As the new year begins, we would like to draw your attention to the fact that you should take new legislation into account when entering into a new employment contract. From 1 January 2015, part of the Work and Security Act came into force, discouraging the improper and long-term use of flexible employment arrangements and changing the legal status of flex workers (including agency workers and payroll employees). It is no longer possible to include a probationary period in an employment contract of six months or less. However, a probationary clause in an employment contract entered into before 1 January 2015 remains valid. It is also no longer permitted to include a non-competition clause in a fixed-term employment contract. An exception to this is that a non-competition clause may be included if this is justified by compelling business interests. If you do include a non-competition clause, the compelling business interest must be set out in writing in the employment contract. In principle, this change also applies to the non-solicitation clause.
In the case of a fixed-term employment contract of six months or longer, you must notify your employee in writing, no later than one month before the end of the contract term, whether or not you wish to continue the employment relationship and, if so, under what conditions. If you fail to do so, you, as the employer, risk a fine of up to one month’s salary. This notice period applies to employment contracts expiring on or after 1 February 2015. For example, an employment contract ending on 15 February must be notified by 14 January at the latest.
The amendments referred to apply to employment contracts entered into on or after 1 January 2015, unless a collective agreement applies to which transitional provisions apply.
Please note the number of fixed-term contracts!
When entering into a new employment contract, in addition to the above, you must also take into account the legislative changes that will come into force on 1 July 2015. From 1 July 2015, you will only be permitted to enter into three fixed-term employment contracts over a two-year period. The three-month interval required to break the chain of contracts will be extended to six months. This new legislation will apply to employment contracts entered into on or after 1 July 2015. You would therefore be wise to take this into account now. For example, you could choose to enter into one seven-month fixed-term contract and two eight-month contracts, or to ensure that the new contract ends before 1 July 2015. In this way, you will avoid the employee being entitled to a permanent contract and to any transition payment.
Tip: If you can’t see the wood for the trees, please contact us to ensure you comply with the new legislation.