THE GOLDEN RULES OF EMPLOYMENT CONTRACTS

THE GOLDEN RULES OF EMPLOYMENT CONTRACTS

One of the most important documents that all small businesses should have in place is signed employment contracts between the organisation and all employees. These set out the ground rules between the parties, let employees know exactly what is expected from them, what they can expect and provides a reference document on a wide variety of issues. If not employment contract is in place, employers and employees are bound by the Basic Conditions of Employment Act and the Labour Relations Act. This is not an ideal situation as employers can get much more protection and benefit out of a good strong employment contract. 

There are some important factors to bear in mind when drawing up employment contracts: 

KISS (Keep it Simple Stupid) 

Don’t use complicated legal speak. Use concise, simple English or if necessary, native language, to ensure that the agreement can be understood by both parties. 

Sign before they start 

Make sure the new employee signs the contract before they start work. If they’ve started they can’t be forced to sign the contract and you may have difficulty negotiating tricky clauses like restraint of trades. 

If they haven’t signed 

If your employees haven’t signed contracts don’t despair. Sit down with them and work through the contract together. Ensure this is done in a relaxed non-threatening environment with the emphasis put on the mutual benefits for both parties in formalising rights and responsibilities. Inform employees that you are simply ensuring that you are legally compliant. 

When their term ends… 

Make sure you also have contracts for the fixed-term employees and remember to get new ones signed once the term is up. Independent contractors should also sign employee contracts to protect you in the event that clients, staff, trade secrets or methodologies are stolen. 

FACTORS TO INCLUDE 

Look to include the following in employment contracts for permanent staff: 

Probationary periods 

These are usually three months in duration and are designed to ensure that you can terminate the services of unsuitable new employees quickly and efficiently. You still can’t just tell them to pack their bags and leave; there is a process that must be followed. 

Conditions of employment 

This section must include: 

  • A description of duties with the proviso that the organisation can require employees to undertake other duties that are within reason. This will prevent the “it’s not in my job description” argument.
  • Details of working hours and breaks, including smoke breaks.
  • The remuneration to be paid, including the monthly payment date, amount, method of payment, relevant deductions and any extra provisions such as commission, petrol or cell-phone allowances.
  • All benefits, including annual leave (usually 15 days, but can be increased especially for senior staff or long service staff); sick leave (with provisions for investigating excessive or suspicious sick leave); family responsibility leave; annual bonuses; annual increases and medical aid and retirement funding if applicable. 

Protection clauses for the employer 

  • An exclusive service clause to ensure an employee only works for you, unless you give them written consent.
  • Trade secret and confidentiality clauses to make sure that your confidential information, methodology, marketing and expansion plans, new contracts, and clients stay exactly that: confidential.
  • Ownership and/or copyright clauses stipulate that any materials, programmes, systems etc. developed by employees while they work for you, remain solely owned and copyrighted by the organisation.
  • Non-solicitation clauses ensure that ex-employees don’t steel your clients, potential clients and staff members.
  • A restraint of trade to make it difficult for ex-employees to start up competitor business or work for competitors within close proximity to your operation. This would normally only be applicable to key members of staff.
  • An electronic communications proviso to stop abuse of email and the internet. This should allow you to access employees’ emails and instigate appropriate discipline if they are accessing porn sites, downloading inappropriate data or huge amounts of data etc.
  • A termination clause would usually stipulate a one calendar month notice period, but you can make it longer in the case of key employees that you are going to battle replace.
  • And finally, don’t forget to get both parties to sign and date the document and to put the original in the employee’s file. You would be surprised how often this step is missed and negates everything mentioned above. 

Reference: 

Claire Stewart – Founder of PeopleWise (Your Business)