Creating Employment Contracts

Businesses want creative, productive staff. They also need to protect their ideas, reputation and resources. Creating strong but flexible employment contracts can help square the circle.

When it comes to safeguarding a business – its ideas, reputation, resources and culture – there is no substitute for putting careful thought into employment contracts, training and guidance. Overly restrictive employment contracts, on the other hand, can be counter-productive.

Sally Hulston, Managing Associate at national law firm Addleshaw Goddard, believes that suitably tailored contracts, regularly reviewed, will go a long way to ensuring clarity on company policy while enabling individuals to retain the freedom and confidence they need to work productively. “The gut reaction is to put everything possible into the employment contract to ensure certainty of the employment relationship,” she says. “But that can work against you. If you review contracts regularly and reinforce them with training and guidance notes, that tends to be more effective.”

Four areas – homeworking, social media, personal relationships at work, and blurring boundaries between company and individual resources, particularly tablets and smart phones – are currently attracting attention. All have benefits for entrepreneurial businesses, but they also have their pitfalls.


A strong culture with attractive working arrangements is important, so saying yes to homeworking can be useful, just as long as the business can count on staff to be contactable and productive.

Changes in the law since 2002’s Employment Act mean that employees with 26 weeks’ continuous service are entitled to request flexible working arrangements if they have a child under 17, a disabled child under 18, or care for another adult. Soon, all employees with six months' service under their belts will be able to request flexible working, whether or not they are parents or a carer.

Bosses differ on their attitudes to homeworking. Recently, Yahoo CEO Marissa Mayer withdrew the search company’s homeworking policy. But for most, there are still important upsides. Working from home can cut out untimely distractions, create greater job satisfaction and improve morale. Companies with homeworking policies report reduced absenteeism, improved productivity, and say they find it easier to recruit.

The flexible working legislation does not create a right to work flexibly or part-time; it simply provides a statutory framework through which a request must be considered, Hulston points out. If such a request is granted, she suggests agreeing homeworking days in advance and stipulating within the employment contract the specific activities, client meetings or appraisals perhaps, that must take place on site. Working hours should be set out clearly and employees made aware of their obligations to protect company equipment and data. It’s also a good idea to confirm who will bear the cost of any heating, lighting or business rates, as well as specifying who will supply, maintain and finance the necessary IT and communications.

Social media

Using social media to build your profile can be highly cost-effective, but as an increasing number of legal cases demonstrate, companies need to be aware that a Facebook or Twitter account in the hands of a disgruntled or careless employee, is a reputational risk.

Apple dismissed an employee who posted derogatory comments about work and the company’s products on Facebook – a move that was upheld by an employment tribunal – because Apple’s training and disciplinary policy covered this area. Clear guidelines are essential says Hulston. “It is sensible to update any disciplinary policies to make clear that inappropriate use of social media that brings the company into disrepute, or which constitutes bullying or other unacceptable behaviour, may be misconduct, which could lead to the termination of their employment,” she says.

Relationships at work

It’s a fact of life that many long-term personal relationships begin in the workplace. “This should not be viewed as a problem in itself, but it is important to recognise that such relationships can cause a number of issues for the employer and the rest of the workplace,” says Hulston.

For example, if one half of a couple is the other’s manager, the company should put arrangements in place should it need to take disciplinary action against the more junior employee. Similarly, it needs to keep a watchful eye if the more senior member of staff is responsible for signing off expense claims or overtime.

The sensible course is to put in place policies that guard against staff committing or becoming open to allegations of inappropriate behaviour, favouritism, abuse of authority or conflicts of interest and linking them to the contract, Hulston says. Setting out within the contract the kinds of issues a person can be sacked for without notice – for example, sexual harassment, bullying, financial misconduct – is also essential, along with stating that employees are expected to act fairly and respectfully at all times.


A relaxed BYOD (bring your own device) policy, one that seems to encourage enthusiasm and productivity, can become a liability if issues around access to company information and security are not resolved in advance. “Many companies have refused to integrate personal devices with the company’s networks. Yet, increased competition in the marketplace and the rise of flexible working conditions have meant that BYOD is creeping into many new businesses,” says Hulston.

One possibility is joint ownership. If businesses contribute to the purchase price, they take a stake in the device, which may entitle the business to keep it once the employee leaves. In all cases, businesses should set boundaries on how company information is stored and be clear about their expectations on their rights of access. “There are data protection and privacy laws at play here, so best practice would be to obtain the employee’s general consent to access company data on the device at all times when it is needed,” says Hulston.

In all these areas, clear thinking and a willingness to update contracts and guidelines will clarify policy while enabling staff to enjoy the flexibility they need.

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John Carroll - Helping businesses achieve International success. Head of Product Management & International Business, Santander UK