You’ve heard the advice, right? Make it all clear in the contract — every last detail! Whether you’re the employer or employee, contracts are increasingly popular as a way to protect yourself — think of the unstoppable rise of the pre-nup.

But the fact is, contracts offer very little protection. From the pre-nup to the employment contract, no contract can overwrite people’s actual statutory rights. Tying people up with endless clauses doesn’t work when those clauses are trumped by existing laws.

Contracts won’t save you from conflict. By the time you’re combing through the contract to find points the other party has broken you’re already in a collapsed relationship. At that point it becomes more about trying to bolster a court case — and whatever the judgement, court cases are tie-consuming, expensive, potentially embarrassing and stressful. Unless you’re a lawyer, of course.

The real purpose of contracts is often to try to intimidate people so they won’t look into or stand up for their own rights. Starting a relationship with bullying and fear tactics is rarely a happy beginning! We tend to be rather more casual at Gamevy. We do produce contracts. It’s a legal requirement and our staff sometimes have to show them to bank managers or landlords. But we don’t stuff them full of clauses about where they can work or who they can speak to. In general, we figure that if we’ve mistakenly hired a vindictive, Machiavellian monster then a piece of paper is unlikely to save us. That’s when we reach for our monster-spray.

There are elements that cannot be enforced, and clauses you can enforce but would be mad to! Here’s a brief selection.

1. Restrictions on working for competitors. While companies might be able to restrict the use made of confidential information, they can’t block an employee’s right to make a living. Does that stop companies sticking a blanket ban into contracts? It does not.
2. Restrictions on taking colleagues with you. You can’t solicit other employees to leave their jobs and join you, but there’s nothing to stop your new company soliciting them or those employees simply applying on their own. In other words — it’s an absurd restriction which is almost impossible to prove.
3. Restrictions on taking clients or business, often called ‘non-dealing’. Again this is about solicitation. No company can stop other companies trading with whoever they want to. nor can they stop you soliciting their business after a ‘reasonable’ length of time. Defining those termscan happen in court, but given you really don’t want to end up there, maybe it would be better to come to a mutual agreement.
4. Insistence on notice period. If your relationship has broken down would you really force an employee to sit in your office for several weeks while you pay them and they think of ways to slow or obstruct work because now they hate you? Thought not. Would you even force them to sit at home on ‘gardening leave’ just because they want to join a competitor? If you do want to do that — be warned — several cases went against the employer.

The Contractual Attitude

Having some kind of a contract is a legal requirement in most countries. But if you’re a radical company then the paper itself will be a formality that is hardly ever looked at again. The relationship will develop, change and last or break on factors that have nothing to do with a piece of paper. And this attitude extends to all other ‘contractual style’ ways of thinking about the relationship. Many of the formal HR policies companies expend time on are just another type of contract. They mandate how employees must behave, from travel policies to working hours, from holiday allowances to sick days.

So when we say no contracts, what we really mean is that we should lose the contractual attitude.