Ensuring compliance: updating employment contracts and policies

In April 2020, the government introduced changes to the terms that needed to be included in an employment contract. In addition, the requirement to provide a contract was extended to workers as well as employees. It became mandatory to provide a contract from the first day of employment at the latest. 

Four years on, and with numerous significant regulatory changes coming into force this year, now is the time for employers to revisit their employment contracts and policies. This will ensure they are compliant and fit for purpose. 

What changes are taking effect this year? 

The most significant changes to legislation include:

• new rules on holiday entitlement and pay, effective from 1 January 2024; 
• flexible working requests to become a day one right;
• right to request a predictable working pattern;
• neonatal care rights;
• carer’s leave;
• enhanced redundancy protection for pregnant mothers and employees returning from family leave; and
• duty to prevent sexual harassment, which is likely to come into force in October 2024.

For more detail on these changes, read our article on ‘What’s on the HR agenda for 2024?’.

What should employers be doing now? 

To comply with the above legislation changes, employers should take the following actions.

• Regarding the new rules on holiday pay, employers should assess whether any workers meet the new definition of an irregular hour’s work. If they do, the terms of holiday clauses in the employment contract may need amendment. 
• Rights relating to additional pay such as overtime pay, commission, and bonuses may need to be reviewed. This is because they may need to be included in the holiday pay calculation for four weeks of annual leave. 
• Flexible working policies will need to be updated to reflect the reduced timeframe to complete the process from three to two months, the day one right, and the right to make two requests every 12 months. 
• Employers with a casual workforce will need to introduce a right to request a predictable pattern of work policy. You will need to determine how such requests will be dealt with and where training will be required. 
• A carer’s leave policy will need to be drafted.
• If there is a redundancy policy, this will need to be updated to reflect the new rights for pregnant mothers and employees returning from family leave. 
• Equal opportunities and harassment policies will need to be reviewed to ensure they address the changes required under the new duty to prevent sexual harassment. 

How can the changes be introduced? 

Policies should be drafted in a manner that allows them to be updated from time to time. 

Template contracts should be updated immediately to ensure new employees are offered employment under the new terms. These should also be centrally controlled by HR to ensure that the standard terms cannot be altered without approval. 

However, modifying employment contracts for existing employees requires their agreement. If changes to existing contracts are needed, a good option is to coordinate them with pay reviews, salary negotiations, and promotions. This will act as an incentive for employees to agree to the changes. 

Other considerations

One of the most common issues we see is that senior employees have employment contracts that date back to their previous positions within the company. This means that some important business protections, such as non-compete clauses, may not be enforceable. Therefore, when promoting senior employees, it’s important to review and amend any non-compete contractual clauses to ensure they are reasonably drafted to protect the business’ interests. Areas of focus should include confidential information, the retention of valuable employees, and relationships with key clients. 

If you would like to speak to anyone regarding an update to your employment contracts or policies, please get in touch with Charlie Barnes.