You've just been offered a new job (congratulations!). You are excited about the opportunity and are raring to go. You are passionate about the new employer and anticipate a supportive and trusting working relationship with the company. Now, your employer has handed you a monolithic employment contract spanning several volumes, full of legal jargon, long complex clauses, and lots of ways that things might go wrong. It all sounds a bit deflating doesn’t it? Can we do better?
One Dutch lawyer, Daniel Maats of Bruggink van der Velden, has done just that. Maats helped a company, Tony's Chocolonely, to produce something very different for their incoming employees – a wonderful single page document, which is easy to read and understand. The benefits of such a simple agreement are clear and I'm sure that future employees of Tony's Chocolonely will feel fondly towards their new employer after being presented with this fun and friendly contract. I would encourage you to click the link and take a look.
However, the contract is based on Dutch law.
Can we do the same thing under UK law? Let's have a look through the requirements for employment contracts in the UK page, and see if we can create a single page contract as user-friendly as Maats'.
There are no particular formalities required to enter into an employment contract in the UK; a contract can be written or spoken and its terms may be express or implied. That said, section 1 of the Employment Rights Act 1996 ("ERA") requires an employee to be given a written statement of certain specified employment particulars. This means that, even if a contract is agreed verbally, an employee will still need to receive a statement of their terms and conditions by the time they start their employment.
There can be serious consequences for failure to provide the right information. An employee can make a complaint to the employment tribunal if their employer fails to provide a section 1 statement or provides an inaccurate or incomplete statement. If the complaint is successful, the employer will be ordered to pay them between two and four weeks' pay in compensation. For a business with a large number of employees, this could soon add up.
Note that I'm using the term "employee" for ease here but, since April 2020, ERA also requires workers to be given a written statement of particulars in the same way as employees and is entitled to bring these same complaints.
So, for us to truly have a one page contract, we will need to comply with section 1 in that contract, otherwise we'll just be adding extra documents after the fact, which seems like cheating to me.
Section 1 of the ERA requires certain information to be provided in a single document (in the rest of this post, I will refer to that single document as a "S1 Statement"). Can we keep all of these terms and conditions confined to a single page?
Our S1 Statement will need to include:
- The names of the employer and the employee.
- The date when employment will commence under these particular terms and the date on which any earlier period of continuous employment commenced.
- The employee's rate of pay, or the method for calculating that pay.
- The intervals at which they will be paid (e.g. weekly or monthly).
- Any conditions relating to hours of work, such as normal working hours, normal working days, and whether these days or hours might vary.
- Holiday entitlement and details of whether holiday can be carried forwards.
- Length of the notice period required to terminate the contract.
- A job title or a brief description of the work.
- If the role is for a fixed term, the length of time for which the arrangement is expected to last or the date it will end.
- Details of any probationary period.
- Place of work and, if the employee is required to work outside of the UK for more than one month, some additional details about working abroad.
So far so good. In fact, assuming that our employee won't be working outside the UK for more than a month, Maats' Dutch one page contract seems to be doing the job. The only thing we would need to add to comply with section 1 would be details of the probationary period (What happens during that period? Is the notice period shorter? Will it end automatically?).
Unfortunately, we are not done yet. In April 2020, section 1 ERA was updated to include some new requirements. Now, our S1 Statement will need to include:
- Information about any training which the employer requires the employee to complete and whether or not the employer will pay for that training. (There is actually a wider requirement for information about training which will be available but not required, but more on that later!)
- Details of any benefits provided by the employer which haven't already been set out (e.g. bonuses, stock options, private healthcare or staff discount), even if these benefits are discretionary.
Clearly, this could take up more than a page, however small we type. If no training or benefits are on offer, then the statement will need to say so.
Even if we manage to squeeze this onto a single page, there is still more to add.
Section 1 sets out another list of terms and conditions - details of which can be set out in another easily accessible document. Great news! Surely this saves us space on our single page? Not quite. While the particulars of these terms and conditions can be in a separate document, our S1 Statement must still refer to that document. We need to make space on our page to let the employee know where they can access details of:
- Sick leave and sick pay.
- Any other paid leave, such as maternity leave.
- Any training the employee may be able to participate in.
If our page wasn't full enough, section 3 of the ERA chimes in with some extra requirements for our S1 Statement. The S1 Statement must include a note about:
- How the employer will deal with disciplinary issues (or referring the employee to a separate document containing that information).
- Who they should contact to appeal a disciplinary decision.
- Who they should contact if they have a grievance and the manner in which they should make their grievance.
Our single page employment contract is suddenly not looking like a friendly, inviting document any more. The print is so tiny that any rational employee would be forced to assume that we are trying to sneak something in that we don't want them to know about.
Aside from the legal requirements, there are other topics that an employer may want to include in a contract. Some employment matters can be included in a handbook, which is a helpful way to keep the contract itself short (I notice that Maats’ contract refers to a contractual “Serious about People Guide”). For example, the contract may not need a full page on how to claim expenses, when this can be covered nicely in a business-wide policy. We would always advise that handbooks should be kept non-contractual to ensure maximum flexibility and they should only contain general policies that apply to all employees, or certain groups of employee, in the same way. However, anything that needs to be tailored for a specific employee, or which really needs to be a contractual obligation, should be included in the contract.
Employees have access to a large amount of their employer’s sensitive information, such as trade secrets and client lists. It is absolutely important that employers trust their employees, but it is helpful to lay down a few ground rules about what employees can and can’t do with that information during their employment, so that everyone knows where they stand. Also, while we don’t want to be all doom and gloom, any lawyer would tell you that a contract should have provisions covering what might happen when the contract ends – it’s in everyone’s best interests to have a bit of certainty about what will happen after the employee leaves. It may be very important for an employment contract to contain things like post-termination restrictions, confidentiality obligations and intellectual property provisions.
So, it does not seem like we can mimic Maats' single page contract for UK employers. Though that is a shame, it does not mean that we should revert to a default contract, which corporate-rebels describe as "boring, scary, and full of incomprehensible legal mumbo-jumbo".
A contract can be longer than a page but still be user-friendly, readable and easy to understand. It can include all of the necessary protection for both parties, and satisfy all of the section 1 requirements, while still being in plain English. Employers who are particularly keen to make a good first impression could use an informal and personalised offer letter or even provide a single page summary of the terms and conditions, inspired by Maats' flowchart style contract, along with the more detailed contract.
Signing a new employment contract is a milestone for most of us. It accompanies the start of a new adventure full of hope and ambition. However, the contract itself is boring, scary, and full of incomprehensible legal mumbo-jumbo.