An employment contract also known as contract of employment is an agreement that covers the working relationship between an employer and an employee. It allows both parties to clearly understand their obligations, responsibilities and the terms of employment. An employment contract must clearly define all terms and conditions of the employment relationship.
Under Section 91 of the Labour Act, 2004, employment contract or contract of employment is defined as “an agreement, whether oral or written, express or implied whereby one person agrees to employ another and that person agrees to serve the employer as a worker”. The elements of a contract employment depends on the right and obligations of the employer and employee.
A written employment contract is a great way to clearly define the role, the responsibilities and the benefits of the employment and to prevent any confusion. An implied employment contract is one that is inferred from comments made during an interview or conversation, etc.
Section 7 of the Labour Act, 2004 provides that the employer must give the employee a written contract within three (3) months of the commencement of the employment. The contract regulates the relationship between the employer and employee. The written contract must specify the following:
- The name of the employer or group of employers, and where appropriate, of the undertaking by which the worker is employed;
- The name and address of the worker and the place and date of his engagement;
- The nature of the employment;
- If the contract is for a fixed term, the date when the contract expires;
- The appropriate period of notice to be given by the party wishing to terminate the contract, due regard being had to Section 11 of the Labour Act;
- The rates of wages and its method of calculation and the manner and period of payment of wages;
- Any terms and conditions relating to –
- Hours of work; or
- Holidays and holiday pay; or
- Incapacity for work due to sickness or injury, including any provision for sick pay; and
- Any special conditions of the contract.
In other words, an employment contract must include the following:
- The position/Job title
- Duration of employment
- Salary or Wages
- General Responsibilities
- Non-Disclosure Agreements (where applicable)
- Covenant not to compete or Non-Compete clauses (where applicable)
- Performance expectation and requirements
- Termination of employment, etc.
Note that where there is no agreement between an employer and an employee for period of notice to be given for termination of employment the notice to be given by virtue of Section 11 of the Labour Act, 2004 shall be:
- One day, where the contract has continued for a period of three months or less;
- One week, where the contract had continued for more than three months but less than two years;
- Two weeks where the contract has continued for a period of two years but less than five years; and
- One month, where the contract had continued for five years or more.
As we have stated, an employment contract defines the relationship that exists between an employer and an employee, hence, its importance cannot be overemphasized. Some of the benefits of having a contract of employment include:
- It clearly defines duties and benefits of both parties.
- It protects each party.
- It provides stability in the relationship.
- It ensures job security for employees.
- It ensures confidentiality for employers.
Please note that as an employer, you need the services of a lawyer to very well advise you on all the elements and clauses that the agreement must contain, bearing in mind the nature of your business and the best practices in your industry. Also, as an employee, you need a lawyer to help you vet the agreement to be sure that you are not signing yourself into modern day slavery.
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