Employment Contract: What Is It?

Let’s start by defining it; an employment contract is an agreement that stipulates the working relationship of a company and an employee.

What is the purpose of an employment contract?

It allows both parties – employee and employer, to clearly understand their obligations and the terms of employment. This document can also serve to eliminate any disputes which may arise at a later date.  Both the employer and employee are bound to the employment contract until it ends due to notice given or a change in terms by either party.

Key elements of an employment contract?

Salary or wages: Contracts will state the salary, wage, or commission that has been agreed upon.

Schedule: In some cases, an employment contract will include the days and hours an employee is expected to work.

Employment type: The employment contract will specify the length of time the employee agrees to work for the company. In some cases, this might be permanent or part time.  At other times it may be a contract, with a possibility of extension

Duties: Contracts can list the various duties and tasks a worker will be expected to fulfill while employed.

Confidentiality: Although you may have to sign a separate non-disclosure agreement, some employee contracts include a statement about confidentiality.

Non-Competition: A non-compete clause prevents a company from losing a good employee or supervisor to its competition. Usually, you agree that after you stop working for your current employer, you will wait a certain amount of time before working for any rival or similar company.

Benefits: A good employment contract should include all promised benefits. This could include: medical cover, allowances like travel or housing or even extra payment for working overtime.

When should a contract of employment be issued?

As an employer, your new employees will enter into an employment contract with you as soon as they start working for you. Legally, you are meant to issue the employment contract within two months of the start of their employment but many employers are advised to have it out on the first day the employee reports to work.

Different types of employment contracts?

Permanent employment contracts: It applies to employees who work regular hours and are paid a salary or hourly rate. The contracts are ongoing until terminated by either the employer or employee and may be for full or part time work.

Fixed-term contracts: This is a contract for a specific period of employment, usually three months and above, the contractual relationship is automatically terminated at the end of this period, without being considered a resignation or a dismissal.

Casual employment contracts: This employment contract applies to the casual employee who is paid every day after they are done with their tasks and is not engaged for a longer period than 24 hours at a time.

In conclusion,

Employment contracts should be reviewed before signing, because there may be consequences if both parties do not hold up to their end of the bargain. It also helps to foster a good working relationship.

If you need help selecting the right type of employment contract for your staff, and making sure your contracts are legally complaint, Corporate Staffing Services offers to help you! Order a customized employment contract here.