Why Employee Contracts Matter

Why Every Employee in your Business Needs a Contract of Employment

Running a small business comes with its own unique set of rewards and challenges. Amongst the many responsibilities that come with managing a business, providing a contract of employment to each and every employee is crucial. Whether you have 1 employee or 100, here is why contracts are essential for the success and stability of your Company.

  1. Legal Compliance

Do you know that it is a legal requirement to provide every employee with a contract of employment regardless if they work full-time or only a day here or there?

  • There are certain core terms and conditions that must be issued to your employees within 5 days of their start date with the remaining terms and conditions to be issued within 1 month of the employees start date.
  • If an employee brings a complaint to the Workplace Relations Commission (WRC) because you have not provided them with terms and conditions of employment i.e. a contract, you may have to pay 4 weeks’ pay to the employee. Also details of the hearing and the names of the business and employee are publicised which can have a damaging effect on your reputation.
  • You may also receive a random inspection from the WRC. WRC Inspections Service carry out inspections at employers’ workplaces to check compliance with employment legislation in areas such as in national minimum wage, working time and rest breaks. They also have powers to investigate compliance with Employment permit obligations. As of January 2024, the WRC Inspector may impose an on the spot fine of €1,500 for each contract which the employer does not have in place within the first month of their employees starting work.
  1. Clarity and Expectations

Your contracts of employment set out clear expectations for both you and your employees. They define responsibilities such as hours of work, annual leave, breaks and rate of pay to name a few. This clarity helps prevent misunderstandings and ensures that everyone is on the same page from the outset.

  1. Professionalism and Credibility

Offering a formal employment contract enhances your business’s professionalism and credibility. It signals to potential hires that your business operates with integrity and adheres to best practices. This can be particularly important for small businesses looking to establish themselves in competitive markets.


Providing a contract of employment is not just a legal obligation; it is a strategic move that supports the smooth operation and growth of your small business. It creates a transparent, secure and professional work environment that benefits both you and your team. Investing the time in providing comprehensive employment contracts can save your business from future complications and expenses and pave the way for long-term success.

If you need assistance in drafting employment contracts or policies and procedures for your business or indeed you have any other employment related queries, you can reach us at: https://actionhrservices.com/contact-us/