Standard Employment Contracts - how far is too far?

Employment contracts come in various shapes and sizes, but is enough thought given to how the clauses contained in a standard contract of employment might be viewed by new starter?

Naturally, the starting position of a company when preparing a standard contract of employment is to look at what it wants to protect the most and then to make sure the contract addresses those concerns.  Classically this involves including a confidentiality clause, clauses to prevent employees from competing with the company in some way after leaving and ensuring that all intellectual property created in the course of employment remains with the company (which most of it does anyway in an employer/employee arrangement).  Once prepared it is an easy administrative job to print a standard contract off for a new employee to sign and it also ensures consistency of terms of employment across your workforce.

However, is consistency of terms across all employees genuinely helpful?

With the focus being on what the company wants to protect, an aspect of having a standard contract of employment that is often overlooked is the impact the clauses it contains may have on a new employee.  

For example, does a new junior receptionist need to sign an employment contract agreeing not to work for a competitor for a period of 12 months after leaving, or to assign any intellectual property to the company that has not already automatically transferred?  What are you seeking to achieve? Realistically, would the junior receptionist benefit from e.g. a cut down confidentiality clause which more appropriately addresses his or her use of the limited amount of confidential information he or she is likely to come across at work?  

Conversely, if you have drafted a standard contract of employment and have been mindful not to go too far with your protectionist clauses, owing to the impact it could have on your junior employees, are you comfortable it goes far enough to protect you from the potential future actions of your most senior members of staff?  

A new senior manager should expect to sign a contract containing detailed clauses that will help to protect the company on the basis that he or she is highly likely to reach a position where they could potentially hurt the company after leaving.  They will have had access to your client lists, business interests, trade secrets and confidential information. It makes sense. However, to a junior employee, including similarly detailed terms is likely to appear onerous and threatening. One size does not fit all.

From the company’s perspective, what is there to gain from all employees being employed on the same terms?  For example, do you need a standard notice period from all employees? There is a clear benefit in requiring, say, three months’ notice from a senior employee, owing to handover periods, the time it would take to recruit a new senior manager etc.  However, it is not so clear that it would be important for a junior employee to give three months’ notice. It’s difficult to see how imposing this length of notice period on e.g. an admin assistant, where no major handover is required, could benefit the company.  It may just lead to an increasingly unhappy junior employee, which would be a sad note to end an otherwise good employment relationship on.

Similarly, as a company there is a clear benefit to reserving the right to place a senior member of staff on Garden Leave during their notice period.  However, it’s difficult to envisage a situation where a company would wish to place a junior employee on Garden Leave, so why invite confusion by including a term referring to it in a junior employee’s contract?  

It is essential to look at how to protect your company’s interests in a contract of employment and in some cases it may make good sense for a junior employee to be required to sign detailed clauses that would usually be associated with an employee in a more senior position.  However, the thought process on how to best protect the company should include looking at the impact the contract that is offered to a new staff member is likely to have on them. Providing a junior employee with a contract containing a level of detail that is disproportionate to the level of responsibility they are to be given can be highly intimidating and off-putting.  It’s not a good start to an employment relationship.

So what’s the answer?

Have a suite of employment contracts which have been drafted with terms that are appropriate for the differing levels of your employees i.e. have a junior contract, a contract for the middle level and one for the most senior level.  And whilst you’re at it, make sure your employee handbook is effective, but friendly too!

If a junior employee is promoted to a mid-level role, then ask them to sign a new contract of employment at that stage.  Not only does this ensure they are employed on terms that are appropriate for their role, but it’s also a good way for a company to make sure that its employees are continuously employed on the most up-to-date terms possible.

A lot of emphasis is placed on making new employees feel welcome at work, and rightly so. A pleasant and enjoyable office atmosphere is a source of pride for any employer and recruiting a team that works seamlessly together is no easy task.  Don’t undo the good work you have achieved at the recruitment stage by frightening your new junior staff members before they have even started.

If you would like any assistance reviewing your standard contracts of employment and employee handbook I will be happy to help.