Agreements between an employer and employee often include key aspects regarding the employment conditions as well as employee duties, responsibilities and rights. While these are typically written contracts between the employer and employee, employment contracts can also be verbal agreements. These are also binding contracts. Due to this, some employers and even employees may opt for not signing contracts of employment.
There are many disadvantages to this and an employment consultant would always encourage the relevant parties to sign an employment contract as it can be beneficial to both the employer and the employee.
Why is not signing a contract of employment discouraged?
There are many advantages to signing an employment contract, especially since it outlines the terms of employment and is a binding agreement between the employer and the employee. Signing an employment contract signals to the employer that an employee is willing to commit fully to their role and the organisation.
An employment consultant would also argue that a written contract leaves less room for misunderstandings and disagreements. While verbal contracts can be binding, they leave room for misunderstandings, especially about the employment terms and employee responsibilities. This can later on lead to disputes and disagreements.
By signing an employment contract, both the employer and employee are aware of the exact terms and provisions they are agreeing to. If there is ever a breach of the contract, a written employment contract will make it easier for the wronged party to receive compensation, for instance.
Key disadvantages of not signing contract of employment
According to HMRC, there are several implied terms of an employment contract, like employees not stealing from an employer, legal requirements like the right to a minimum of 5.6 week’s paid holidays, and entitlement to something carried out regularly by the company over a long time, like a holiday bonus.
In addition to this, it is also implied that the employer will provide a safe and secure working environment to the employee.
However, not all employment terms and responsibilities are implied and having a written document that lists the various conditions the employer and employee agree to makes it easier to avoid disputes and disagreements.
Salary is a key component of an employment contract
The salary structure of an organisation will be of interest to any employee, especially a new recruit. In addition to salary negotiations, the parties to a contract may agree when an employee is eligible for a promotion to a higher pay grade.
While these may be discussed verbally by the employer and employee, the lack of a written agreement may make it difficult to enforce. This is why an employment consultant would discourage an employee from not signing a contract of employment.
Following verbal discussions about the salary structure of a company and what an employee is entitled to, the agreed upon terms can be clearly stated in a written agreement that the employee as well as employer can refer to at any point.
An employment contract can solve disputes
If there is a disagreement between the employer and employee, they can attempt to informally solve the problem by discussing it. However, failure to resolve the issue this way could lead to more serious action against one party.
An employee, for instance, can make a formal grievance complaint in writing and make an appeal if they are not in agreement with the employer’s decision. Mediation, which can take place at any time during the dispute, is also an option when resolving disputes between an employer and employer.
If an employee believes they have been treated unlawfully by an employer, potential employer or trade union, they can make a claim to the UK’s employment tribunal. This can be for discrimination, unfair dismissal or unfair deductions from their pay.
When making these claims, an employee will find great use for a signed contract which shows the employer agreeing to the terms they are now failing to comply with. Having a written agreement signed by the employer and the employee simplifies these proceedings and can help an employee make a claim to the employment tribunal.
These proceedings may carry on for longer in the absence of a written agreement signed by the employer and employee. This is yet another disadvantage of not signing a contract of employment.
