Employment Contract [For Senior Employee]

*Updated for GDPR*

This document is for when you want to employ a more senior employee in your business. The employment agreement for a senior employee has more protection for the company than the employment agreement for a junior employee (also available on the site). It depends on the level of responsibility, and the access to confidential information and clients that the employee will have. Generally you would use the senior contract for managers and above, or those who have regular dealings with key clients and may develop a relationship that they could use if they were to move to a competitor or set up in competition themselves. See our Step by Step walkthrough for full guidance notes to help you complete this document on your own.

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Step-by-step guide

Let’s walk you through how to go about drafting an Employment Contract something you need if you’re a business hiring new staff. Employees can work for you only during the hours they work for you. This is one of the differences between an employee and a consultant. A consultant is normally allowed to work for other people too. You also have more control over the day to day activities of an employee, than a consultant.

The legal side of a business does not have to be scary or confusing; it is however 100% necessary. Follow these simple steps to put your agreement into writing and ensure that you are adequately protected.

1. First thing’s first, enter the relevant details of both parties.

2 & 3. You’ll want to include some general points regarding the beginning of the term. This often includes a probation period during which you can assess the suitability of the employee and end their employment on less notice than you would need to give normally after their probationary period.

4. In the next section, ask the employee to confirm that he or she will not breach any other contract by entering into this one, this is important – if they are already contractually bound to someone else you could be in trouble if you hire them.

5. You’ll need a bit outlining the duties of the employee – what are they going to do for you? This is important as it sets the standard for the level of work they will be carrying out, even if you vary their specific tasks later – so the more breadth you give yourself the better.

6. You’ll also need to define what the normal place of work will be.

7. and also what the normal hours are, and related matters – such as overtime. There are specific laws applying to working time in the UK as a result of EU legislation, so you may want one of our LawBriefs to help you with this bit.

8. Then, include information about the salary, including review and payment. Bear in mind there is a national minimum wage in the UK which you need to follow – feel free to discuss this with one of our LawBriefs. And are there any other benefits like shares or a bonus? If so, you need to set all this out now – and for shares you may need an option scheme and some wording on what happens to shares and share options if an employee leaves.

There are lots of tax issues associated with shares so tread carefully and get some extra advice from us or one of our accountant partners if you feel uncomfortable doing it yourself.

9. Now to decide how the employee will be reimbursed for expenses they incur on behalf of the business. Must these be approved in advance? Do they have to produce receipts?

10. Use this the next section to state how many days’ holiday the employee will be entitled to, how holiday is to be taken and what happens to un-used holiday – this is another area where the law has something to say, so make sure you give them the right entitlement. If you are unsure then we can help with this.

11. What will the standard procedure be regarding absence due to sickness? When does the employee have to notify you and what evidence of sickness do you need? Will they get statutory sick pay only or will you pay them more than that and, if so, how long for?

12. The section on Intellectual property involves clarifying things like who owns the employee’s ideas or copyrights generated by the employee during the course of the appointment.

13. You’ll need to include a section about confidentiality – make it very clear what information can and cannot be shared.

14. The ‘Payment Instead of Notice’ section allows you to pay the employee the money they would have earned during their notice period, instead of the employee having to work their notice. Just remember that the employee may still have rights to unfair dismissal (which is a legal right, and has nothing to do with the employment contract) so you might want to take advice from a LawBrief before you terminate the employment of any employee.

15 & 16. There should be a formal procedure for the termination of the contract (otherwise the employee may be able to claim unfair dismissal), and don’t forget to state the instances upon which the contract can be terminated – for example if the employee breaches the agreement – (or if what they do is so bad it amounts to something called “gross misconduct”) that they can be dismissed without notice or further payment.

Stealing from the company might come into this category, so you must explain what the employee must do with the company’s property if the agreement is terminated – for example, giving back any documents they have been working on, or their company phone or laptop. You might also want to require the employee to resign if he is a director.

17. You might want to make it clear that the employee will not be able to compete with the company after the end of the term or poach its employees or customers. Be careful, though, these kinds of restriction, called “Restrictive covenants” can be difficult to enforce if they go on too long or cover too much ground. This is another one you might need to talk to a LawBrief about.

18. You may also want to outline the procedure for discipline and complaints, so that everybody knows where they stand. If you don’t include the procedure in the contract, you must tell the employee where to find the procedure. It is always a good idea to have a standard staff handbook that everyone can access to set out this kind of stuff, as it can also deal with other legal obligations like data protection.

19. The next section should explain simply that pension provisions are outlined in Schedule 2. This is another area where you may need advice as the law has recently altered and you may be obliged to provide or phase in a pension plan for employees.

22. Almost done now. You should include something about notice. How do you plan on communicating about the agreement? Oh and make sure that the employee can’t assign the agreement to someone else – you want his services, not somebody else’s.

24. And this is where you get the option to try out fantastic e-signing feature at no extra charge and close the agreement in minutes.

Remember, if you come unstuck at any point, our LawBriefs are here to help. Visit our legal advice page to submit an online enquiry or call us on 020 7148 1066.

Document drafted by:

Louise Paull LawBrief

Louise Paull is an experienced employment lawyer providing clients with commercial, practical advice on a full range of employment-related matters.

She advises on contentious and non-contentious matters working with employers on the legal issues arising in relation to the recruitment, day-to-day employment and dismissal of staff, including drafting contracts of employment, staff handbooks and policies, cultural and family-friendly issues, equal opportunities, diversity and discrimination matters, sensitive issues around the termination of employment, including disciplinary, conduct and capability issues, negotiating severance packages and settlement agreements, collective and individual redundancies, unfair dismissal, breach of contract, business transfers and TUPE issues.

Louise qualified in 1999 with City firm King and Wood Mallesons SJ Berwin as an employment associate and most recently worked for Berwin Leighton Paisner in its employment team. She spent time on secondment with IMG, a major international sport and artist management business, as its sole in-house employment lawyer, and has worked for BT in its in-house legal team.

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