Why Do We Need Employment Contracts?

For most new employees, signing a contract of employment is a routine part of accepting an exciting new job opportunity.    Prudent employers put a great deal of thought into the content of an employment contract, but new hires regularly sign with little regard to the obligations they are committing to.

Employers

Employers with more than five employees have a statutory obligation to provide employees with “written particulars of employment” (section 29 of the Basic Conditions of Employment Act 1997) and most employers seek to comply with this requirement by issuing employment contracts.

Five critical areas for employers when drafting employment contracts are:

1. Outlining preconditions of employment (such as qualifications or verifications checks), to guard against “bad hires”.

• Stating an employee’s obligations during the probationary period, or clearly stating expiry dates in the event of a fixed-term employment contract.

• Listing the possible deductions from the employee’s remuneration, including overpayments and the implications of an employee failing to comply with required notice of termination periods.

• Outlining what information is confidential to the business and prohibiting the employee from disclosing this information, both during and after the employment period.

• Appropriate and valid post-employment restraints of trade.

Apart from applicable legislation, employers should also ensure that their employment contracts adhere to other statutory instruments, such as collective agreements and sectoral determinations that may apply in their industry.

 Employees

Employees ought to critically scrutinize employment contracts provided to them as part of accepting new offers.   All too often employees are surprised by the obligations and commitments that they have agreed to in their employment contracts.

Five critical areas for employees when signing employment contracts are:

1. Employment contracts must sufficiently outline working hours, particularly those outside of normal business hours, and the financial implications for the employee working such hours.
2. Many employment disputes arise because of ambiguity about the employee’s remuneration package.    Basic salary, commission payments, incentive payments, allowances and other benefits must be clearly specified to avoid such disputes.

• Legislation provides employees with a range of leave entitlements and the employment contract should outline what those entitlements are, how they can be accessed and what limitations are placed on the various forms of leave.

• Employers are often aggrieved by absenteeism-related issues and employees should ensure they clearly understand when and how they are to notify their employer of an absence, what type of absences are permitted and when they are obliged to provide proof an absence, such as a medical certificate.

• Most employment contracts require an employee to seek authorisation for accepting secondary employment and accordingly, if an employee wants to have a side business or interest, he or she should ensure that they clearly understand and comply with the contractual requirements.   Failure to do so can render the employee liable for dismissal.

For assistance with employment contracts, kindly contact Workplace Strategies at info@workplacestrategies.co.za.