5 Common Mistakes Employers Make in Employment Contracts – Daily Business

Employment contracts are more than just formalities — they are the foundation of the employer-employee relationship. A well-drafted contract protects both parties, ensures compliance with employment law, and prevents costly disputes down the line.  

However, many employers still overlook key details that can lead to misunderstandings or legal challenges later. If you’re based in East Yorkshire or nearby, working with solicitors in Pocklington can help ensure your contracts are watertight and compliant with the latest regulations. 

This article explores five of the most common mistakes employers make when drafting or managing employment contracts — and how to avoid them. 

1. Failing to Providea Written Contract on Time 

Under UK law, employees are entitled to receive a written statement of employment particulars on or before their first day of work. Yet many employers delay issuing contracts, assuming a verbal agreement is enough. 

Without a written contract, it becomes difficult to prove what was agreed if a dispute arises. Employees may also misunderstand their rights regarding pay, notice periods, or working hours. 

Providing a clear, written agreement at the outset sets expectations and demonstrates professionalism. Templates can help, but they should always be reviewed by a solicitor to ensure they reflect your specific business needs and comply with current legislation. 

2. Using Outdated or Generic Templates

Employment law evolves regularly, and using an outdated or one-size-fits-all template can cause serious problems. Clauses that were once acceptable may now be unlawful, and failing to update them could leave your business exposed. 

Common issues include: 

• Incorrect or missing references to statutory entitlements (such as holiday pay or parental leave) 

• Non-compliant data protection clauses 

• Overly restrictive non-compete clauses that won’t hold up in court 

Regular contract reviews help ensure your agreements align with current employment law and reflect modern workplace practices. The ACAS employment contract guidance is a useful starting point for understanding your obligations. 

3. Ambiguity Around Pay and Working Conditions

A vague contract can cause just as many issues as an incomplete one. Terms around pay, bonuses, and working hours must be specific and transparent. 

For example: 

• Clearly define whether pay includes overtime or commission. 

• State the frequency of payment (weekly or monthly). 

• Specify normal working hours and expectations around flexible or remote working. 

Failing to include these details can lead to confusion, grievances, or even claims for unpaid wages. 

Employers should also ensure their contracts reflect current hybrid or remote working arrangements, especially if these were introduced informally during the pandemic. 

4. Overlooking Probationary Periods and Notice Clauses

Probationary periods are an effective way to assess new employees — but they must be clearly stated in the contract. Ambiguity around the length of probation, notice requirements, or termination rights can lead to disputes. 

A clear clause should include: 

• The duration of the probationary period. 

• The notice period during and after probation. 

• The conditions under which employment may be extended or confirmed. 

Equally important are notice clauses. These protect both parties if the employment relationship ends and help manage business continuity. 

Including fair and lawful notice terms reduces the risk of claims for wrongful dismissal and demonstrates good HR practice. 

5. Ignoring Intellectual Property and Confidentiality

For many businesses, intellectual property (IP) and confidential information are their most valuable assets. Failing to include clear clauses around these areas can be disastrous. 

Your contract should specify: 

• That all work created by the employee during their employment belongs to the company. 

• That confidential information must not be disclosed during or after employment. 

• That employees must return company property and data upon termination. 

This is particularly important for businesses in sectors such as technology, marketing, or design, where innovation and client data are critical to success. 

Bonus Tip: Keep Contracts Aligned with Company Policies 

Contracts should never exist in isolation. They work best when aligned with company policies such as disciplinary procedures, data protection, and grievance handling. 

Make sure: 

• Contracts reference key policies within your staff handbook. 

• Employees confirm they’ve read and understood these policies. 

• Policies are reviewed regularly to stay up to date with legislation and industry best practice. 

Building a Solid Legal Foundation 

Getting employment contracts right from the start helps your business avoid unnecessary risk and build stronger relationships with employees. Clear, legally sound contracts show professionalism, protect your business, and help ensure everyone understands their rights and responsibilities. 

It’s also worth remembering that good contracts do more than prevent disputes — they build trust. When employees understand what’s expected of them and what they can expect in return, it creates a sense of security and fairness that supports retention and morale. Regularly reviewing your agreements and keeping communication open demonstrates that you value your workforce and are committed to operating transparently. 

If you’re unsure whether your current contracts meet modern standards, now is the time to review them. A solicitor can help you identify gaps, update outdated terms, and future-proof your agreements so your business continues to grow on a strong legal foundation. 

 

Legal Disclaimer: This article is for general information only and does not constitute legal advice. Employers should seek professional guidance from a qualified employment solicitor to ensure their contracts comply with the latest UK employment laws.