Employment contracts can often feel like a legal necessity or a formality with no real weight behind them.

Something you download, fill out, and file.

But if you're running a business in the UK, treating these documents as just legal red tape can cause far more than just administrative problems.

At Woodstock Legal Services, we work with businesses across a wide range of sectors, and we’ve noticed a recurring pattern: the same contract-related mistakes being made time and time again.

In this insight, Richard Hiron, Employment Law Consultant, unpacks the seven most common issues we see in employment contracts and explains how to avoid them to keep your business compliant, efficient, and protected.

1. An Overreliance on Template Documents

Templates are a helpful starting point, but that’s all they are. No two businesses operate the same way, even if they’re in the same sector. So, using a contract template borrowed from another company, or downloaded online, without tailoring it to reflect your structure, policies, and culture, is risky.

We often hear from clients:

“I got this contract from a friend – it’s worked well for their business.”

That may be true, but it doesn’t mean it will work for yours. A good employment contract should reflect the reality of how your business operates and protect you against the specific risks your company might face. If you treat it as a simple tick-box exercise, you’re likely to find yourself facing disputes or confusion later, often when it's too late to correct the issue easily.

2. Using the Same Non-Solicitation Clauses for Everyone

You want to protect your business, especially if you’ve built it from the ground up. But when it comes to post-termination restrictions, also known as restrictive covenants (like non-solicitation clauses), a one-size-fits-all approach can backfire.

Courts only enforce restrictive covenants if they’re reasonable and justified. If you’ve used the same boilerplate clause across all roles, regardless of the employee’s seniority or access to sensitive information, you may find that it fails when you need it most.

Instead, consider each role carefully:

• What risk does this employee pose if they move to a competitor?
• What kind of clients or information do they have access to?
• Is the restriction proportionate; in other words, does it reasonably achieve your aim without going too far?

Customising restrictions in this way helps you stand a better chance of enforcing them and shows the court you’ve taken a measured, reasonable approach

3. Not Including a Pay in Lieu of Notice Clause (PILON)

PILON clauses allow you to end employment immediately while still paying the employee for their notice period. This gives you flexibility and reduces disruption, especially in sensitive exit situations.

Let’s take Arthur as an example. He resigned on 30 June 2025 with a three-month notice period. If his employer, ZYX Limited, doesn’t want him to work the notice, they can rely on the PILON clause, end his employment immediately, and still pay him for July–September.

If your contract doesn’t contain a PILON clause, you’ll need the employee’s consent to take this route. That can be awkward, especially if relations have broken down.

A well-drafted PILON clause should also make clear what’s included in the final payment: just salary, or also commission, bonuses, or accrued holiday?

4. Failing to Define How to Calculate a Day’s Pay

It seems like a small thing, but when payroll issues arise, not having a defined method for calculating a day’s pay can cause real problems.

Whether it’s deducting pay for unpaid leave, calculating holiday pay on exit, or managing Keeping In Touch (KIT) days during parental leave, having clarity in your contract can save you time, reduce disputes, and help avoid claims for unlawful wage deductions.

5. Don’t Overpromise for Third Parties Offering You Services (But Still Achieve a Workable Balance)

Perks are a big part of modern employment packages. From gym memberships to life insurance, they help you attract and retain talent. But many of these benefits are delivered by third-party providers, which means you’re not fully in control.

If your contract guarantees a perk or benefit (like free gym access), and that provider pulls out or changes their offer, you could be legally obliged to provide an equivalent, even if it’s at your own cost.

To reduce this risk:

• Use careful wording, such as “may be eligible for” or “subject to availability.”
• Avoid making benefits contractual unless you’re fully confident you can uphold them.

6. Leaving Out a Probationary Period

A probation period gives you a chance to assess whether a new hire is the right fit for your business. It also allows for shorter notice periods and easier termination if things don’t work out.

Despite this, many contracts leave out probation periods altogether or use vague wording with no defined end date, which can appear unreasonable to tribunals.

Including a clear, time-limited probation clause with the option to extend (if needed) provides structure for both employer and employee. It also gives you a chance to offer feedback, monitor performance, and make more informed long-term decisions.

7. If You Don’t Want Something to be Contractual, Then Why Are You Putting It in the Employment Contract?

Employment contracts are legally binding documents, just like your agreements with suppliers, landlords, or IT providers. That means anything you write in them could be enforced against you.

We’ve seen businesses unintentionally lock themselves into providing:

• Enhanced sick pay
• Extra annual leave
• Automatic salary increases
• Discretionary bonuses or unpaid leave

To avoid this:

• Use language like “at the company’s discretion” or “may be offered”
• Put flexible perks in a non-contractual staff handbook instead
• Be mindful of “custom and practice” - if you apply a benefit consistently, it may become an implied term in the employment contract even if it’s not written down

Ultimately, if you don’t want to guarantee something, don’t promise it - in writing or otherwise.

Final Thoughts: Employment Contracts Are Here to Help You

It’s easy to overlook employment contracts or see them as legal admin. But they can be one of your most important tools as a business owner.

A well-drafted employment contract protects your interests, ensures legal compliance, and creates clarity for both parties. That means fewer misunderstandings, fewer disputes, and fewer costly problems later down the line.

Whether you’re hiring your first employee or reviewing contracts across a growing workforce, it’s worth investing the time (and getting expert advice) to get it right.

Need Help Drafting or Reviewing Employment Contracts?

Woodstock Legal Services is here to support you.

Our employment law consultant, Richard Hiron, has extensive experience helping UK employers navigate the complexities of employment contracts. From bespoke drafting to contract audits, he’ll help ensure your documents are tailored, compliant, and working in your favour.

Email Richard directly at r.hiron@woodstocklegalservices.co.uk or complete the contact form below to arrange a free initial discussion.