When should you provide a written statement of employment terms to new employees?
10 January 2019 #Contracts
In the recent case of Stefanko and others v Maritime Hotel Ltd, the Employment Appeal Tribunal held that any employee engaged for a month or more is entitled to a written statement of terms in accordance with Section 1 of the Employment Rights Act 1996.
The case has been described as “revolutionary” for businesses with a high turnover of employees.
The three Claimants were employed by the hotel as waiting staff. They were sacked, and all successfully claimed automatic unfair dismissal for asserting their statutory rights.
Two of the Claimants, who had worked for the hotel for over two months, were awarded additional compensation for not receiving a written statement of employment terms in accordance with the Act.
The tribunal in the first instance said that the third Claimant would not be entitled to compensation despite also not receiving a written statement of terms as she had only been employed for six weeks when she was dismissed. This was therefore below the two-month grace period that employers are afforded to supply written statements of terms to new employees.
The Claimant appealed. The EAT reversed the decision and said that employers must provide a written statement of terms to all employees who had been employed for a month or more, even if they leave or are dismissed before the two-month grace period elapses.
This is likely to have the greatest impact on industries such as retail and hospitality who experience a high turnover of staff. In these industries, it can be commercially sensible to wait until the back end of the two-month period before issuing statements of terms, as this saves time and money by not issuing statements to those who do not reach their two-month employment anniversary. The judgement therefore places a greater responsibility on employers to provide written statements sooner.
It should be noted that from 6 April 2020 it will be compulsory for employers to provide a written statement of terms to all new employees and workers on the first day of employment, eradicating the grace period and extending the obligation to all “workers”, not just “employees” as currently.
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