For all employers, a legally sound, comprehensive employment contract is essential – not just for legal compliance but also to ensure employer and employee alike understand what is required of them, right from the start of the relationship. Whereas a staff handbook is a written summary of the standards of behaviour expected of your employees. It is important to understand the distinction and which items go where given the documents’ nature. In this post, we look at the difference between a staff handbook and a contract of employment.
Employment Contracts
An employment contract is a key contract that binds you and the employee. Although not expressly required by law, it is important to have an employment agreement to govern the relationship between you and your employees. Some key terms of an employment agreement include the following and are crucial for the corresponding legal reasons.
Staff Handbook
A staff handbook is made up of policies, and it is useful to think of policies as a written summary of your directions to employees. A policy can cover a range of different topics and can be broadly classified into two categories: core policies and operational policies.
–Core policies speak to your vicarious legal liability, i.e. whether you are responsible for an employee’s acts or omissions such as a health and safety policy or an anti-discrimination policy; and
-An operational policy is anything other than core policies and speaks purely to operational matters such as how to submit leave, uniforms, punctuality, etc. If you have a direction you would like to clearly communicate to the company as a whole, a policy is a practical way of doing so.
What are the key differences between a staff handbook and a contract of employment?
An employment contract is a contract and therefore creates binding obligations on the parties. If a party breaches its obligations, the other party can ultimately go to court to seek to enforce the agreement. An employer may also take disciplinary action or dismiss the employee if the employee breaches the contract. A staff handbook, on the other hand, is a collection of policies. Policies are not a contract and cannot be enforced in court. If an employee breaches a policy, you may take disciplinary action such as issuing a warning or termination.
An employment contract includes the key terms which remain the same throughout the term of the employment relationship (unless varied in writing by agreement).
A staff handbook should include core policies such as a:
–Disciplinary and grievance policies;
-anti-discrimination, bullying, and harassment policy; and
-IT policy.
It can otherwise include a range of operational matters and can therefore be very detailed, including how to complete timesheets or expenses.
An employment contract cannot be unilaterally changed. Both parties must agree to the change, generally using a signed letter of variation or signing a new agreement.
You can change a staff handbook without seeking the employee’s approval.
For example, you can change the way expenses are processed and document it in the policies without employees agreeing to it. It is useful for employees to be notified of any changes, and you may also wish to seek their written acknowledgment.
In summary
The employment contract should cover critical items and items that you may want to contractually enforce during and after the employment. The staff handbook covers details of some critical items for which you may be vicariously liable and operational matters.
You must seek the employee’s agreement to vary the employment agreement, but a handbook can be unilaterally changed given your directions to employees may change over time. If you would like assistance with drafting your employment agreement or handbook, contact our employment law experts here.
