Employment contracts are an extremely important document for employers. They create a legally binding agreement between you and your employee, ensuring that both parties are entering the working relationship on a fair and level playing ground. As an employer in Ireland you are legally required to enter into a contractual agreement with employees who work for a salary at your business. For example, this would not include contractors unless there was evidence that they were solely working for you over an extended period of time. So, given their importance, what should you include in an employment contract?
Terms of employment
An employment contract in Ireland is divided into two terms: express terms and implied terms. Implied terms are terms that cannot be changed or renegotiated. They are usually specified by law, implied by statute, or implied in collective agreements that have been set by a union. You cannot do anything about these terms because you are under obligation to follow them. Express terms are those that are agreed upon between you as the employer and the employee. These can be negotiated and written in a manner that is agreeable to both parties.
Irish law stipulates that the first six months of employment should be probationary.
An employment contract should include a notice period that falls within the probation period, and references the disciplinary procedures that are applicable during this period. An employee on probation is still an employee. This means that the correct procedures for contractual termination should be followed and you should make sure that the wording on the exact terms of the probation are clear. There are other nuances in the law about probationary periods and employment contracts. To understand them all we advise that you get a legal professional to write up the employment contract you require.
A common mistake that employers make is to include a job description in employment contracts that is very broad. They do this to make sure that employees perform the role that is required of them, and can’t dispute certain work that may appear to be outside the scope of their job. When your job description is too broad you may encounter problems in the future if the role becomes redundant. They could claim that they are still required to perform the many other tasks that were included in the contract by the company. So make sure you undergo adequate planning before hiring someone for a role to make sure that the job description is as specific as possible. You can always enter into a new employment contract in the future if things change.
Both parties should agree on the number of hours an employee will work in this section of the contract. It includes information about shifts and how they are structured. You should also mention if the employee will have to work overtime. Employers are not under any statutory obligation to pay employees to work overtime, however most offer higher rates during this period. The details of the rates that you offer and any other terms concerning overtime should be laid out in this section of the employment contract.
You must include the amount of time that employees get for breaks, as well as the number of hours an employee will be expected to work.
Place of work
It is advisable to have a clause in the contract that touches on the geographical mobility of the role. This makes it easier for you if you need to transfer an employee in the future. If a transfer is allowed in your employment contract, the law is quite lenient when you transfer someone from one location to another, and you will not break any implied terms. However, you should not exploit this, and only use transfers in cases where there is a strong need - from the individual or the business.
Termination of employment and notice periods
You are required to give an employee written notice of the procedures that are followed if their employment is terminated. Including the notice periods.In general, an employee should be given notice of the termination of a contract at least a month before they are dismissed.
Pay and benefits
An employment contract should include the basic salary that you will pay the employee. You should make sure that you state how commissions and bonuses will be paid out, and it’s typically best to ensure that the payment of a bonus is at your discretion. This way there will be no arguments concerning payment in the future because you are the one who makes the ultimate choice.
Holidays and leave
The Organization of Working Time Act of 1997 outlines the entitlements that employees get with regards to minimum holidays. The law states that the employer is the one who decides when the holidays are taken. It is important that you include these terms in the contract so that everything is clear. The clause should also state that extra holidays are not included in the standard holidays that the employer provides. Other types of leave you should include in your employment contract include sick leave, parental leave, carer’s leave, force majeure leave, and compassionate leave.
All the necessary terms that you need to include in an employment contract can be found in the Terms of Employment (Information) Act, 1994. It is advisable that you work with a legal professional to draft and review a contract before committing to one with an employee.