Speaker 1: In this video I want to take a look at how I draft the contract of employment for small business owners, small employers who contact me on a regular basis for contracts. So I'm going to take you through my contract and the thought process and the important things that I see in the contract, what to be careful for or watch out for. Okay so we'll start here, this is essentially my template contract, this is my starting point. So clearly the contract should be issued on the letterhead containing the name and address of the employer. At the outset then you're going to address your letter, your terms and conditions letter to the employee and you're going to send it out in duplicate once you're satisfied with it. And the employee is going to sign two copies and you're going to take one copy back and then both of you have a signed copy of the contract of employment. This contract will also keep you right in terms of your obligations under the Terms of Employment Information Act of 1994 which is a statutory obligation. You must do this, you must give employees a written statement of certain terms and conditions of employment within two months of starting the job. So you obviously address your letter, your terms and conditions letter to the employee and you set out here the name of the legal entity that is the employer. So that could be a sole trader, it could be a partner, it could be a limited company. You need to be careful about that. In this first paragraph there's a line here at the end which are two lines at the end which I would strongly recommend and you'll see here it says for the avoidance of doubt and I'm going to highlight this, for the avoidance of doubt these documents are not contractual and may be amended and replaced from time to time at the discretion of. I'm referring there to copies of the policies and procedures i.e. the staff handbook will be given to the employee under separate cover but I am stipulating that those documents, the staff handbook, the relevant policies and procedures are not actually part of the contract and are not contractual. Now I have a separate business or a separate video rather about whether the staff handbook should be contractual or not. Take a look at it on YouTube, you'll see why I don't recommend that it's contractual and you can see why then I am stipulating here that for the avoidance of doubt these documents that is the contract or the staff handbook is not contractual and can be amended and or replaced from time to time. So I'm saying here that this letter embodies the entire agreement and understanding between employer and employee. So the date of employment then that's going to be here, if the employee has started already you're going to put in the proper commencement date of the employment, if the employee is going to start with you in the next week or month or so then obviously you put in the correct date as well. Now you're going to have a clause here, I would strongly recommend it, subject to satisfactory completion of the probation period specified below. That's very, very important. I recommend very strongly that you have a probation period of at least six months. That's extendable, it should be extendable to 11 months. That's in relation to a permanent contract. You can also have a probation period in relation to a fixed term contract. There are two types of fixed term contracts. One is for a specific term, for example, six months or 12 months or two years or indeed five years. The other is what's called a specific purpose contract. This is a contract for the specific purpose of doing something. So a person could be working in your business or in your school or wherever for the specific purpose of covering for somebody on the maternity leave, for example. Likewise you could have a specific purpose contract for the purpose of a particular construction project or for a building project or for something of that nature. In other words, it's got a specific objective or a specific purpose and the contract only lasts for as long as that purpose is there. It could be, as I say, maybe roadworks or a building or bridge or something of that nature. Once the object is satisfied and achieved, the contract is at an end. As I say, there's a fixed term contract and that's for a specific duration of time. It could be six months. It could be six years. So that's what you need to put in there if you are going for a fixed term contract, one of those contracts. Otherwise, you're looking at a permanent contract provided the person passes the probation period. You'll see here as well something that's important which is in my contract. That is a statement that the Unfair Dismissals Act will not apply to dismissals consisting only of the expiry of the term or the cessation of the purpose specified in this clause. In other words, if the contract is a fixed term contract for 12 months, the very fact that the 12 months comes to an end means that the contract is over and it will not give rise to an unfair dismissal claim. In other words, the contract has simply expired in accordance with the terms. Okay, the next thing then is your appointment is as. So you could put in there solicitor, secretary, receptionist, retail assistant, support staff or whatever. Your job description is attached. We'll show you the job description there at the end. Essentially at the end, you put in a job description setting out the main bullet points I would suggest of the responsibilities and tasks involved in the job. The location clause, you want to stipulate or set out exactly where the person is going to be located. And you're also going to have to stipulate if they are going to have to perform their duties away from the premises from time to time. So, you know, they may have a job that will require some travel, or they may have a job or you may want them to travel to different branches of your business around Dublin or around Leinster or around Cork or wherever. It's important though that you put the location in relation to the job in the contract. And it's also important that you put in a clause providing for geographical flexibility. In other words, that you can be flexible or that the employee will be flexible in relation to locations of work to meet the needs of the business. So that's important. Location. This is the probationary period. It's one of the most important clauses, I believe, in the contract of employment, especially if you're giving one to a person for the first time. I would recommend a six-month period and that should be extendable to 11 months. And I would also recommend that it states quite clearly that during the probation period, the only notice the person, employee, is entitled to is one week's notice. I have seen contracts where they forget about the probationary period notice period and the contract itself will then have three months notice. And after a month, it's clear that the employee is not going to work out. And then the employer is then stuck with the three months notice period, even though the employee may only be there for a month or two months or three months. And even though they're going to get terminated during probation, they have left out the provision for one week's notice in the probation period. And then they're stuck with the general notice period in the contract. That could be a month or three months. The hours of work that it's set out here, if it's a retail business, that's important. If it's an office, obviously, that's important. So you should set out the opening hours of the business, and you should also set out the situation in relation to overtime. Is the person going to get paid their normal rate for overtime? Are they going to get time and a half, maybe double time? Or is there no overtime payable in respect of the position? It may be a salary job. It may be, you know, sort of understood or certainly made clear from the contract that overtime will not be payable. But you need to make that clear at the outset, because if you don't, then in the event of a dispute, i.e. a person has a contract for 40 hours a week, invariably, they end up doing an extra hour or two every day after a period of time, they get very frustrated and disgruntled, and they will be looking to bring some sort of a claim perhaps for the extra hour of work. In the normal course of events, quite frankly, they're entitled to be paid for the work. But if they're on a salary, and if the contract says you're not going to get paid for overtime, well, that's fairly definitive. The pay rate of pay then should be included in your contract as well. So you should set out just, you know, how often they're going to get paid, whether it's weekly, monthly, etc., etc. And one thing you should put in if they are a retail worker, for example, or on a relatively low wage, you should put in the pay reference period for the purpose of the National Minimum Wage Act. This is actually a requirement in the contract of employment that you put in a pay reference period. You also have a clause here, you'll see where the company, or the employer rather, reserves the right to deduct from your wages, and if so, it's due to it. So, you know, this might include overpayment of wages or something of that nature. Annual leave then, that's governed by the Organization of Working Time Act 1997. However, your employment may provide more generous employment or annual leave provisions. If that's the case, it should be stipulated here. One thing that you might note here is this, except in special circumstances, no more than 10 days may be taken at any one time. So 10 days leave is essentially two weeks. So a lot of employers will insist that the employee can't be gone for more than two weeks. Another thing that you may consider is a certain number of your annual leave days may be taken or may be designated as dates that you must take as holidays when the office is closed during the Christmas and Easter holidays. That may be given notice of these days in advance. So if you're the employer, you might want to consider this and just see, is there any particular dates that can be closed, for example, Good Friday or Holidays at Easter, or Holidays at Christmas or whatever. If you want them to be designated as holiday days, well, you need to specify it and set it out there. The situation in relation to pension allowance is that there's no obligation on the employer to provide a pension. However, the employer should make provision for payment by the employee into a PSRA. This is a private pension situation for the employee. So you should make provision for or allow the employee to facilitate payments into a PS, PRSA of their choice, and you should give them a list of approved providers if they request it. You can get a list of approved PRSA providers online, anywhere. Now if you are an employer who operates a pension, well then you just stipulate or set out here what's the situation there, what they're entitled to, what payments will be made, etc. etc. Retirement age, I would strongly recommend that you have a retirement age in your contract. If that's going to be an issue for you, you do need to specify it or set it out. If you don't, well then you're going to have a situation where it may be very difficult to get somebody who comes to a certain age and you want to, for intergenerational reasons, etc., promote younger people. But if there's no retirement age in the contract, well then in Irish law at the moment, as things stand on 28th of March of 2018, there's no specified or particular retirement age, unless you're in the public service or in a specific job provided, in which the contract provides for retirement age. Illness then, you should set out here what the situation is in relation to illnesses. You should set out the reporting requirements, etc. etc. Now you may also have a staff handbook and I would strongly recommend that you have a staff handbook. The staff handbook should specify in more detail what the reporting requirements are in relation to illness, how they report, etc. etc. You should also set out, if there is a sick pay scheme, what the situation is, how long it lasts for, and so on and so forth. Or if there isn't a sick pay scheme, you simply say that the company or the employer does not operate a sick pay scheme and that is the legal position. You're not obliged to provide one, but some employers do. Maternity Parental Adoptive Enforcement Year Leave and there are other statutory leaves as well. All the details of these should be set out in the staff handbook. So I would recommend that you have a staff handbook and that you set out those leave arrangements and entitlements in the staff handbook. You should have a confidentiality clause as well, dealing with customers or clients of your business. You don't want any information or details of those being disclosed to anybody else or any notes or memoranda taken from the business. You also may want to put into your contract a restrictive covenant. A restrictive covenant is something that stops somebody from setting up a business in competition with yours or indeed working in the same industry within a separate or a certain geographical distance for a specified time, for example, six months after they leave you. If you have a nail bar or if you have a hairdresser's or something, you don't want somebody setting up two doors down the street after they've left you and bringing their clients with them. You also don't want them carrying out work at home, for example, in their own house, maybe in the garage or a converted shed or something, and they're doing hair or they're doing makeup or they're doing nails or whatever. You need some protection for yourself. Now your restrictive covenant, that is your non-compete clause for when they leave the job must be reasonable. So it can't be completely la-la in terms of stopping them from working for 12 months over the entire region of Ireland, because people have a constitutional right to earn a living, but you also have a constitutional right and a common law right to protect your business. But it does have to be reasonable as to time and as to geography, what area you're looking to protect. An important bunch of procedures will be those dealing with grievance, discipline, bullying, harassment, sexual harassment, et cetera, again, staff handbook. So your three most important procedures, grievance, discipline, and dignity at work. You also have a data protection clause here, which stipulates that by signing this document, you consent to the employer maintaining personal data about you or retaining it. This is getting much more strict with the introduction of GDPR from May 2018. You cannot just rely on this simple signing of a contract as consent. You really need a more lawful basis for consent from the employee. Now you may well have that. For example, you do need to maintain records of employees for the revenue commissioners, for the Department of Jobs, Enterprise, Employment, and so on and so forth, your statutory and legal obligations. But it's not enough or will not be enough when GDPR comes in from May 2018 to simply get the employee to sign this, and this gives you free reign to do what you like with the data. That won't be the case. This clause here deals with the notice period in relation to the termination of employment. What is set out here is the statutory situation. You may require, however, your employees to give you more notice. You may require a fortnight or a month or three months or something of that nature, and it will depend on the nature of the job. Pay on termination, then, that's a relatively straightforward sort of clause. You're entitled to pay calculated as a proportion of one month's or week's salary for any day's work since you were last paid, plus any accrued holiday entitlements. Changes to your terms of employment, this is important, however, it's of limited value. You are entitled to, as an employer, change the terms of employment, however, those changes must be reasonable. If they're not reasonable, you do need to negotiate the changes with your employee, get them to sign up to elsewhere. You then will ask the employee to sign here, and you'll give them two copies and get them to sign both copies, and you take one back, and they take one back, and in the event of a dispute, then, both parties will know exactly where you stand. Down here, then, is the job description. I would recommend a number of bullet points, five to 10 bullet points, setting out the main responsibilities and duties associated with the role. I hope you find this useful. If you do, you might give it a thumbs up down below, and if you need a contract or staff handbook or whatever, feel free to contact me, and I'll be able to give you a quotation for a contract and a staff handbook. Contract on its own without a staff handbook is, I wouldn't recommend it. I recommend getting a staff handbook as well, because your contract, quite frankly, is going to refer to the policies and procedures in your staff handbook, and if you don't have a staff handbook, then your contract is going to look like the emperor with no clothes, as it were. If you want to put all your policies and procedures in the contract, well, then you're going to have a huge, unwieldy document, and your policies and procedures are also going to be contractual. You don't want that, because you want to reserve the right to change them or add or subtract as time goes on. Hope you find it useful. Give it a thumbs up down below if you do. Thanks a lot.