We have asked the Corporate Legal Services Department of PwC to write an article about the importance of written documentation in employment.

Introduction
The majority of local businesses in Northern Ireland are small/medium enterprises, many of which are owner managed and run by families. In such small, close knit, working environments, there can be more of a tendency to keep things relatively informal in terms of policies and procedures. This can lead to particular difficulties when it comes to employment arrangements. In some cases an organisation’s approach will have been developed through custom and practice over a period of time. This can lead to confusion from employees unfamiliar with the approach on particular matters and at worst can be cause for employment related disputes which can escalate into Tribunal claims.

Aside from risking an award of 2 or 4 weeks' pay for failing to provide written particulars to an employee within 2 months of their commencement of employment under regulation 43 of the Employment Rights (Northern Ireland) Order 1996, an employer will also be compromising the degree of control that they can exercise over an employee and the level of protection it has during the employment (e.g. confidentiality provisions and provisions dealing with outside interests and dealings). Some particular issues arise on termination of the employment. This could be because there are no post termination restrictions in place, or because what is there, is no longer applicable to the role that the employee holds.

A recent case illustrating this is WRN Ltd v Ayris [2008] EWHC 1080, were the High Court confirmed that, when considering the reasonableness of restrictions, it would only have regard to the employee's job title at the time of entering into them and would not take into account any subsequent promotions. It is therefore important not only to put restrictive covenants in place but also to review their applicability periodically thereafter.

Cost Reductions
As challenging economic conditions prevail, Northern Ireland employers continue to have to review operating costs to ensure their ability to trade. One of the most expensive costs for businesses is employee salaries and it remains one of the top target areas for employers seeking to make cost savings.

Despite the desire to often reduce costs as quickly as possible, care needs to be taken about dismissing employees or changing their terms and conditions to ensure that this does not result in sanctions or penalties being awarded against the employer. Employers wishing to make staff redundant or to select staff to be placed on short-time working must be able to justify their selection. In order to show that an individual’s selection is fair, the employer must use fair criteria and apply it in a fair and consistent manner.

The LRA recommends the use of selection criteria that can be objectively justified and which are measurable rather than relying on something which is an intangible personal “feeling” of the employer, as per Williams v Compair Maxam UKEAT/372/81. Rationale for marks given should also be recorded and a reasonable level of detail would be expected. Where possible, the criteria should be measured by reference to HR records covering such things as performance and attendance.

Where such records are patchy or do not exist, the employer will have to do its best to objectively measure employees, but this will make it all the more important for there to be more than one manager involved in the process and for there to be evidence of the reasoning applied.

Examples of criteria which have been held by the Tribunal to be too imprecise, vague or subjective include:

* Employees "who, in the opinion of the manager concerned, would keep the company viable" (Williams v Compair Maxam, above);

* Employees who were "best suited for the needs of the business under the new operating conditions" (Smith and others v Haverhill Meat Products Ltd ET 7631-40/85);

* "Costs savings" (a comparison with who cost most in terms of overheads but generated least revenue) (KGB Micros Ltd v Lewis UKEAT/573/86);

* "Attitude" (Graham v ABF Ltd [1986] IRLR 90)

It follows that in the absence of clear records, an employee is much more likely to be able to challenge any decision which an employer makes and it will be more difficult to justify it in the absence of verifiable documentary proof.