind
such as inventions, literary and artistic works, and symbols, names, images, and
designs used in commerce. In this case, the Company should clearly define what it
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means by ‘intellectual property’, state that is owns any and all invention, process, etc
developed by the employee while with the Company and impose an obligation on the
employee to aid the Company to trademark, copyright, etc any intellectual property
should the Company so wish.
14. Restrictive Covenants / Restraint of Trade: A restraint of trade clause essentially
seeks to restrict an employee after terminating their employment with the Company
from using confidential information or trade secrets obtains whilst working for the
Company, working either on their own account in competition with the Company or for
a competitor of the Company and / or soliciting the Company’s customers, suppliers
or staff. However, these restrictions can be difficult to enforce and thus must be
worded very well.
15. Right to Test for Intoxicants: Today, the big HR issue or topic is the right to test and
employee for alcohol, drugs and / or a combination of both. As clear guidelines in this
area are lacking, and even if the Company does not currently test for intoxicants, it
would be prudent for a Company to include such a clause.
16. Right to Search: In line with the previous clause, and in order to prevent theft, a
Company should include in their Contract a clause giving them the right to search
employee property.
17. Retirement: As there is no mandatory retirement age in Irish legislation at present, a
Company should state a retirement age in all Contracts of Employment.
18. Lay-Offs or Short-Time: In today’s economic climate, a Company would be wise to
include a clause in all Contract of Employment reserving the right to place an
employee on lay-off or short-time.
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For
Consultation Services relating to HR, Employment Law, Contract of
Employment, Policies and Procedures and Employee Handbooks
Contact
Helena Broderick
Managing Consultant
Tel: +353 1 8666426
Mob: + 353 87 9074843
E-mail: hbroderick@collierbroderick.ie
Services are available nationwide through our team of experienced HR practitioners and
employment law consultants
Web: www.collierbroderick.ie
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