The Importance of the Employment Contract It is quite surprising just how many employers out there do not provide employment contracts. They seem to have some wild dream that "if it is not in writing, then it does not exist," or another dream is that "if there is no written contract, then we can do what we like with our employees." These are not dreams - these are nightmares - which are sure to land the employer in hot water at the CCMA. Every employer is required by law (Basic Conditions of Employment Act – section 29) to provide the employee with a written contract of employment not later that the first day of commencement of employment. Failure to do so could land the employer in jail for a term of imprisonment (section 93 of the BCEA) or to liability for a hefty fine (schedule 2 – BCEA) A contract is usually entered into between two or more parties, in order to protect the parties to the contract against any breach or unlawful action in terms of the contract itself. When you get married, you enter into a contract. When you buy a house or car, you enter into a contract. When you get divorced, you enter into a contract. So then why not have a contract of employment with your employees? The contract of employment is a vital document - it regulates the terms and conditions of employment between the employer and the employee. It stipulates what the employer will provide in terms of benefits, and in terms of labour legislation, and it specifies what the employee is entitled to receive in terms of company policy, company benefits, and labour legislation. It also regulates the behaviour of the employee in the workplace - because all company policies and procedures, as well as your disciplinary code, form a part of the employment contract. If there is no contract regulating these matters, it is extremely difficult to take action against the employee - if there is no contract, or if the employee has never been informed, then he has the right to conclude that it does not exist.
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The Importance of the Employment Contract
It is quite surprising just how many employers out there do not provide employment contracts. They
seem to have some wild dream that "if it is not in writing, then it does not exist," or another dream
is that "if there is no written contract, then we can do what we like with our employees." These are
not dreams - these are nightmares - which are sure to land the employer in hot water at the CCMA.
Every employer is required by law (Basic Conditions of Employment Act – section 29) to provide the
employee with a written contract of employment not later that the first day of commencement
of employment.
Failure to do so could land the employer in jail for a term of imprisonment (section 93 of the BCEA)
or to liability for a hefty fine (schedule 2 – BCEA)
A contract is usually entered into between two or more parties, in order to protect the parties to the
contract against any breach or unlawful action in terms of the contract itself.
When you get married, you enter into a contract.
When you buy a house or car, you enter into a contract.
When you get divorced, you enter into a contract.
So then why not have a contract of employment with your employees?
The contract of employment is a vital document - it regulates the terms and conditions of
employment between the employer and the employee. It stipulates what the employer will provide
in terms of benefits, and in terms of labour legislation, and it specifies what the employee is entitled
to receive in terms of company policy, company benefits, and labour legislation.
It also regulates the behaviour of the employee in the workplace - because all company policies and
procedures, as well as your disciplinary code, form a part of the employment contract. If there is no
contract regulating these matters, it is extremely difficult to take action against the employee - if
there is no contract, or if the employee has never been informed, then he has the right to conclude
that it does not exist.
The contract of permanent employment
The first thing that happens is that an offer of permanent employment is given in writing to the
prospective of the employee.
The prospective employee then accepts the offer of employment in writing.
The permanent contract of employment is then entered into.
The Fixed Term Contract of Employment
The fixed term contract of employment is in fact almost identical to the contract of permanent
employment.
The only real difference is that the fixed term contract of employment will stipulate a starting date
and an ending date.
The contract will state that "Upon the attainment of (state ending date) this contract of employment
will terminate, and the employment relationship between the employee and the employer will cease.
The employee will no longer be employed by the employer as from (state ending date.)
Apart from this clause, the contract will be the same as the permanent contract of employment,
except that in the fixed term contract the employer will stipulate where the benefits such as pension,
medical aid, provident fund, any group life assurance facility, etc is applicable or not applicable to
the fixed term contract.
A further important paragraph to be included would be as follows:
"This contract of employment may be terminated by either party to the contract providing to the
other party to the contract, 1 month written notice of intention to terminate, for any reason
recognised in law as being sufficient. The employer may terminate this contract of employment at
any time during the duration of the contract, for reasons of the incapacity or misconduct of the
employee, or the operational requirements of the employer."
Should this contract be terminated for any of the above reasons, the employee agrees that he shall
have no claim against the employer for any outstanding benefit, including remuneration, to the end
of the contract."
Annual leave and sick leave
An employee on fixed term contract is entitled to paid annual leave and paid sick leave (from the first
day of employment ) , as well as family responsibility leave (only after 4 months employment), in
terms of the Basic Conditions of Employment Act.
The temporary contract of employment
This is in fact merely another name for a fixed term contract of employment, and the same
stipulations apply.
A further important paragraph to be included would be as follows:
"This contract of employment may be terminated by either party to the contract providing to the
other party to the contract 1 month written notice of intention to terminate, for any reason
recognised in law as being sufficient. The employer may terminate this contract of employment at
any time during the duration of the contract, for reasons of the incapacity or misconduct of the
employee, or the operational requirements of the employer.
Should this contract be terminated for any of the above reasons, the employee agrees that he shall
have no claim against the employer for any outstanding benefit, including remuneration, to the end
of the contract."
The project contract of employment.
Here again, the project contract of employment is also in fact a fixed term or temporary contract of
employment. The difference is that instead of stipulating a starting date and an ending date (a
contract which runs according to time,) the project contract of employment is a contract where an
employee is employed by the employer to complete a certain project. In other words, the date of
completion of the project is unknown - it may be six months, it may be 12 months or even longer.
Thus, the contract will stipulate wording something like:
" the employment shall commence on (stipulate starting date) and shall end upon completion of the
project."
A further important paragraph to be included would be as follows:
"This contract of employment may be terminated by either party to the contract providing to the
other party to the contract 1 month written notice of intention to terminate, for any reason
recognised in law as being sufficient. The employer may terminate this contract of employment at
any time during the duration of the contract, for reasons of the incapacity or misconduct of the
employee, or the operational requirements of the employer. Should this contract be terminated for
any of the above reasons, the employee agrees that he shall have no claim against the employer for
any outstanding benefit, including remuneration, to the end of the contract."
The contract of probationary employment. Conditions relating to probation are usually stipulated in
the contract of permanent employment. It is however, important that the employer should stipulate
all the conditions applicable to the probation period.
It is important that is a minimum, the following should be stipulated :
[a] that the period of probation will not be extended. The reason for this is that the employer is the
best judge of whether or not a particular employee is going to "make the grade" or not. The
employer is also the best judge of how long it should take a newly employed person to " make the
grade."
If the employee is unable to prove himself within the stipulated period of probation (say three
months) then our view is that any extension of time, in itself, will not achieve anything. In other
words, if the employee is unable to prove himself within the reasonable period of time afforded by
the employer, then he is unlikely to ever be able to prove himself. There is therefore no point in
extending the period of probation - it simply wastes the employer's time and money.
Employers must take note of the following extract from the Schedule 8 of the Labour Relations Act
(The Code of Good Practice – Dismissal.):
8 Incapacity: Poor work performance –
(1) A newly hired employee may be placed on probation for a period that is reasonable given the
circumstances of the job. The period should be determined by the nature of the job, and the time it
takes to determine the employee's suitability for continued employment. When appropriate, and
employer should give an employee whatever evaluation, instruction, training, guidance or counseling
the employee requires to render satisfactory service. Dismissal during the probationary period
should be preceded by an opportunity for the employee to state a case in response and to be
assisted by a trade union representative or fellow employee.
(2) After probation, an employee should not be dismissed for unsatisfactory performance unless the
employer has:
and
(b) after a reasonable period of time for improvement, the employee continues to perform
unsatisfactorily.
(3) the procedure leading to dismissal should include an investigation to establish the reasons for
the unsatisfactory performance and the employer should consider other ways, short of dismissal, to
remedy the matter.
(4) in the process, the employee should have the right to be heard and to be assisted by a trade
union representative or fellow employee.
It is quite surprising just how many employers out there do not provide employment contracts. They
seem to have some wild dream that "if it is not in writing, then it does not exist," or another dream
is that "if there is no written contract, then we can do what we like with our employees." These are
not dreams - these are nightmares - which are sure to land the employer in hot water at the CCMA.
Every employer is required by law (Basic Conditions of Employment Act – section 29) to provide the
employee with a written contract of employment not later that the first day of commencement
of employment.
Failure to do so could land the employer in jail for a term of imprisonment (section 93 of the BCEA)
or to liability for a hefty fine (schedule 2 – BCEA)
A contract is usually entered into between two or more parties, in order to protect the parties to the
contract against any breach or unlawful action in terms of the contract itself.
When you get married, you enter into a contract.
When you buy a house or car, you enter into a contract.
When you get divorced, you enter into a contract.
So then why not have a contract of employment with your employees?
The contract of employment is a vital document - it regulates the terms and conditions of
employment between the employer and the employee. It stipulates what the employer will provide
in terms of benefits, and in terms of labour legislation, and it specifies what the employee is entitled
to receive in terms of company policy, company benefits, and labour legislation.
It also regulates the behaviour of the employee in the workplace - because all company policies and
procedures, as well as your disciplinary code, form a part of the employment contract. If there is no
contract regulating these matters, it is extremely difficult to take action against the employee - if
there is no contract, or if the employee has never been informed, then he has the right to conclude
that it does not exist.
The contract of permanent employment
The first thing that happens is that an offer of permanent employment is given in writing to the
prospective of the employee.
The prospective employee then accepts the offer of employment in writing.
The permanent contract of employment is then entered into.
The Fixed Term Contract of Employment
The fixed term contract of employment is in fact almost identical to the contract of permanent
employment.
The only real difference is that the fixed term contract of employment will stipulate a starting date
and an ending date.
The contract will state that "Upon the attainment of (state ending date) this contract of employment
will terminate, and the employment relationship between the employee and the employer will cease.
The employee will no longer be employed by the employer as from (state ending date.)
Apart from this clause, the contract will be the same as the permanent contract of employment,
except that in the fixed term contract the employer will stipulate where the benefits such as pension,
medical aid, provident fund, any group life assurance facility, etc is applicable or not applicable to
the fixed term contract.
A further important paragraph to be included would be as follows:
"This contract of employment may be terminated by either party to the contract providing to the
other party to the contract, 1 month written notice of intention to terminate, for any reason
recognised in law as being sufficient. The employer may terminate this contract of employment at
any time during the duration of the contract, for reasons of the incapacity or misconduct of the
employee, or the operational requirements of the employer."
Should this contract be terminated for any of the above reasons, the employee agrees that he shall
have no claim against the employer for any outstanding benefit, including remuneration, to the end
of the contract."
Annual leave and sick leave
An employee on fixed term contract is entitled to paid annual leave and paid sick leave (from the first
day of employment ) , as well as family responsibility leave (only after 4 months employment), in
terms of the Basic Conditions of Employment Act.
The temporary contract of employment
This is in fact merely another name for a fixed term contract of employment, and the same
stipulations apply.
A further important paragraph to be included would be as follows:
"This contract of employment may be terminated by either party to the contract providing to the
other party to the contract 1 month written notice of intention to terminate, for any reason
recognised in law as being sufficient. The employer may terminate this contract of employment at
any time during the duration of the contract, for reasons of the incapacity or misconduct of the
employee, or the operational requirements of the employer.
Should this contract be terminated for any of the above reasons, the employee agrees that he shall
have no claim against the employer for any outstanding benefit, including remuneration, to the end
of the contract."
The project contract of employment.
Here again, the project contract of employment is also in fact a fixed term or temporary contract of
employment. The difference is that instead of stipulating a starting date and an ending date (a
contract which runs according to time,) the project contract of employment is a contract where an
employee is employed by the employer to complete a certain project. In other words, the date of
completion of the project is unknown - it may be six months, it may be 12 months or even longer.
Thus, the contract will stipulate wording something like:
" the employment shall commence on (stipulate starting date) and shall end upon completion of the
project."
A further important paragraph to be included would be as follows:
"This contract of employment may be terminated by either party to the contract providing to the
other party to the contract 1 month written notice of intention to terminate, for any reason
recognised in law as being sufficient. The employer may terminate this contract of employment at
any time during the duration of the contract, for reasons of the incapacity or misconduct of the
employee, or the operational requirements of the employer. Should this contract be terminated for
any of the above reasons, the employee agrees that he shall have no claim against the employer for
any outstanding benefit, including remuneration, to the end of the contract."
The contract of probationary employment. Conditions relating to probation are usually stipulated in
the contract of permanent employment. It is however, important that the employer should stipulate
all the conditions applicable to the probation period.
It is important that is a minimum, the following should be stipulated :
[a] that the period of probation will not be extended. The reason for this is that the employer is the
best judge of whether or not a particular employee is going to "make the grade" or not. The
employer is also the best judge of how long it should take a newly employed person to " make the
grade."
If the employee is unable to prove himself within the stipulated period of probation (say three
months) then our view is that any extension of time, in itself, will not achieve anything. In other
words, if the employee is unable to prove himself within the reasonable period of time afforded by
the employer, then he is unlikely to ever be able to prove himself. There is therefore no point in
extending the period of probation - it simply wastes the employer's time and money.
Employers must take note of the following extract from the Schedule 8 of the Labour Relations Act
(The Code of Good Practice – Dismissal.):
8 Incapacity: Poor work performance –
(1) A newly hired employee may be placed on probation for a period that is reasonable given the
circumstances of the job. The period should be determined by the nature of the job, and the time it
takes to determine the employee's suitability for continued employment. When appropriate, and
employer should give an employee whatever evaluation, instruction, training, guidance or counseling
the employee requires to render satisfactory service. Dismissal during the probationary period
should be preceded by an opportunity for the employee to state a case in response and to be
assisted by a trade union representative or fellow employee.
(2) After probation, an employee should not be dismissed for unsatisfactory performance unless the
employer has:
and
(b) after a reasonable period of time for improvement, the employee continues to perform
unsatisfactorily.
(3) the procedure leading to dismissal should include an investigation to establish the reasons for
the unsatisfactory performance and the employer should consider other ways, short of dismissal, to
remedy the matter.
(4) in the process, the employee should have the right to be heard and to be assisted by a trade
union representative or fellow employee.
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