The Importance of a Signed Contract of Employment

Peninsula Team

August 29 2013

1.         Introduction Every employee who works for your business must receive a written contract of employment. This is outlined in Section 3 of the Terms of Employment Act, 1994, which states “an employer shall, not later than 2 months after the commencement of an employee's employment … give or cause to be given to the employee a statement in writing containing the following particulars of the terms of the employee's employment”
  1. the full names of the employer and the employee,
  2. the address of the employer,
  3. the place of work
  4. the title of the job or nature of the work,
  5. the date of commencement of the employee's contract of employment,
  6. in the case of a temporary contract, the expected duration of the contract and/or the date on which the contract expires,
  7. the rate or method of calculation of the employee's pay,
  8. the pay reference period and pay intervals and that the employee may request a statement of their average hourly rate of pay,
  9. any terms or conditions relating to hours of work (including overtime),
  10. any terms or conditions relating to paid leave (other than paid sick leave),
  11. any terms or conditions relating to sick pay or a pensions
  12. the period of notice of termination to be given by the employer and the employee,
  13. Details of any collective agreements.
Remember, if an employee does not receive a contract that complies with legislation and/or they don’t receive it within 2 months of starting, then each such employee could win 4 weeks’ pay each in compensation. 2.         The Importance of a Written Contract of Employment It is important to note that every employee has a contract of employment, even where one is not given in writing. This is because implied terms and conditions can exist based on the working employment history. Thus, a custom and practice may be deemed a contractual entitlement where the employee comes to rely on that term. The difficulty with this kind of arrangement is that the employer and the employee may well have different views as to what are the implied terms and, where such views clash, difficulties in the employment relationship will no doubt arise. Accordingly, it is very important for an employer to clearly outline terms and conditions in writing to avoid any confusion or ambiguity. In New Cityview Press Ltd. -v- Breslin (PW55/2003), a dispute arose as to what bonus arrangements would apply. The EAT found in favour of the employee stating that in order to establish “justice between the parties” a “fair, reasonable and just approach” would be to find in favour of the employee. Thus, the failure to issue a written contract outlining the bonus entitlements resulted in the employer breaching an implied custom and practice. In Hall -v- Crowe & Dolly Heffernans (UD1288/2002) the EAT held that a contributory factor behind their decision that the employee had been unfairly dismissed was the employer's failure to furnish the employee with a contract of employment. 3.         The Importance of a Signed Contract of Employment Furthermore, it is becoming increasingly important for employers to ensure that employees sign their contract. In the case of Kerry Foods -v- Donnegan (PW68/2003) a dispute arose over overtime payments. The employer argued that they had issued contracts of employment which clearly specified that employees were not entitled to overtime payments. The EAT accepted that contracts existed with these overtime terms. However, they were not satisfied that the employee had actually received the contract as there were no signed copies. Therefore, the employer could not establish that the employees were in fact aware of the overtime policy and as a result the EAT found favour of the employees. Another example is Malone -v- Dunnes Stores (UD1299/2002) where an employee claimed that she was constructively dismissed largely because she was constantly transferred between departments. The EAT, however, dismissed her claim largely due to the fact that then employer could clearly evidence that the employee’s signed contract clearly outlined that she would be required to work across all departments. Therefore, the employee did not have a case as the company had not broken her terms and conditions. 4.         Conclusion It follows that an employer should not simply just issue their employee with a written contract of employment; they must also take positive steps to ensure that their employees return a signed copy of that contract. Employers should take time to ensure that the contracts of employment contain sufficient clauses to govern the working relationship and that the contract will work exactly the way it is needed to. Employers should seek advice from Peninsula Business Services when seeking to introduce new contracts of employment or where faced with a situation where an employee refuses to sign their contract of employment. Please phone the 24 Hour Advice Service on 01 8555050 and one of our experienced advisors will be happy to assist.  

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