Working for a better future

Since the enactment of the Trade Union Reform and Employment Rights Act 1993 (TURER), employees starting work on or after 30 November 1993 have had extended and enhanced rights to receive a written statement of their main employment terms, while existing employees can now demand a statement in the new form. For many employers however, the new requirements under TURER are an unknown quantity, and failure to comply with them can have serious repercussions.

The statement must contain the particulars set out in the table shown, and even if there are no particulars to be entered under any heading, then that must be stated clearly for the employee to see. Employers are required under TURER to give the statement to employees no later than two months after their employment begins, provided the employment continues for one month or more. This is so even if the employment comes to an end before the end of that period, perhaps because the employee is not retained at the end of a probationary period.

As for who is entitled to a statement of conditions, the legislation includes all employees except those who work less than eight hours a week. However, there must be some doubt, in the light of the 1994 part-time workers case in the House of Lords, as to whether this qualification requirement is lawful or not. Indeed, in February the Government introduced legislation to give the same statutory rights to part-time workers as full-timers enjoy, which includes the right to such a statement.

An employee can be given the statement in instalments, provided all instalments are given before the end of the two month period. However, best practice for most employers is to include all the statutory details in one document, usually, because it is often the only contractual document an employee receives, in the offer letter.

One of the main changes introduced is to ensure that certain basic details are contained in a single document, called the principal statement. Previously, it was possible to scatter the particulars among various documents. For certain purposes, an employer can still refer to other documents which are not given to the employee. For example, the statement can refer the employee to another reasonably accessible document, perhaps a staff handbook, for particulars of sickness entitlement, pensions and certain disciplinary and grievance matters. Reasonably accessible in this context means reasonably accessible to the employee or which he must have reasonable opportunities of reading in the course of his employment.

If any of the written particulars change, employees who qualify for a statement will be entitled to receive an individual written notification of the change within one month. One point to note is that existing employees, whether or not they have requested a statement in the new form, will be entitled to receive notification of changes as if they had done so.

The legal requirements are perfectly clear. But what is the position of an employer if he fails to comply? Clearly the employee still has a contract of employment, albeit not in writing. The terms are uncertain. If a problem arose, perhaps on a dismissal, the terms would have to be interpreted by a court or an industrial tribunal. In addition, employees have the right to go to a tribunal to ask it to determine what particulars ought to have been included in the written statement. Although there are no financial penalties, few employers will want to place themselves in the position of having the most important terms of their employees' contracts of employment determined by a tribunal.

These requirements are seen by some as an administrative inconvenience. But they have advantages for an employer. One good example is the notice provision in a contract. Statute prescribes a minimum period of notice to which employees are entitled. This is basically one week up to two years' employment, and then one week per year up to a maximum of 12 weeks' notice. An employer is only entitled to receive one week's notice.

Unless a notice period is specified in the contract, the employee will be entitled to at least the statutory minimum period of notice. But, in certain cases, an employee may be able to argue that he is entitled to a longer period of notice than the minimum. If a contract fails to set out a notice period, it can generally be terminated by either party on reasonable notice. Unfortunately, there are no hard and fast rules as to what constitutes reasonable notice. A quite senior employee could be entitled to six or, perhaps nine, months' notice! Since any compensation on dismissal will be calculated by reference to the employee's notice period, that can be expensive by any employer's standards.

Although an employer who provides the basic statement will comply with his legal obligations, the statement is largely for the protection of the employee, rather than the employer. A contract which contains only the prescribed details could be seriously defective.

One example might relate to the days which employees can be required to work. If the usual working week is Monday to Friday, an employer cannot unilaterally change that to include a weekend day, without running the risk of a claim for constructive dismissal. A provision which allows the employer to vary the working week will give the employer a greater degree of flexibility.

Another example is the employer's liability to make deductions from the wages of employees, perhaps because of stock or till shortages. Unless the employer has the employee's written agreement to the deduction it will be unlawful. Any such agreement must be given before the event giving rise to the deduction has happened. In one recent case, an employer obtained an employee's written agreement after the event giving rise to, but before the actual, deduction. The employee recovered the amount deducted.

Yet another important consideration for many employers is the protection of know-how, goodwill and customers. During the employment, there is little problem. The law implies certain duties into contracts of employment, for example, to act in good faith. The disclosure or misuse of confidential information would be a breach of that duty. And clearly, during the employment, the employee cannot compete. But after the end of the employment, the position is much more serious. Only a very limited confidentiality undertaking is implied by law after the employment has ended. This covers only genuine trade secrets, or information which is so confidential that it requires the same protection. In order to restrict the use of other confidential information, for example information on the employer's customers, prices or research, an express provision must be included in the contract.

The same applies to competition. In the absence of a restriction, the employee is perfectly free to go to an employer's main competitor and start poaching clients and staff. It may be worthwhile seeking to protect the employer's position by including in the contract a restriction on certain competing activities. But only those restrictions which are reasonable, and protect a legitimate business interest of the employer, will be enforced by the courts. That interest might be a close connection with customers. The period of the restriction will need to be reasonable. But, if it is, the courts will generally enforce a contractual term which seeks to prevent a former employee soliciting business from or dealing with customers of the employer.

Similarly, it may be that the employer wishes to safeguard his employees, to prevent a former employee making use of his connections with them to attract them to a new business. While the courts will not allow an employer to protect all his employees, a restriction specifically targeted at those employees in a senior position or who have special technical skills will probably be enforceable.

One point which it is important to note is that if an employer is in breach of contract, any post-termination restrictions contained in the contract will not be enforceable. There is often the tendency to dismiss an employee immediately with a payment in lieu of notice. Unless the contract allows the employer to do this, he will be in breach of contract, and the time and effort spent in tailoring the restrictive covenants to the employer's particular business will have been wasted.