Creating a successful employment contract in the tech sector

Hiring staff can be an exciting part of running a business and is often an essential element in the growth of a company.

The tech sector is no different and with a growing pool of talent out there for businesses to tap into you may be chomping at the bit to welcome your next team member.

However, when employing a skilled professional it is important to put the right foundations in place to properly protect you and your business.

This is where the creation of an employment contract come into play. An employment contract ensures that both you and your employee have an understanding of what is expected from each of you during the term of employment.

Having a robust contract in place can help to prevent disputes arising in future and will give your employee a better appreciation of their rights, as well as their responsibilities and obligations.

Disputes can be costly, lead to a loss of productivity and damage to the reputation of your business, so creating a ‘water tight’ contract is an essential part of being an employer.

Whether you are a new employer just starting out or an experienced entrepreneur or owner, here are some important elements that you should consider within your employment contracts.

 The Basics

 Every contract of employment must contain some basic information, such as job title, the length of employment, working hours, probationary periods, the company or department in which the employee will work and to who the person should report. Although this may seem obvious it is this that confirms the employee/employer relationship.

Remuneration

A contract should also lay out how the person will be paid for the work they provide, including any pre-agreed arrangements, such as pay increases after a certain period of time or the offering of bonuses and shares. These will probably have been agreed prior to the commencement of work, but it is important that they are included within a person’s employment contract and updated regularly to reflect any changes.

Benefits

In the modern tech work force, the benefits offered to an employee can be important as pay, so they should also be included in a person’s contract.

These could include gym memberships, the provision of a mobile or laptop or arrangements for working from home or flexible hours of employment.

It is important that these are included and clearly spelled out so that staff understand what they are being offered and the limitations of the benefits provided.

Obligations and responsibilities

Employments contracts should outline each employees’ responsibilities, their roles within their business and their relationship to the business, i.e. whether they are a temporary employee, a self-employed person working on behalf of the business or even if they are being seconded from another company.

It could also outline expectations for appearance, including clothing requirements and your obligations to them.

Firms such as Uber have faced legal action due to the misclassification of workers and with the more informal nature of some tech firms it is easy to get caught out if you aren’t clear and transparent in work contracts.

Confidentiality

It is important that you protect your business and its ideas. Including a confidentiality agreement within a contract of employment is therefore important and will make an employee liable for action if they give away commercially sensitive material.

It is also important to consider their period after employment with your business and the prospect of them moving to a rival firm.

It is therefore useful to include clauses and covenants that are triggered in this scenario, this can include, but are not limited to:

  • Garden Leave – a garden leave clause in a contract of employment allows an employer to require the employee to not enter into new employment for a period of time in exchange for the continuation of pay and benefits
  • Non-competition covenants – restricts a former employee working in similar employment for a competitor
  • Non-solicitation covenants – prevents the stealing of clients/customers/suppliers of the former employer

Social Media Policy

Social media plays an important role in the lives of individuals, but also in the reputation of businesses. It is, therefore, critical that employers spell out their expectations when it comes to how employees interact with the business online. This may vary from role-to-role, but its ultimate aim should be to prevent reputational damage or sharing of sensitive data via social media platforms.

IT Policy

Similar to a social media policy, firms should also include a detailed outline of how IT systems should be used and what is and isn’t allowed.

This can include the steps that employees should take to ensure that client data is properly protected and the use of computer equipment for personal tasks.

Other considerations

An employment contract is just one of a number of documents that should be presented to new employees. Businesses should also consider the employee handbook that they offer, which should outline rules surrounding harassment and discrimination, and the training that needs to be offered.

Failing to prepare an appropriate employment contract could leave you and your business exposed to a tribunal claim, reputational damage or the loss of valuable information, expertise or clients to a competitor.

This is only a basic guide to drafting an employment contract and employers are strongly encouraged to seek professional advice.

While a number of employment contract templates do exist online, these are not likely to be tailored to the specific needs of your business.

To find out how our employment team at iLaw can help you with the drafting of your employment documents and policies, please contact Julian Cox by emailing  julian.cox@ilaw.co.uk