Time for an employment contract review?

28th May 2021

Written by PC Payroll and Legal Claire Day Solicitor of England & Wales

It is easy to assume that because you have an employment contract in place with your employee(s), you have fulfilled your legal obligations as an employer, however, employment law is fast-moving and changes usually take place at least twice a year in April and October. Sometimes, further changes are made throughout the year and simply slip through the net unnoticed by employers, but it is important to recognise when changes to employment law need addressing in your contracts of employment because any errors can result in costly consequences to an employer.

Whether you have a single employee or a large workforce, there are a multitude of reasons to ensure your employment contracts are full updated and legally compliant. Here are just a few good reasons…

The Good Work Plan Changes

Most employers are familiar with the requirement to provide a written statement of terms of employment to an employee who has been continuously employed for a period of more than one month, within 8 weeks of commencing employment. This was covered by Section 1 of the Employment Rights Act 1996. In April 2020, these requirements changed as a result of the Good Work Plan 2018 and it is now necessary to provide greater detail within those Section 1 terms which will now also apply to workers and employees from day one of their employment. This means that an employer will have a duty to provide an employee or worker with a written statement of terms of employment covering the extended list of section 1 terms from the first day of their employment. Those terms must now cover (in addition to the usual section 1 terms):

  • The hours and days of the week the worker or employee is required to work and whether they may be varied and how.
  • Entitlement to any benefits.
  • Entitlement to any training.
  • Any probationary period.
  • Entitlement to any paid leave.

Review of existing terms and custom & practice

Whilst your employee may have started out on the terms contained within their contract of employment, it is often the case that things change and the reality becomes different to what the contract says. It is always important to update the employment contract to accurately reflect what is happening in practice. This reduces the risk of there being any misunderstanding between the employer and employee and should there be any need for the Employment Tribunal to be involved in the future, the employer will be in a stronger position if they have their terms and conditions clearly and correctly set out (subject of course to those terms and conditions being legally compliant and non-discriminatory!).

For example, if a Nanny was originally engaged for childcare duties but during the course of time, incorporates housekeeper duties into her role on a regular basis, it is likely to be determined that this would be an implied term in her contract due to custom and practice (that she is doing this regularly as part of her day-to-day duties). This is important to be aware of from the employer’s point of view; just because it isn’t set out in the contract, does not mean it is not enforceable and does not become an implied right.

The same rule can be applied throughout employment law rights and another prime example is the topic of bonuses. Perhaps a contract of employment is silent on the subject of bonuses but over the course of time, the employee has regularly received a bonus, it may be considered by the tribunal that the bonus became an implied right within the contract through custom and practice of the employer. it is therefore imperative to always set out in the contract any terms which are happening in reality but have not been clearly identified in the contract because if they are considered implied, they may not be the terms the employer would have wanted to incorporate.

Salary increases and changes in work pattern

Whilst it is not absolutely necessary to update a contract of employment due to a salary increase or change in work pattern as this can be confirmed via a letter, it is advisable to always ensure any changes are fully documented and agreed upon and most importantly that they are legally compliant. The National Minimum Wage is usually increased in April of each year and the Working Time Regulations 1998 impose limits on the numbers of hours worked along with providing other rights relating to annual leave.

Outdated law

As already mentioned, changes to employment law are regular and usually at least twice a year. It can be easy to ignore or not notice these changes but it is important to recognise that the contract of employment issued to a worker or employee accurately complies with the law because if it does not, it can have adverse cost consequences on the employer.

These are just examples of the ways in which an employer may fall short of complying with their legal obligations but a review of your employee’s contract and what is happening in reality will allow the employer to ensure they are meeting all of their legal obligations

If you would like some help reviewing your employment contract for your nanny or small business, please give PC Payroll & Legal a  call and we would be pleased to assist, with an onsite solicitor as part of the team, ready to help.


PC Payroll & Legal are a team of experts who look after running PAYE and pension administration for working families who employ nannies and small businesses.

If you need help with nanny PAYE, nanny tax or auto enrolment into a workplace pension get in touch.

020 8979 6453|payroll@pcpayroll.co.uk

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Contact us about your payroll or legal needs

We have a comprehensive range of payroll, pension and legal services to help you save time. Speak to our highly experienced and friendly team to get started.

Need more help?

Contact us about your payroll or legal needs

We have a comprehensive range of payroll, pension and legal services to help you save time. Speak to our highly experienced and friendly team to get started.

About PC Payroll & Legal

PC Payroll & Legal was established in 2011. We help families stay legal and save time with our nanny payroll, pension and legal services. We help small business owners and the self-employed focus on running their businesses by offering outsourced payroll, workplace pension administration, business administration, HR advice and legal services. 

PC Payroll & Legal is part of the Working Life Solutions Group of companies. The Working Life Solutions Group includes Your Employee Wellbeing which offers wellbeing support programmes for businesses of all sizes.

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