Why UK small business owners should never skip employment contracts

Running a small business in the UK means juggling a lot of responsibilities. You’re the marketeer, the salesperson, the strategist – and often the HR department too. With so much on your plate, it can be tempting to skip what might seem like “paperwork,” like employment contracts. But here’s the truth: skipping employment contracts isn’t just a bad idea – it can expose your business to serious risks.

Why employment contracts matter

Employment contracts aren’t just about formality; they’re legal documents that define the relationship between you and your employees. Here’s why they’re so important:

·      Legal protection for both parties – an employment contract sets out the key terms of employment like job title, pay, working hours, holiday entitlement, notice periods. In the UK, employees are entitled to a written statement of terms within two months of starting work, but having a proper employment contract goes even further. It ensures both you and your employee are clear on your rights and obligations from day one.

·      Avoid costly disputes – without a contract, misunderstandings can easily arise. If an employee thinks they’re entitled to more holiday or a different notice period, and there’s nothing in writing to clarify, disputes can get messy fast. A clear contract helps you avoid these headaches by setting everything out upfront.

·      Show your professionalism – contracts aren’t just about compliance – they’re about showing you take your business (and your team) seriously. They help foster trust and set a professional tone, which is especially important for small businesses competing for talent.

·      Protect your business – a well-written contract can include important clauses to protect your business, such as confidentiality agreements or restrictions on what an employee can do after leaving (like taking your customers with them!). Without these, you could find your hard work walking out the door.

What the law says

In the UK, every employee has the right to a written statement of employment particulars within two months of starting. While this is the legal minimum, a proper employment contract goes further and ensures both parties are clear on everything from pay to disciplinary procedures. Skipping this step isn’t just unprofessional – it’s potentially unlawful.

If you’re a small business owner, it might feel like you don’t have the time (or money) to draft employment contracts. But trust us: the risks of not having them far outweigh the investment. A simple, clear employment contract protects your business, strengthens your relationship with staff, and helps you avoid costly disputes down the line.

Need help getting started? Let’s chat about how to put the right employment contracts in place for your team.

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