An Employment Contract is a legally binding agreement between an employer and employee. It is important to have an Employment Contract because it protects both parties in the event of a dispute. An Employment Contract should be specific about the terms and conditions of the job, including pay rates, hours worked, work locations, and job responsibilities.
An Employment Contract should also include provisions for severance pay, maternity leave, and sick days. A good Employment Contract should include a non-disclosure clause to prevent employees from disclosing company secrets during or after their employment with the company.
Having an employment contract in place is critically important for employers and employees alike. Employers often complain about having to spend time drafting employment contracts. On the other hand, employees often complain about not having a clear understanding of their rights and obligations. Having an Employment Contract in place can help to resolve these disputes quickly and fairly.
What are the benefits of having an employment contract?
The benefits of having an employment contract are:
- A clear understanding of your rights and obligations as an employee;
- The ability to enforce the employer’s obligations in the event of any breach of contract by the employer;
- Protection against unfair treatment or termination by the employer;
- Protection against unlawful discrimination or harassment by the employer; and
- Confidentiality of the company’s business information and trade secrets.
What clauses should be included in an employment contract?
There is no standard list of clauses to be included in an employment contract. However, you should discuss with your students the following common clauses that are often found in contracts of employment:
- A statement of the job title and a brief description of the job responsibilities;
- Compensation details such as the start date, rate of pay, and deductions for tax and national insurance contributions;
- The date of employment (the date from which all terms and conditions apply);
- Working hours including overtime details if applicable;
- Non-competition clause where the employee agrees not to engage in the same business activity in a geographical area within a specified time period after the termination of employment. You may also wish to include a notice period for the employee before termination of employment if the contract is terminated early for any reason;
- Suspension of terms and conditions when the employee is on holiday, maternity leave, or absent for any other reason;
- Protection against unlawful acts by the employee such as discrimination or sexual harassment; and
- Confidentiality clauses such as the employee agreeing not to disclose company secrets etc.
Can an employment contract be terminated by either party without giving notice?
An employment contract can only be terminated by notice given in writing. However, an employer may immediately terminate a contract without notice on any of the following grounds:
- A statutory ground for dismissal – for example gross misconduct where the employee has behaved in a manner that constitutes a criminal offense or has behaved in a way that has caused substantial damage to the employer’s interests;
- Insolvency – the employer goes into liquidation or administration because the business has become insolvent;
- An economic ground – the employer has terminated the contract because a general downturn in the economy has resulted in the company having to reduce its workforce; and
- Mutual consent – both parties agree to dispense with the need for notice.