The Good Work Plan: Action needed on Employment Contracts

As trailed in our Guide to the Good Work Plan, 6 April 2020 will herald some quite significant changes to the content of most employment contracts.

All employers who use their contracts of employment to satisfy the minimum written terms that an employee must receive will need to review them in good time before 6 April and make any necessary updates so that compliant contracts are in place to issue to new employees joining on or after 6 April 2020.

Section 1 of the Employment Rights Act 1996 lists a series of pieces of information which must be provided to an employee in writing. It sets out what information must be contained in a single document (often referred to as a ‘principal statement’), what can be included in a supplemental statement, and what can be included in some other reasonably accessible document referred to within the principal statement. At the moment, all of the prescribed information must be provided within 2 months of the beginning of employment.

Most employers provide the Section 1 information via their contract of employment and certain policies and procedures referred to within it. The contract of employment then goes on to include various other things which are not required by Section 1.

Over recent years, many employers have gone to great lengths to simplify and shorten their contracts of employment and minimise the differences between employees in different roles.  These new requirements are going to reverse some of those efforts.

What are the changes?

From 6 April 2020, the information that must be given under Section 1 is being expanded, and some of the things that can currently be provided other than in the principal statement will have to be moved into the principal statement itself. In addition, most of the Section 1 information will have to be provided on or before day 1 of the employment.

In the main, the changes apply to new employees starting on or after 6 April 2020.

From the employment contracts that we see day-to-day, we anticipate that all will require amendment to be Section 1 compliant for new employees. This is a project that HR teams can be getting ready with now.

Aspects that will need changing in most contracts will include:-

  • If the contract just states the number of hours to be worked in the week, more specificity about days and hours of work will need to be introduced
  • All benefits (whether contractual or not) need to be set out in the contract – care will need to be taken not to convert what would otherwise have been a discretionary benefit into a contractual entitlement
  • Introducing a cross-reference to where information about paid leave (e.g. family-friendly leave but also any paid study leave or paid sabbatical) can be found
  • Providing information about training which the employer requires the employee to complete

From the clients that we have spoken to about this already, the element which causes the most consternation is the new requirement to provide information about “training entitlement”.

Interestingly, this addition gets no mention in the Government’s response to the Good Work Plan (in which it set out what information it would add into Section 1), in the Government’s Impact Assessment of the Regulations that introduce the legislative changes to make all of this happen, nor indeed in the Explanatory Memorandum to the new Regulations. There is therefore considerable uncertainty about what exactly is supposed to be covered by “training entitlement”.

Does it mean a list of all the training that the employee will have to do? With employers increasingly trying to move to uniform contracts for all staff, having to set out mandatory training courses in a contract of employment will require bespoke tailoring and inevitably the risk that a training course might be inadvertently omitted. And as new training courses are rolled-out then it would technically amount to a variation of contract and something that must be notified to the employee within 1 month.

What about subsequent changes to Section 1 information?

If any of the information changes then an employer must notify the employee in writing of the change within 1 month. Where the employer uses the contract of employment as its means of satisfying Section 1 then it must still comply with any necessary requirements for how it can change contract terms.

Do you have to do anything for existing employees?

Revised statements/contracts will not have to be provided to existing employees automatically. However an employee may request an updated version and if they do then it must be provided within 1 month of their request.

Regardless of whether an existing employee has requested updated Section 1 information or not, if the employer changes any of the Section 1 information (old or new) then it must provide notice of the change to existing employees within 1 month.

What else is happening as part of the Good Work Plan?

See our Good Work Plan Guide and watch out for our separate briefing on the requirement for workers to also get a Section 1 statement.

Can Devonshires help with this?

Of course we can. Just contact any member of the team or call 0207 880 4263.

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