Almost one in three employers is contravening employment rules by not issuing staff with a written contract.

Furthermore, recruitment agencies have no means of ensuring clients issue their candidates with the right paperwork, according to law firm Peninsula.

According to the firm’s survey, 29% of companies do not offer staff employment contracts – a basic requirement of the Employment Rights Act 1996. It also showed that almost 40% do not give staff notes on disciplinary procedures.

Mike Huss, senior employment law specialist at Peninsula, said the failure to issue a contract or outline disciplinary procedures could lead to employers being penalised at employment tribunals.

Failure to comply with new dispute and resolution regulations coming into force in October – which stipulate that every employee must have a note in writing about the firm’s disciplinary procedures – could lead to a hefty compensation payout.

Huss added that many small firms such as recruitment agencies often found it difficult to devote time and money to drafting employment contracts. “In some businesses you’re the managing director, the financial director and the human resources manager at the same time, so sitting down to write a contract often gets a lower priority,” he said.