What's the point of employment contracts?

We are often told by employers and employees alike that they do not have a written employment contract and that therefore there is no contract, but this is not quite right.  If an employee is attending work and being paid then there is a contract, it is just not written down.

It is therefore always safer to have written employment contracts as this means that you can actually choose the terms, as opposed to having standard clauses implied by law that you may not want.

Additionally you may wish to have in place other clauses to safeguard your business.  For example by including a clause restricting what an employee can do following employment.  You are likely to want to protect your client base by trying to stop the employee poaching your customers and staff.

If you are paying for expensive courses or qualifications, you could have a clause requiring an employee to repay some of their training costs if they leave within a certain length of time.  Without a written clause, it will probably be unlawful to deduct these costs from the final salary payment.  This will leave the employee free to leave and make use of the qualifications somewhere else while you foot the bill.

If you’re still not convinced that having a written contract in place is the way to go, bear in mind that it is also the law!  Employers are obliged to provide employees with a written statement of their key terms of employment like the hours, place of work and holiday.  Failure to do so will allow the employee to apply to the Employment Tribunal.  And if you are unlucky enough that an employee wins an employment tribunal claim against you for something else, failing to provide a written statement can result in an uplift in their award of up to 2 to 4 weeks pay.