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Getting to grips with the complexities of employment contracts

By Madelein van der Watt

15 May 2015

An effective, flexible and understandable employment contract is the basis of a good employee-employer relationship. Let's look at the basics of creating a sound employment contract.

What is an employment contract?

It's a document that sets out the terms and conditions of employment between your business and an employee. It can be something as simple as a one-page letter you give a worker upon appointment or a formal document that outlines these terms and conditions in extensive detail.

Why is it important to provide employees with employment contracts?

The law (the Basic Conditions of Employment Act) states that you must give all employees a document containing information about the conditions of their employment. That applies whether they are full-time, contractors or temporary workers.

In addition to being illegal, not putting in place a contract with your employees can lead to disputes and misunderstandings further down the line. If you have a grievance with a worker, it will be harder to take action without a contract in place.

What information should an employment contract include?

Details for employer and employee: full name, address, employee's occupation or tasks

Employment details: Dates and places of work, working hours

Payment details: Monthly salary or the rate and method of calculating wages, rate for overtime, allowances and benefits, bonuses, deductions, frequency of payment

Leave: Leave the worker is entitled to

Notice period

If the worker is a contractor, the period of the contract

Anything else I should know?

Be sure to get your employee to sign the document so there can be no arguments about whether he or she received it. If you hired any employees with a verbal contract, draw something up on paper as soon as possible.

And remember to update employees' contracts if the law changes, they are appointed to new roles, their benefits or working conditions change, etc. It's also important to note that the document must be written in language the employee can understand.

Where do I start with drawing up an employment contract?

There are many free templates available on the web - for an example click here. It can also be a good idea to ask a labour lawyer to give your employee contracts a glance to make sure they're watertight and that the terms and conditions you've proposed are in line with the Basic Conditions of Employment Act.

What is the purpose of a contract past date of employment?

An employment contract is not just important to start an employer-employee relationship but it is imperative that you stick to the clauses agreed on throughout the relationship. Recent changes in Labour Law dictates that fixed term contracts may no longer be treated as casually as employers used to treat them.

Previously, employers would create part-time positions and offer a three-month contract and casually extend them by not explicitly issuing the employee with a new temporary contract. Now, an employee would be within his rights to insist on being appointed in a permanent position and due to the employee's lack of acting according to the contract, his behaviour resulted in intent to employ full time.

The lesson here is to strictly adhere to the contract stipulations and if you intend to change the content, it must be done on the actual contract and not only verbally.

For example: If an employee's working hours are stated as 8am to 5pm on an employment contract and the employee starts arriving at 9am and leaving at 4pm every day without being reprimanded, the fact that the employer did not instruct the employee to adhere to the contract shows that the employer agrees with the new working hours arrangement. The employer will have a difficult time disciplining the employee based on working hours at a later stage.

Labour Law expert, Andrew Levy, and Sage Pastel Payroll & HR are presenting seminars on the subject countrywide this month. Find out more at www.pastelpayroll.co.za/seminars/employment-contracts-seminar

Madelein Taljaard (van der Watt)

About Madelein van der Watt

Madelein van der Watt is Development Manager at Sage Pastel Payroll & HR and a regular commentator in financial and business media, is an expert in areas of employee tax and legislative changes affecting payroll.