A contract of employment governs the relationship between an Employer and Employee and could either be a short written letter or a lengthy contract depending on the organization and level of employment. Every business has different needs and thus the style and content of the contract of employment will differ.
It’s essential for both employer and employee to document their relationship for sake of minimizing disputes and allowing each party know the precise extent of their respective rights, duties and obligations. In some cases a Job Description is also included as an addendum to the employment contract.
As an employer, you want an employment contract that protects you and your business, whilst as an employee you want a contract that protects your rights, spells out your duties and generally provides a suitable work environment. This week, we are delving into the essential elements you should look out for in an employment contract from both the employee and employer perspective.
- Role/ Position
A very important clause in an employment contract is the specification of the role, it should provide a clear understanding of what the employee is being engaged to do for the Company and it usually includes, designation, role, and job description. The employment contract should also spell out the place and hours of employment.
- Probation & Confirmation Period
This is also an essential clause in an employment contract, and it should include length of probation period and requirements for confirmation. In a situation where the employment is not intended to be permanent, the period for which it is expected to continue or, if it is for a fixed term, the date it is to end.
- Compensation
Any prospective employee expects an employment contract that defines compensation based on what would have been discussed during the interview period. It’s important for both employer and employee to clearly understand the expected remuneration which would usually include Basic Salary, Allowances,( Housing, Food Allowance, Leave), Pension Contributions, Performance bonus etc. It’s also common and lawful for some of the allowances to be tied to performance and for the contact to indicate applicable taxes to be deducted from employee’s salary.
- Performance
Some employee contracts typically include performance requirements and production goals especially in a sales-based position. It’s important that both parties understand the barometers of measuring performance.
- Benefits
Benefits should be clearly spelt out and this can include health, death, and injury. Some employers also cater for employees dues or memberships of professional bodies, holidays, vacations, stock options, retirement plans etc and this should also be included in the Employment Contract. The employees leave period should also be clearly documented.
- Confidentiality & Non- Compete
Some employers include confidentiality clauses which typically requires the employee not to disclose trade secrets and confidential information, they might also be prohibited from using such information after their disengagement from the Company. Employees are also not entitled to compete against their employer or engage in same business as their employer during the employment relationship (Non- Compete).
- Resignation or Termination
It’s a fact that employment relationships must terminate at some point, consequently it’s important to document the termination process. Every employment contract must state in clear terms the process of disengagement from the Company and the requisite notice required and should also cover severance terms that may apply in different circumstances.
In conclusion, some organizations have developed Employee or Staff Handbooks which contains the policies of the Company detailing things like Equal Opportunities, Internet and Telephone use, Maternity and Parental Leave, Dress Code, Disciplinary & Grievance Procedures etc. This document is important because it details the day to day administrative policies and processes of the Company which govern the relationship with an employee.
Many Companies and Employees typically pay little attention to the details of an employment contract until a dispute arises, it’s however advisable that you consult a commercial lawyer who can draw up an employment contract which would minimize disputes and in the event that a dispute occurs, would ensure that the contract gives true meaning to the intention of the parties.
