Know why it is important to have your Employment Contracts in writing?

The importance of a written Employment Contract

It is important that the status of an employee be established from the beginning of the employment relationship – permanent, fixed term, temporary, and so on. Section 129 of the Basic Conditions of Employment Act (“BCEA”) provides for certain written particulars of employment to be provided as a minimum, and every employer is legally obliged to provide all employees with these minimum particulars in writing not later than the first day of employment.

This minimum requirement, however, is not sufficient. Employers are well advised to enter into a written Employment Contract with every employee. Apart from section 29 of the BCEA, there is no legal requirement for the employer to provide a written contract, but by reducing everything to writing there can be no arguments in future about what the terms of the employment relationship are.

The terms and conditions of a verbal contract are very difficult to prove – it is your word against the employee’s word, and verbal contracts are not at all satisfactory. A written employment contract may include the following:

• Name and address of employer;
• Name and address of employee;
• Job title;
• Job description;
• Salary;
• Agreed deductions from salary;
• Pension or provident fund benefits, rules and contributions. The contract should stipulate that contributions are subject to change if this is the case;
• Medical aid benefits, rules and contributions. The contract should include a clause in terms of which the employee agrees to abide by the requirements of any amendments to the scale of medical aid rates, and also to any amendments to the employee’s or the employer’s contributions, which is normally an annual amendment. The employment contract should provide for the employee to specifically sign next to these two conditions;
• Copy of company Disciplinary Code & Procedures. This will include a description of the procedure that the company will follow in the event of disciplinary action being instituted against the employee, as well as a description of the company grievance procedures;
• Company rules and regulations (dress code, standards of behaviour required etc.);
• Company car usage and restrictions;
• Company cellphone usage and restrictions;
• Normal working hours;
• Company policy on overtime and compensation therefore;
• Leave provisions for annual leave, sick leave, family responsibility leave, maternity leave and any other types of leave that the company provides for such as study leave;
• If the employee earns above the present threshold of R115572-00 per annum, terms regarding normal hours and overtime hours, meal breaks and the agreed compensation if any for overtime hours;
• Terms and conditions applicable to bonuses or other incentive schemes paid by the employer;
• Terms and conditions applicable to performance reviews;
• Terms and conditions applicable to salary reviews – here it should be expressly mentioned that a “review” is not a guarantee of an increase. The term “review” simply means that the salary will be looked at in terms of the employee’s performance or other criteria that the employer decides on, but may not necessarily result in a salary increase. Many employees incorrectly interpret “review” as meaning “guaranteed increase” and it must be made clear to employees that this is not so;
• Terms and conditions applicable to staff loans – does the company provide financial assistance to staff by way of loans? If so, explain the procedure to be followed;
• If the company does not provide financial assistance, this should be stated in the contract;
• Internet and e-mail usage policy. This is an extremely important inclusion;
• Restraint of trade agreement where desirable;
• Confidentiality agreement where desirable;
• Conflict of interest agreement – this would be to prevent undesirable conflict of interest within the workplace. For example, one rule may be that the company will not employ a relative of an employee in a position that may cause a conflict of interest. An example would be that it is undesirable for the Human Resources Manager to be the husband of a female employee.
• A “kickbacks” or “gifts” prohibition clause or limitations on the value of gifts received.

Very few employees actually read their employment contract. For this reason, it is advisable to provide the employee with a copy of the contract that he/she would be required to sign and let them take it home and read it through before signing.

Where necessary, the contract of employment should make provision for the employee to signify understanding and acceptance of certain specific and important clauses of the contract by appending their signature to that specific clause in the contract.

For example, it would be advisable that for the internet usage clause, the restraint  of trade agreement and the conflict of interest agreement,  the employee should  affix his/her signature to the following clause appended at the end of that condition in the contract:

“I know and understand the contents of the (Restraint of Trade Conditions, Confidentiality Agreement etc.). I clearly understand that any breach of this clause will be regarded in the most serious light by management, and disciplinary action will follow any such breach. Such disciplinary action may lead to my dismissal.”

This leaves no doubt in the mind of the employee exactly where he/she stands. The contract should also make mention of benefits that will not be provided. If there is no retirement funding facility offered, or medical aid, then state as much in the contract.

With a written agreement or contract of employment, there is no doubt or confusion in anybody’s mind regarding the terms and conditions of employment, and this document will prove its value in matters of dispute that will arise.

It is a Golden Rule to always put an agreement (employment or otherwise) in writing.

For more information on employment contracts or if you’d like assistance getting your staff employment contracts in place, contact Pagdens and our team will be able to advise you on the best way forward.

This article is for general information should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact an attorney for specific and detailed advice. Errors and omissions excepted (E&OE).