The true cost of employment contracts

By law, an employee is entitled to a written statement of the main terms of their contract within two months of employment, which must include:

• To pay
• Work hours
• right to vacation
• sick pay arrangements
• warning
• Information on disciplinary and grievance procedures

Because the contract is a legal document, it must contain the correct information, written correctly and sensibly in a way that protects both the employer and the employee.

But how to write employment contracts without legal knowledge?

Contact a lawyer

If you are not legally trained or have little experience drafting employment contracts, it would be wise to seek legal advice.

A law firm will be able to draw up a contract for company-wide use, but sadly at a cost, typically at an hourly rate of between £160 and £250. For small businesses this can be a cost that just isn’t an option. viable option.

contract templates

A template is a standard document that allows you to fill in all the appropriate details of your company, employee and terms of conditions. While relatively inexpensive, they can include a lot of generic employment law information and data that may or may not apply to your business, which will need to be interpreted before it can be used as a legal document.

Once this has happened, you may need to modify, add, or remove clauses to make the document relevant to your business or situation. So now you have a dilemma: you think you have a legally binding and compliant contract, but because you’ve made changes to the original (generic) data, you can’t be absolutely sure that, should something happen unexpected, you, your employees or your business are protected by law.

This brings us back to the legal advice, that in addition to the costs above, a lawyer would need to read the contract and prepare some notes, which usually takes half to three-quarters of an hour. Which means extra fees of at least £80 to £125, and at this stage, you still don’t have a legally compliant employment contract.

Suddenly your £45 template starts looking expensive and time consuming.

Templates usually look plain and you may feel like you’re getting value for money by buying one and reusing it. However, using a template to create compatible employment contracts in England and Wales assumes that you have had legal training or a lot of experience, have a healthy HR budget, and have free time on your hands.

Understanding the true cost of the journey from headcount to compatible employment contract is difficult to achieve. The changes you made to the original document may only require minimal redaction and your legal bill may be less than £250 per contract. Alternatively, you could get very unlucky and end up with fees that are double or even triple that amount, per contract.

pay as you go

Recently, another service has opened up for many small and medium-sized businesses in the UK that falls somewhere between the two options above.

Employees can now purchase employment contract templates that have been signed and endorsed by professional law firms that allow you to create a custom contract based on your company’s needs and for a specific employee. Based on your answers to a set of simple questions, the system understands what clauses are required in the document and inserts the text needed to complete the contract.

While these employment contracts cost more than a standard template (£100-£200), because they’ve been signed by a legal team, you can rest assured that your contracts comply with current UK law that protects your business. . and its greatest assets, its employees.

When choosing a provider of employment contract documents, look for:

• Are you tied to a contract? There are some companies that will lock you into a binding and expensive software agreement. Always review the terms and conditions thoroughly before contracting the service.
• Will you receive updates? Employment law is a constantly changing thing, and employment contracts can quickly become outdated. Make sure that whichever option you choose, you get updates about the change and what they mean (obviously this is better if it’s free). Do they also give you free legal advice for those factors you don’t understand?
• How legal are legal documents? For the documents to be real, they will need to be endorsed and signed by a real legal team or firm. Don’t settle for just being told they are, find out who is behind them and investigate them thoroughly.

Where to go?

The option a company chooses will always depend on the company itself. Whichever way you decide, always make sure that your employment contracts remain legal, so that you protect your business and your most important asset, your employees.