What is an employment contract?


What is an employment contract?

Starting a job is exciting but can be challenging for young people. One of the first challenges is understanding your employment contract.

An employment contract is an agreement between a company and a worker.

A contract describes what the employee is entitled to according to company policy, benefits, and labour laws, as well as what the employer will provide in terms of benefits and labour laws.

A contract regulates the employee’s behaviour in the workplace, incorporating all company policies, procedures, and the disciplinary code.

Every employee should have a contract. An employer must provide a written contract no later than the first day of commencement of employment, according to the Basic Conditions of Employment Act (BCEA). The employment contract must be updated when the law changes, when both parties agree to changes, or when the pay or benefits of the employee increase.

Essential elements of an employment contract

Job title and description: states your role and responsibilities within the company.

Commencement date and duration: specifies the start date of your employment and the end date.

Place of work: the primary location where you will perform your duties.

Wage/salary details and payment frequency: includes your salary, any allowances (such as transport), and the frequency of payment (weekly or monthly).

Working hours and overtime policy: details your regular working hours and the conditions under which overtime is compensated.

Entitled leave: describes your rights to annual leave, sick leave, maternity leave, and family responsibility leave.

Confidentiality: While you might need to sign a separate non-disclosure agreement, some contracts also include a confidentiality clause.

Future competition: Some contracts include a non-compete agreement or clause, which prevents an employee from competing with the company after leaving. This provision can be a separate agreement.

Termination clause: the conditions under which either party can terminate the contract.

Types of employment contracts

Fixed-term contracts: Fixed-term contracts are similar to permanent contracts but with set start and end dates. Benefits like pension, medical aid, and provident fund may or may not be part of the package. Some employers exploit fixed-term contracts to cut costs by withholding certain benefits. Also, if a fixed-term employee gets retrenched, they may be denied severance pay.

Rolling over fixed-term contracts: Some employers sometimes renew fixed-term contracts, a practice known as “rolling over.” While not forbidden, it’s typically acceptable to do this once or twice. However, after multiple renewals, the employee gains the “right of expectation,” anticipating contract renewal. If the contract is not renewed, the employee can file an unfair dismissal claim with the Commission for Conciliation, Mediation, and Arbitration (CCMA).

Project contract: The project contract is akin to a fixed-term or temporary contract but focuses on completing a specific project rather than specific dates. Instead of setting a start and end date, the contract continues until the project’s completion. It typically states, “Employment begins on (start date) and ends upon project completion.”

Termination of employment contract

An employment contract can end for various reasons:

  • Expiry of the agreed period or completion of the task
  • Notice from either party
  • Summary termination for a material breach
  • Repudiation(to reject the value or authority of the employer or employee)
  • Mutual agreement
  • Death of either party
  • Insolvency of the employer
  • Impossibility of performance
  • A contract cannot be terminated without a valid reason.

Grounds for termination

  • Employee misconduct
  • Poor performance or incapacity
  • Employer’s operational requirements

Rights and obligations

As an employee, you have the right to:

  • A safe and healthy work environment.
  • Fair wages and equal pay for equal work.
  • Take leave as specified in your contract and under the BCEA.

Employers are obliged to:

  • Provide a written contract.
  • Ensure fair treatment and non-discrimination.
  • Adhere to labour laws regarding working conditions and benefits.

Common pitfalls to avoid

  1. Signing without reading
  2. Not negotiating terms
  3. Accepting verbal agreements
  4. Not knowing labour laws and your rights in the workplace.

RESOURCE: Breastfeeding in the workplace

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