The importance and requirements of terms and conditions of an employment contract
Carly Stratton| Head of Business & eGaming | Senior Advocate | Employment Update originally published on 17 June 2010
The relationship between an employer and an employee is based on an employment contact, which is founded on a set of agreed terms and conditions.
The employment contract does not need to be in writing, except in the case of seamen on merchant ships registered in the Isle of Man (Merchant Shipping (Masters and Seamen) Act 1979), as such, the employment contract can be an oral and/or written contract. However under Employment Law on the Isle of Man, most employees are entitled to a written statement of particulars of the prescribed terms of their contract of employment (“the written statement”).
In addition to this legal reason to supply the employee with a written statement, there are also a number of other reasons why providing the employee with a written statement can be beneficial to both the employer and the employee.
The purpose of the written statement is to clarify and provide cogent evidence of the main terms and conditions of the employee’s contract of employment. It also provides certainty to employees and employers of what the employee must do for the employer and what the employee is entitled to from the employer. This will in turn reduce the amount of misunderstandings between the parties and reduce the scope of any potential costly disputes.
The written statement can also provide greater job security for the employees, for example, minimum notice periods and give the employers’ greater control over their employees, for example, setting standards for the employee’s performance.
However the written statement does not alone, unless expressly stated, represent the whole of the contract of employment. It can merely summarise the principal terms and conditions of the contract of employment, where for instance, staff manuals and handbooks are to be part of the contract as well.
There are certain terms which are required by law to be included in the written statement. These terms include provisions on sick pay, holiday pay, termination of employment, disciplinary and grievance procedures.
There are also certain statutory rights which employees are entitled to in relation to these terms, for example, the right to the prescribed minimum notice periods. The written statement must reflect these statutory rights, however the employee is free to negotiate and the employer free to grant more generous terms of employment.
Employees who are entitled to the written statement, must receive it from the employer no later than four weeks after the beginning of their employment.
If the employees do not receive their written statement within this time limit, the employer could face prosecution from the Department of Trade and Industry (“the Department”), as failure to provide the written statement within this time limit is an offence under the Employment Act 2006. If the employer is found guilty, they are liable on summary conviction to a fine of up to £1,000. If they are found guilty following a notice being issued by the Department, which has set a time limit for compliance, they are liable on summary conviction for a fine of up to £2,500 with a further fine of £50 per day for each day after conviction they have not provided the written statement to the employee. The Employee can also refer the matter to the Employment tribunal which has the power to make an award against the employer.
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MannBenham Advocates Limited has experience in drafting a wide variety of terms and conditions of contracts of employment. We work with our clients to provide a set of terms and conditions that are tailored to meet their requirements. Please do not hesitate to contact us should you require further information, assistance in this area or want to be kept abreast of the next employment update.
