Categories
The Employment Contract

How Safe is Your Business From This Simple Mistake?

small-business-mistake

Imagine this.

You’ve worked hard to build up a solid base of clients in your hairdressing or beauty salon business.

It hasn’t been easy, but you began to see the fruits of your hard work, long hours, and commitment pay off around 12 months ago.

In fact, it got so busy that you had to take on another hairdresser and, after fielding applications and interviews, you took on Nigel 9 months ago.

Nigel seemed to be the perfect person for the job; he was originally from the area and had spent the last 5 years in Dublin working in one of the country’s top salons gaining valuable experience.

You agreed the main parts of his employment contract-his salary and working hours-and things have gone surprisingly smoothly. You didn’t give him a written contract because you were both happy enough and the real meat of the agreement was how much he would be paid and how many hours per week he would work, and you were agreed on this.

You noticed that he got on great with all your clients and they really liked him.

Last weekend, though, you heard some disturbing news: you were told Nigel was going to set up his own salon on the Main Street in your town. You didn’t believe it at first, but couldn’t help worrying about it because there was a nagging concern in the back of your head.

If it was true, it would not be hard to imagine pulling a lot of your clients with him.

Then you notice a friend of his wishing him well on his new venture on his Facebook page.  You can’t wait any longer and you confront Nigel and put the disturbing rumours to him.

Nigel confirms your worst fears and gives you a month’s notice.

You ring a solicitor with your questions:

  1. Can you dismiss him immediately?
  2. Do you have to give him notice? If so, how much?
  3. Will he have a case for unfair dismissal?
  4. Do you have to pay him if you terminate his employment today?
  5. Can he bring your clients with him?

You’re told that you can dismiss him and, while he is entitled to one week’s notice, he does not have the required 12 months’ service to bring a claim for unfair dismissal.

But you now quickly realise that the most serious aspect of this whole affair is Nigel setting up his new competing business on Main Street, and the danger of you losing a lot of your clients-clients you had spent years acquiring.

And the most stomach churning part of the whole affair?

You now know that if you had a written contract in place from the start of Nigel’s employment you could have protected yourself and your business with a non-compete clause.

This non-compete covenant may have only lasted for 12 months after Nigel left, and it may only apply to a limited geographical area, for example your town or County, but it would have been a huge help, wouldn’t it?

Because if Nigel had to click his heels and wait for 12 months before starting on Main Street maybe he would thought twice about quitting now; and if he couldn’t set up in your town maybe he would have started his business far enough away from you that it would have no impact on your existing clients.

The sad thing is you will never know now because there is no non-compete clause, because there is no contract.

There are plenty of risks involved in running your own business-some avoidable, some unavoidable.

Putting a written contract in place for all your employees is not expensive, and a well drafted one specifically for your needs might even help save your business.

Learn more about drafting an employment contract including a restrictive covenant here.

Are you an employer?

Need a quote for a contract of employment? Contact me.

We can supply you with

  1. a template contract which you will complete yourself for each employee. This would involve things like commencement date, job description/role, rate of pay, and any other specific details for the individual employee and/or
  2. individual contracts for each employee-we get all the necessary details from you for each employee and draft the contracts for you.
Categories
Podcast The Employment Contract

How to Draft an Employment Contract

This episode looks at

  • the express terms that should be in a contract of employment
  • the 4 sources of implied terms in the employment contract.
Categories
Blog Podcast The Employment Contract Unfair Dismissal

An Unfair Dismissal Cock Up That Will Inevitably Cost the Employer

A young man, worried about losing his job, contacted me this week.

unfair dismissal

He only has about 11 months service in the job and was concerned that the employer was getting ready to dismiss him before he had the necessary 12 months service for the protection of unfair dismissal legislation.

Let me explain.

In order to have the statutory protection of the Unfair Dismissals Acts an employee needs to have 12 months continuous service in the job.

This guy has been called to a “meeting” to discuss his performance. There has already been a series of these meetings with heavy hints that these probationary review meetings were leading to one inevitable conclusion~dismissal.

The employer has made it quite clear that any dismissal will be carried out just prior to 12 months service being acquired. And will have the comfort of knowing that the employee is not protected under the Unfair Dismissals Act.

There is only one (major) problem with this~when I looked at the contract of employment it provides for 6 weeks notice of termination of employment.

And most importantly it provides for 1 months notice during the probationary period.

The key point here is that a dismissal does not take place until the end of the notice period, not when notice is given.

So my contact will almost certainly have 12 months service.

And the protection of the Unfair Dismissals Acts.

The employer wouldn’t have had much difficulty here, if his contract of employment provided for, say, one week’s notice during probation. But it doesn’t.

And he inevitably will face either

  1. an unfair dismissal claim or
  2. without prejudice negotiations for a negotiated exit, if he really wants to get rid of the employee.

Anyway, the moral of the story is that little mistakes can cost big money.

And a well drafted contract of employment is worth every penny.

Categories
The Employment Contract Videocast

How to Draft an Employment Contract-Express Terms That Should Be Included in a Contract of Employment

employment-contract-ireland

The employment contract in Irish law is made up of implied terms and express terms. There is nothing you can do about the implied terms.

That’s why great care should be taken about the express terms in the contract, and why corners should not be cut when you as an employer are putting contracts in place.

You don’t want to be staring at the small print later on when facing a claim for breach of contract or unfair dismissal and saying “did I really say that?”.

Implied terms fall into 4 categories:

1. Those implied by statute

2. Terms implied by custom and practice

3. Terms implied by law

4. Terms implied by collective agreements in unionized employment.

There is nothing the employer can do about these implied terms. However, the express terms-agreed between employer and employee-are a matter for negotiation and agreement between the parties.

What express terms should be included in a contract of employment?

1. The Parties

Who the employer is is a vital term and it may not be entirely clear unless set out in the contract.

1.1 Date of Commencement

The date of commencement will be very important to establish various statutory entitlements of the employee eg the protection of unfair dismissals legislation, redundancy entitlements etc.

2. Job Function/Description

The temptation for the employer here is to have as widely drafted a job description as possible.

However, this can cause problems if the need for redundancy arises as the employee may claim that their job description requires them to carry out duties different from those which the employer wishes to make redundant.

3. Hours of Work

The hours of work term of the contract should deal with

• Overtime (paid or not) (There is no statutory obligation on employers to pay  overtime. However, most employers pay higher rates of pay for work done outside normal working hours, for example at a rate of time and a half. This should be stated in your contract of employment).

• Shifts

• Breaks.

The most important piece of legislation in this area is the Organisation of Working Time Act, 1997.

It is advisable for the employer to also provide for the right to lay off or place employees on short time (there is no general right in law to do this).

The Protection of Young Persons (Employment) Act, 1977, the Conditions of Employment Acts 1936-44, and the Shops (Hours of Trading) Act, 1938 should also be considered.

4. Place of Work

It is advisable for employers to have a geographical mobility clause in the contract as an express term. Here is an example:

The company reserves the right when determined by requirements of operational efficiency to transfer employees to alternative work and it is a condition of employment that they are willing to do so when required.

However, the employer must act reasonably and responsibly in this regard.

Interestingly, a reduction in pay as a result of a contractually allowed transfer is not a breach of an implied term that there would be no unilateral reduction in pay.

5. Exclusive Service

Decisions in Irish employment law have held that employees have the right to work for another employer in their spare time. However, this work could not conflict with their duties of confidentiality and loyalty to their employer.

6. Probation

Any probationary clause should not exceed 12 months. It should also provide for an extension of the initial period (say 6 months) and should have a notice period less than outside the probation period.

Reference should also be made to the disciplinary procedures of the company not applying during the probation period. However, if this is the case, then a probationary policy should be drafted by the company setting out what procedure will apply during the probationary period.

Even though an employee is on probation, s/he is still entitled to fair procedures and natural justice when it comes to termination.

The wording of the probationary period is also important. The District Court in Ireland has held that the following clause gave rise to an entitlement to the employee to be paid for the remaining 5 months of a probationary period when he was dismissed after one month:

The first six months of this contract shall be a probationary period.

This one clause is a good example of why you should have a legal professional draft any contract of employment you require.

At common law, it appears that the employer has an implied right to terminate during the probationary period on the giving of specified or reasonable notice. This is why provision should be made in the contract for a shorter notice period during the probationary period.

7. Term or Duration of Contract

The term or duration of the contract is only applicable for a fixed term or specified purpose contract.

8. Salary/Pay

This, clearly, is a very important clause in any contract of employment. Setting out basic salary is straightforward; bonuses and commissions can cause problems if not set out clearly.

The employer will seek to have the payment of a bonus at his/her discretion; employees will be keen to see how they can become entitled to a bonus.

Termination during a bonus period should also be clarified and agreed. (Read the law surrounding the payment of wages also)

9. Holidays/Annual Leave

Minimum holiday entitlements are provided for in the Organisation of Working Time Act, 1997. This act vests in the employer the right to determine when holidays are taken.

However, this clause should also make provision for when holidays can be taken as well as recognising that any extra holidays would be over and above the statutory entitlement to holidays and public holidays.

10. Company Car

The entitlement to a company car should be set out in this clause with clarity as to the make, model, value, etc. allowable.

11. Sick Pay

The sick pay clause will set out whether the employer operates a sick pay scheme or not. There is no general entitlement to sick pay in Ireland.

However, this entitlement may be implied from custom and practice in the workplace.

The employers may operate a sick pay scheme or an income continuance plan or health care insurance entitlements.

This needs to be clear from the outset in the employment contract as sick pay is an area which causes great difficulty for both employer and employee in the absence of clarity.

12. Pension

If a pension is part of the remuneration package, reference should be made to it in the contract and if there is a company pension scheme it is important that an employee is not excluded in such a way as to leave the employer open to a successful claim for direct/indirect discrimination.

13. Retirement Age

There is no statutory retirement age in Ireland (save for in the public service and a small number of industries). For this reason, a retirement age should be spelled out in the contract, if one is desired.

It is worth noting that just because there is a retirement age specified in the pension scheme does not mean that there is an implied retirement age in the contract of employment.

An interesting case dealing with age, retirement age, and fitness to work is the Donegal County Council v Porter [1993], Irish High Court.

14. Grievance Procedure

The method of processing grievances in the employment should be referenced here.

Employees should be bound to exhaust the internal grievance procedure first before resorting to outside bodies.

The statutory code of practice, Industrial Relations Act, 1990 (Code of Practice on Grievance and Disciplinary Procedures) (Declaration) Order, 2000 (Statutory Instrument 146/2000) contains the principles to be applied by the employer in any grievance and disciplinary procedure.

15. Disciplinary Procedure

Employers should have a disciplinary procedure to ensure fair procedures and natural justice where necessary.

SI 146/2000 sets out the basic principles which any disciplinary procedure should follow. These include:

• What will happen to deal with a complaint/allegation

• How many stages will be followed in each event

• The employer’s right to choose which stage to commence the procedure and the penalty to be imposed

• The right of representation of the employee

• Whether there is a right of appeal to any decision taken to impose a penalty.

16. Restrictive Covenant

This clause deals with the right of employees to compete with their former employer once they have left employment with that employer. There are 2 aspects to any ‘non compete’ clause:

• The common law entitlement of the employer to protect trade secrets and confidential information

• The Competition Act 1991.

Regardless of the express term in any contract of employment dealing with this area, the Courts recognise the common law right of the employer to protect confidential information and trade secrets-even when the employment relationship is terminated.

However, there is no common law restriction on an employee competing with a former employer once she leaves employment. This is why a ‘restrictive covenant’ is a good idea in the contract-to protect, for a reasonable time and over a reasonable geographic area, the employer’s legitimate interest.

This is not a restriction on normal trade or general competition post-employment though; it must be a restriction to protect a specific legitimate interest.

However, if the employer breaks or repudiates the contract, he will generally be unable to rely on any restrictive covenant in this connection.

The Courts will also recognise a common law duty of obligation, fidelity, and loyalty in all contracts of employment. This duty has been held to include an obligation not to compete with the employer while in his employment.

There is no common law restriction on former employees canvassing or soliciting business being done by their former employer.

However Courts will recognise the validity of restrictive covenants in contracts of employment provided

  • the employer has a legitimate interest to protect
  • the conduct/activity sought to be restricted must be reasonable
  • the duration of the restriction must be reasonable
  • the geographical extent of the restriction must be reasonable.

It is worth noting that where an employer repudiates the contract or is involved in a fundamental breach he will normally be unable to rely on restrictive covenants in the contract which crystallized as a result of the employer’s action.

Springboard injunctions

An injunction may be granted to an employer where a departing employee seeks to rely on trade secrets or confidential information belonging to the former employer as a springboard to launching a new business.

Competition Act, 1991

The Competition Act, 1991 does have some impact on employment contracts, even though many think that the Act is inappropriate for governing the  employer/employee relationship. The most important case considered by the competition authority was Apex Fire Protection v Murtagh [1993].

17. Termination of Contract

The notice period for termination of employment is a critical clause. If there is none and the contract is silent in this regard, then ‘reasonable’ notice must be given by the employer.

Litigation over what is “reasonable” can be avoided very easily by providing a specified notice period in the contract and will also avoid a legal action for wrongful dismissal provided the notice period is given.

This will vary from contract to contract depending on a number of factors such as job function, length of service, age of employee, custom and practice, etc. In short, what is ‘reasonable notice’ in each case will depend on the facts of the individual case, bearing in mind the factors outlined above.

It is strongly advisable for the employer to specify a notice period in the contract in order to avoid a claim for wrongful dismissal.

Unless it is stated in the contract, notice does not have to be in writing; but it does have to be clear and unequivocal.

Notice given during times of leave or illness is valid, except for during maternity leave which is protected.

The notice period in the contract cannot be less than that provided for in the Minimum Notice and Terms of Employment Act, 1973 (as amended).However, if an employee is dismissed for misconduct s/he loses his/her entitlement to notice.

The employment does not come to an end until the end of the notice period, even where a person is not required to work the notice period and has been ‘paid off’.

Damages that can be awarded to employees for dismissal are generally limited to recoverable losses to which the employee was contractually entitled, but not punitive damages.

18. Search Clause

A search clause is commonly used in many contracts allowing the employer to search the employee’s locker, baggage, vehicle, etc.

Without this search clause, any search, without consent, could be considered to be an assault.

19. Patents, Inventions, and Copyright

Unless there is agreement to the contrary, any copyright in material which is made by the employee in the course of employment is the property of the employer. The same principle applies to research and development work carried out which leads to an invention.

20. Share Options

A share options clause may be necessary. Provision should be made for the employee moving location or changing job function.

21. Bullying and Harassment

An anti-bullying and harassment policy should be appended to the contract of employment as the employer is obliged by law to prevent bullying and harassment occurring in the workplace.

22. Internet and email

Reference should be made to the company’s policy on internet access, email and internet use. A separate policy in this regard should be provided by the company to the employee.

23. Resignation of Office or Directorships

Resignation from offices held, including directorships, should be provided for in the contract of employment.

24. Proper Law

The law governing the contract should be spelled out and is very important where an employee may be required to work abroad.

25. Other

Other clauses which may be included, depending on the specific requirements of the employer, may include

• Wearing of uniforms, dress code

• Punctuality and attendance

• Responsibility for tools, property, uniforms, clothing, boots, etc

• Requirement to hold a driving licence

• Compassionate leave

• Parental leave (subject to statutory entitlements)

• Work standards

• And more.

Work Practice or Contractual Provision?

The difference between a contractual provision and a work practice is very important. Read about the significance here.

If you are an employer and you don’t have existing contracts of employment for your employees, or you are concerned about the contracts you do have, we provide a professional, cost effective contract review and drafting service.

Are you an employer?

Need a quote for a contract of employment? Contact me.

We can supply you with

  1. a template contract which you will complete yourself for each employee. This would involve things like commencement date, job description/role, rate of pay, and any other specific details for the individual employee and/or
  2. individual contracts for each employee-we get all the necessary details from you for each employee and draft the contracts for you.
Categories
Employment Law Procedures and Policies

Do You Make These Mistakes as an Employer in Ireland?

employers-mistakes

Let’s admit it.

Making a costly mistake is easy when it comes to employment law in Ireland.

The scenarios below are quite common in the Irish workplace. Each of them has the potential to be very costly for the employer if he/she acts on the common misconceptions contained in these hypothetical situations.

My employee is 67 and I want him/her to retire-can I just tell him/her that he/she must retire soon?

No, not unless you have stipulated a retirement age in the contract of employment. There is no general statutory fixed retirement age in Ireland. There is a retirement age set in some public sector jobs and in occupations such as Gardai, the fire service, and the Judiciary.

However in the private sector, if it is not in the contract of employment, the employee can continue working.

I never gave my employee a contract. He has worked with me for 7 years but now I want to give him a contract to reflect the changed economic circumstances.

Firstly, just because you failed to give your employee a written contract does not mean he doesn’t have a contract. He does.

And whatever written contract you propose giving him now must reflect the terms and conditions he has enjoyed to date. Any changes to these terms must be with his consent as not to obtain his consent will amount to a unilateral changing of the contract by you as employer.

This is not permissible and will leave you open to a claim for breach of contract and/or constructive dismissal.

I am not happy with my employee’s performance and I want to replace him with someone who will do the job properly.

You cannot do so without going through a procedure which is fair and allows the employee to improve after you have brought to his attention the failings in his work. This will involve in making clear the standards required of your employee and how he is falling short.

You will need to set out the improvements required and give him a reasonable time period within which to come up to the mark. You will also need to give warnings that failure to improve sufficiently may lead to dismissal (ultimately).

My employee has been out on certified sick leave for ages and I have been told I cannot dismiss her while she is on sick leave so I am stuck with her..

This is not the case-you can fairly dismiss in certain circumstances, even when your employee is out sick. However it will depend on the needs of your workplace, the length of service of your employee, whether the sickness is a long term absence or a series of short term illness related absences.

So, while it is not easy to fairly dismiss while your employee is on sick leave, it is possible.

Always consult a solicitor in relation to cases like those outlined above; each case will be hugely influenced by the particular circumstances and making decisions based on misunderstandings can prove very costly.

Readers’ Questions

Can an employer cut my wages without notice?

No, see this article.

Where do I go if my employment rights have been infringed in Ireland?

There is a wide range of options available if your employment rights have been infringed. Click Here.

Who is not covered by unfair dismissal laws?

Read all about unfair dismissals and constructive dismissals here.

Does NERA tell the employer my complaint if I complain?

Read about NERA inspections here.

I am 66 years old-am I entitled to a redundancy payment?

Yes, the law has changed in this area. Check out redundancy in Ireland here.

Is my employer responsible for preventing sexual harassment in the workplace?

Yes. Read about sexual harassment, equality and discrimination in the workplace here.

Can I bring a case for unfair dismissal if I have less than 1 year’s service?

Yes, take a look at dismissal during the probationary period.

What is direct and indirect discrimination on the grounds of disability?

Take a look at equality and discrimination here.

Are you entitled to a written contract?

Yes, or at least you are entitled to a written statement of the terms and conditions of your employment within 2 months of commencing employment.

What are the important changes in parental leave in Ireland?

Take a look at the new parental leave entitlements in Ireland.

What are employees’ rights when a company is taken over?

This situation is covered by the TUPE (transfer of undertakings) regulations.

Can you take a case for unfair dismissal where dismissed on the grounds of age Ireland?

Yes, and you can take a case for discrimination to the equality tribunal under the Employment Equality Acts.

What is a fixed term teaching contract?

Read more about teachers’ fixed term contracts.

What are workers rights in Ireland regarding dismissal?

Read more about workers rights regarding dismissal in Ireland here.

How to calculate annual leave Ireland

 Learn how to calculate annual leave and pay here.

How many sick days are you entitled to in Ireland?

Learn about sick leave and sick pay here.

How much does it cost to bring a case to the employment appeals tribunal?

This will depend on a number of factors including whether you choose to hire a solicitor or rely on a non-solicitor such as a HR person or not. It will also depend on the strength of your case as some solicitors will take on a good case on a “no win, no fee” basis.

Sample employment contract Ireland

Contact us and we will send you a sample employment contract. Drafting your own contract however, even with the benefit of a template, can be problematic as each employment situation is different and unique.

 Are all workplace policies contractual?

No, it depends on whether the staff handbook/workplace policies have been incorporated into the contract of employment.

In most cases, we do not recommend this for two reasons.

1. If an employer fails to follow a policy/procedure (either deliberately or inadvertently) that would give the employee a claim for breach of contract on top of any other claim he/she might have (e.g. unfair dismissal, discrimination, etc.)

2. As businesses evolve, policies and procedures will need to change – if they form part of the employee’s contract of employment, you would need the consent of all the employees to any such changes. Non-contractual policies and procedures can be varied by the employer without needing to obtain the consent of the staff.

What are the basic principles of fair dismissals?

Procedural fairness and substantial grounds are needed to justify dismissal.

What is the pay for a fixed term specified purpose contract for teaching in Ireland?

 See education law in Ireland website for more information.

What are the grounds that the employment equality act 1998-2011 prohibits not to allow discrimination?

 See the 9 grounds here.

What is the average holiday entitlements per month in ireland?

Discover how to calculate holiday entitlements here.

Can employer take wages for mistakes?

It depends on the contract and whether they are fair and reasonable. See payment of wages..

What is constructive dismissal?

Read what is constructive dismissal.

Employment contract for fixed term teacher

 Employment contract for fixed term teacher

 Can an employer reduce wages?

Yes, but it is not entirely straightforward. Learn more here.

What rights does an employee have if not a trade union member in Ireland?

The employee has full employment, contractual, statutory, and constitutional rights in relation to employment, regardless of whether he is a member of a trade union or not.

What are workers right in Ireland regarding dismissal?

 Learn more about unfair dismissal here.

Calculating annual leave entitlement for part time workers

 Learn how to calculate annual leave here.

Sample grievance procedure Ireland?

 Learn more about grievance procedures here.

How to calculate redundancy pay in Ireland

Calculating redundancy entitlements.

How to deal with workplace discrimination

 Learn more about workplace discrimination here.

Define a health and safety statement in the workplace

 Learn more about health and safety statements here.

Can you take a case for constructive dismissal if you have accepted redundancy?

Generally yes.

Retirement age Ireland

 There is no statutory general retirement age in Ireland. However, some jobs do have a mandatory retirement age eg Garda, civil service. In most private sector employment though the contract of employment must provide for a retirement age if one is required.

How to calculate parental leave

 Learn more about parental leave entitlements here.

Do workers who are paid cash have employment rights in Ireland?

Yes,  they still have a contract of employment (even if not in writing).

Can someone claim unfair dismissal even during probabtion?

Yes, but your options are very limited-you can go to the Labour Court under Industrial Relations legislation but the recommendation is not enforceable. You are depending n the moral authority of the Labour Court and the bona fides of the employer.

 If an employee resigns and cites constructive dismissal does this mean he or she going to take the employer to court?

Almost certainly.

Break entitlements for 8 hours work?

Learn more about working time and rest periods here.

How to calculate holiday pay for piece rate workers Ireland

 Learn about holiday entitlements for piece rate workers here.

How long do you need to be working to claim for unfair dismissal?

 12 months.

When does a contract become a contract of indefinite duration?

 Learn about contracts of indefinite duration here.

What can I do if dismissed on capability grounds?

Bring a claim for unfair dismissal.

Grounds for instant dismissal Ireland

 See basic principles of fair dismissal in Ireland.

Penalties associated with tupe Ireland

See tupe Ireland.

Can i get paid for holidays not taken ireland?

See holiday pay and annual leave.

What  are the duties of the employer regarding workplace safety under the safety and health at work act 2005?

See employers’ health and safety obligations.

Going back to work after maternity leave laws

 Learn more about maternity leave in Ireland.

Reckonable service for part time workers for redundancy ireland

 Read about redundancy in Ireland.

Other similar frequently asked questions:

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  • Legal definition of redundancy ireland
  • What is a fixed term contract
  • on temporary contracts for over 3 years when do i get permanent
  • what does tupe mean ireland
  • disciplinary procedure example
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The answers to most of the questions above can be found on this site-simply use the search box in the right sidebar.

If you need professional advice or assistance in this area, do not hesitate to contact us.

Discover how to reduce the chances of expensive claims by employees.