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Why companies are in a fix over fixedterm contracts

Why companies are in a fix over fixedterm contracts A CONTRACT of employment sets out the formal relationship between Why companies are company and employee and defines what each can rightfully expect from the other. The sContracts o f Employment in a fix over Ac t 1972 sets out the basic information which must be given on pay, hours of work, notice entitlements, grievance. procedure and rights to trade union fixed-term contracts membership. Where terms and conditions o f employment are more complex, however, additional contract provisions are often necessary. The majority of This must raise the question of their rights to patents and inventions UK companies tend to give senior staff whether companies should continue the made by employees and 70 per cent of service contracts beyond the statutory practice. directors are formally prevented from requirements. Three years is the most common competing with their employer by re­ period covered but directors' contracts striction of other business activities. The relationship between employer and employee involves a contract may often last for five or seven years. Even at director level, a definition whether this is written or not. Unwritten The majority of fixed-term contracts of duties and responsibilities may be are renewed at the end of the term for a terms may be inferred from the conduct deliberately vague, allowing for necessary new term of the same length. Other of the parties and any real or alleged change and movement. The same is true methods are annual renewal for a new conversation which may have taken of provisions concerning job location, place. A written statement of basic term of the same length and renewal, though the individual wishing not to terms and conditions is mandatory. subject to different notice periods after uproot home and family may be the first term. A few contracts now More detailed contracts spelling out positively protected. operate on a continuous basis for the additional rights and obligations have In addition to stating basic salary, fixed term, i.e. the term becomes the the advantage of clarifying these almost half the companies state their mutually agreed terms and laying down notice period. Salaries are normally salary review policy. The ormula for standards of conduct on both sides. Only reviewed during fixed-term agreements. profit-related remuneration is defined in some of these standards may be 28 per cent of directors' contracts, Such contracts impose rigidity enforceable. reducing to 11 per cent of those for middle and junior management. Other The unfair dismissals legislation on staff deployment, cause contained in the Trade Union and frequent provisions cover company car difficulty of legal enforcement Labour Relations Act 1974 is an im­ entitlements, sickness and disability portant consideration in the drafting benefits, and the reimbursement of when things go wrong, and and execution of contracts as are the expenses. severance provisions of the Redundancy Only 14 per cent of companies are no guarantee of good Payments Act 1965. formally clarify the status of directors' working relationships or of contracts when liquidation, mergers or The British Institute of Management takeovers occur; arbitration procedure is recently conducted a survey of contract consistent performance for the set out in 35 per cent of directors' practice in 200 UK organisations and period covered, contracts; in 59 per cent of companies found that 70 per cent of companies the grounds for dismissal stated in- gave contracts containing supplementary according to a BIM survey directors' contracts include bankruptcy, rights, obligations and conditions of compounding with creditors and mis­ service in addition to the statutory Contracts of indefinite length are conduct. Provisions of this kind are minimum. They claimed that the given by the majority of companies at all also common further down the additional provisions gave definite levels. Notice periods increase with management scale but confined usually benefits in terms of increased security seniority and tend to increase with to less precise mentions of misconduct. for employees, improved understanding length of service. and better prospects of staff retention. Contracts apply not only during Individual letters of appointment, standard letters of appointment, employment but also afterwards through However, fixed-term contracts, used standard service contracts and individ­ provisions restricting future activities: by 48 per cent of the firms mainly at ually negotiated contracts are the four 35 per cent of directors' contracts limit director level and among the larger major formats currently in use. Letters competition with the former employer, companies, were found to cause more the canvassing of former customers and problems than those for indefinite and contracts are often given together, and additional provisions are also fre­ the enticement of former staff. Only periods. quently contained in employee very specific provisions carrying a time The survey reported: "The dis­ handbooks. Individually-negotiated con­ limit of validity may be legally advantages are associated mainly with tracts are mainly the prerogative of enforceable. fixed-term contracts and the rigidity directors. "Contracts of service: A survey of they may impose on staff deployment. employment contracts for managers and Other problems are cost, the difficulty Confidentiality of company inform­ ation is the most common contract staff" by Helen Murlis, BIM Management of legal enforcement when things go provision. It occurs in 61 per cent of Survey Report No.22, is available free wrong, and the fact that such contracts middle and junior management contracts to BIM member-organisations; price £9. are no guarantee of a good working and a higher percentage at more senior to individual BIM members and £10. to relationship or of consistent performance others.postage and packing 10p a copy.▄ for the period covered." levels. Over half of the companies state 34 INDUSTRIAL MANAGEMENT http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Industrial Management Emerald Publishing

Why companies are in a fix over fixedterm contracts

Industrial Management , Volume 75 (2): 1 – Feb 1, 1975
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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0007-6929
DOI
10.1108/eb056491
Publisher site
See Article on Publisher Site

Abstract

A CONTRACT of employment sets out the formal relationship between Why companies are company and employee and defines what each can rightfully expect from the other. The sContracts o f Employment in a fix over Ac t 1972 sets out the basic information which must be given on pay, hours of work, notice entitlements, grievance. procedure and rights to trade union fixed-term contracts membership. Where terms and conditions o f employment are more complex, however, additional contract provisions are often necessary. The majority of This must raise the question of their rights to patents and inventions UK companies tend to give senior staff whether companies should continue the made by employees and 70 per cent of service contracts beyond the statutory practice. directors are formally prevented from requirements. Three years is the most common competing with their employer by re­ period covered but directors' contracts striction of other business activities. The relationship between employer and employee involves a contract may often last for five or seven years. Even at director level, a definition whether this is written or not. Unwritten The majority of fixed-term contracts of duties and responsibilities may be are renewed at the end of the term for a terms may be inferred from the conduct deliberately vague, allowing for necessary new term of the same length. Other of the parties and any real or alleged change and movement. The same is true methods are annual renewal for a new conversation which may have taken of provisions concerning job location, place. A written statement of basic term of the same length and renewal, though the individual wishing not to terms and conditions is mandatory. subject to different notice periods after uproot home and family may be the first term. A few contracts now More detailed contracts spelling out positively protected. operate on a continuous basis for the additional rights and obligations have In addition to stating basic salary, fixed term, i.e. the term becomes the the advantage of clarifying these almost half the companies state their mutually agreed terms and laying down notice period. Salaries are normally salary review policy. The ormula for standards of conduct on both sides. Only reviewed during fixed-term agreements. profit-related remuneration is defined in some of these standards may be 28 per cent of directors' contracts, Such contracts impose rigidity enforceable. reducing to 11 per cent of those for middle and junior management. Other The unfair dismissals legislation on staff deployment, cause contained in the Trade Union and frequent provisions cover company car difficulty of legal enforcement Labour Relations Act 1974 is an im­ entitlements, sickness and disability portant consideration in the drafting benefits, and the reimbursement of when things go wrong, and and execution of contracts as are the expenses. severance provisions of the Redundancy Only 14 per cent of companies are no guarantee of good Payments Act 1965. formally clarify the status of directors' working relationships or of contracts when liquidation, mergers or The British Institute of Management takeovers occur; arbitration procedure is recently conducted a survey of contract consistent performance for the set out in 35 per cent of directors' practice in 200 UK organisations and period covered, contracts; in 59 per cent of companies found that 70 per cent of companies the grounds for dismissal stated in- gave contracts containing supplementary according to a BIM survey directors' contracts include bankruptcy, rights, obligations and conditions of compounding with creditors and mis­ service in addition to the statutory Contracts of indefinite length are conduct. Provisions of this kind are minimum. They claimed that the given by the majority of companies at all also common further down the additional provisions gave definite levels. Notice periods increase with management scale but confined usually benefits in terms of increased security seniority and tend to increase with to less precise mentions of misconduct. for employees, improved understanding length of service. and better prospects of staff retention. Contracts apply not only during Individual letters of appointment, standard letters of appointment, employment but also afterwards through However, fixed-term contracts, used standard service contracts and individ­ provisions restricting future activities: by 48 per cent of the firms mainly at ually negotiated contracts are the four 35 per cent of directors' contracts limit director level and among the larger major formats currently in use. Letters competition with the former employer, companies, were found to cause more the canvassing of former customers and problems than those for indefinite and contracts are often given together, and additional provisions are also fre­ the enticement of former staff. Only periods. quently contained in employee very specific provisions carrying a time The survey reported: "The dis­ handbooks. Individually-negotiated con­ limit of validity may be legally advantages are associated mainly with tracts are mainly the prerogative of enforceable. fixed-term contracts and the rigidity directors. "Contracts of service: A survey of they may impose on staff deployment. employment contracts for managers and Other problems are cost, the difficulty Confidentiality of company inform­ ation is the most common contract staff" by Helen Murlis, BIM Management of legal enforcement when things go provision. It occurs in 61 per cent of Survey Report No.22, is available free wrong, and the fact that such contracts middle and junior management contracts to BIM member-organisations; price £9. are no guarantee of a good working and a higher percentage at more senior to individual BIM members and £10. to relationship or of consistent performance others.postage and packing 10p a copy.▄ for the period covered." levels. Over half of the companies state 34 INDUSTRIAL MANAGEMENT

Journal

Industrial Management – Emerald Publishing

Published: Feb 1, 1975

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