There is a legal obligation for all employers to provide employees with a statement of the terms of their employment. This obligation is normally satisfied by providing a contract of employment. Contracts of employment have evolved from merely satisfying the minimum legal requirements to a fundamental tool in protecting a business.
In particular, contracts of employment can help to protect a business by seeking to prevent employees from, for example, joining a competitor, poaching clients or colleagues and misusing confidential information. Often, a business’s clients are fundamentally important; after all they pay the bills! So, protecting the clients with contractual provisions preventing an employee or former employee poaching them is an obvious and key step. This applies whether your business has one employee or thousands. If anything, smaller businesses are at a greater risk from a departing employee.
Beyond post-termination restrictions, contracts of employment can also have use during the employee’s employment. For example, the contract can be used to set out clearly the employee’s duties. This can be useful if, unfortunately, you are facing the situation of disciplining or performance managing an employee.
Too often we see businesses neglect their contracts of employment at their inception and leave themselves unprotected. Your business will be in a much better position if it has the right contractual terms in place with its employees.