EMPLOYMENT CONTRACT

 

DEFINITION

An employment contract is a legally binding agreement between an employer and all who have been engaged by the former to perform some work for a determined compensation. It spells out the terms and conditions of the working relationship between the two main parties including the rights and responsibilities of each. It serves as a reference of the engagement from the very start of the working relationship till it is discharged or any of the parties decides to terminate it with reference to the terms of the agreement. Employment Contracts could be done written or verbal.

 

TYPES OF EMPLOYMENT CONTRACTS (WRITTEN & VERBAL)

Dependent on the type of job, employers may want to engage employees in a written or a verbal contract. Written contracts are often characterized by formal and long-term jobs of a particular caliber. Verbal contracts are typically for informal jobs and are for short term periods. Verbal contracts are also known as handshake contracts. Most casual jobs are offered verbally so the acceptance is also verbal.

With the above being said, it must be noted that written contracts are more enforceable than verbal contracts at the law courts. Again, it is always safe on the behalf of the employee to seek for a written contract if the offer is from an unpopular source or an entity who has no track record on employee relations. Below are some major employment contracts for your consideration.

1.    Full-time Employment

Full-time contracts typically involve working around 30-40 hours per week, outlining details such as the employee's role, salary, working hours, and benefits. There is job security in these types of contracts and there are opportunities for career advancement for permanent employees. Full time employees are entitled to the full range of benefits the labor law provides such as pensions, insurance and holidays.

2.    Part-time Employment

Part-time contracts involve working fewer hours than full-time positions, with flexible schedules and varying hours based on the needs of the business. Employees on part-time contracts have similar terms as full-time employees but work fewer hours per week, allowing for work-life balance and flexible but are not entitled to the benefits of a full-time employee.

3.    Fixed-term Contract

Fixed-term contracts have a set end date, such as six months or one year, making them suitable for covering specific periods like maternity leave, sick leaves or project-based work. While fixed-term employees enjoy similar rights as permanent employees, extending these contracts beyond a certain period may lead to permanent employment status.

4.    Casual Contract

Casual contracts are ideal when the number of work hours fluctuates, offering flexibility to both employers and employees without a guaranteed minimum number of hours per week. Employees on casual contracts accrue benefits based on the hours worked and may receive statutory sick pay and other entitlements depending on the prevailing local regulations.

5.    Zero-hours Worker contract

Zero-hours contracts do not require a minimum number of hours to be offered or accepted, providing flexibility to both parties without exclusivity clauses. such contracts are open how fast one can execute the task at hand.

6.    Consultancy Agreements

Consultancy agreements are used for self-employed contractors, consultants, or freelancers, outlining terms of service, payment structures, and project details.

These agreements establish the scope of work, deliverables, payment terms, and other relevant aspects of the contractor-client relationship.

7.    Internship Contract

Outlines the terms for individuals gaining work experience in a company for a specified period. Interns may receive stipends or academic credit.

8.    Freelance or Independent Contractor Agreement

This agreement establishes a relationship between a business and a self-employed individual. Freelancers are typically hired for specific projects and are responsible for their own taxes and benefits.

9.    Seasonal Contract

Specifically for positions that are tied to seasonal demand, such as holiday-related jobs or agricultural work. At peak times in a business, this contract is usually engaged.

 

10. Agency Worker Contract

Involves employment through an agency, where the worker is contracted out to other businesses for specific assignments. This is a third-party agreement where business owners often get into with private recruitment agencies.

11. Probationary Contract

Includes a probationary period during which the employer assesses the employee's performance before confirming permanent employment. This contract allows for easy termination of employment that saves the business a lot of commitments if they want to offer applicants an opportunity.

 

FEATURES OF A VIABLE EMPLOYMENT CONTRACT

1.    Parties involved. It must be stated or mentioned how many parties are involved in the contract of labor. It is usually the employer and the employee but under some circumstances, there are third parties acting often the behalf of the employer as an agent.

2.    Job title. It may come out as trivial but it is important to mention what role in the firm the hired staff is going to occupy. It prevents avoidable conflicts.

3.    Supervisor. This is the specific officer whom this new staff will be reporting to in the line of their work. They will be directly responsible for the actions and inactions of the staff.

4.     Benefits and compensation. Whatever the employee is entitled to as compensation for his or her services in accordance with the rank must be spelt in clear terms. This includes monetary and non-monetary benefits.

5.    Employee classification (part-time or full-time). Some engagements are full-time and permanent, yet others are for a specified period of time and it must be mentioned in the contract.

6.    Confidentiality clauses. Every business has information they consider confidential which must be protected by every staff who joins the business. Particular mention is made of senior management roles where key business secretes are accessible to the office holders and so it must be unambiguously stated that such information are classified.

7.     Non-compete clauses. Some strong legal terms on how long an employee must stay away from working with a competitor in the same industry.

8.    Termination clauses. It is important to mention when and how a party to the agreement can terminate the contract and repercussions that can arise against a party should they faulter. 

All the above features should be taken into consideration when drafting an employment contract irrespective of who is being employed.

Most times, a new or small business may start with friends or families during the early days of the business due to financial constraints but that shouldn’t prevent the employer or business owner from drafting an agreement that will bind both parties.

The reputation of the business will suffer subsequently should there be a cause for conflict between the employer and the unassuming friends and family who were brought on board. In such circumstances, there wouldn’t be any reference to a contract and this can greatly affect the beautiful relationship between business owner and staff.

 

LEGAL CONSIDERATIONS

1.    Offer and Acceptance

An employment contract becomes legally binding when there is a clear offer from one party that is accepted by the other party, including invitation to treats.

Both parties must agree to the terms and conditions of the contract for it to be valid and enforceable.

2.    Capacity

Both parties entering into the contract must have the legal capacity to do so, meaning they must be of legal ages and mentally competent to understand and agree to the terms. Contracts signed under duress, coercion, misrepresentation, or undue influence may be deemed invalid by a court of law.

3.    Negotiations

Certain clauses may require negotiations to ensure fairness and legality, especially those that limit post-employment activities or affect contract renewal. This protects both the employee and the employer.

4.    Contract Breaches

Employers are legally bound by the terms of the contract just as employees are, and any breach can result in legal concerns and potential disputes. In the terms should be stated the very acts that constitute a breach to the agreement.

5.    Enforceability Clauses

If a lawsuit becomes necessary due to breaches or disputes, the court's decision may impact compensation and penalties for both parties involved.

6.    Termination and Renewal

Contracts should address termination grounds, notice periods for non-renewal, and renewal processes to avoid misunderstandings or disputes when ending the employment relationship. Properly considering termination, renewal, confidentiality, and other critical issues can help create a robust employment contract that benefits both parties involved.

7.    Formality

While employment contracts do not have to be in writing, having a written agreement is advisable for clarity and reference in case of disputes.

When entering into an employment relationship of a high value, it will be necessary to consult the services of a legal expert in the matters of labor so as to be certain on what you are signing up for, leaving nothing to chance. You should be concerned when you are hurried into signing a contract of service, anything done in haste is likely to be frost with errors. Thank you for doing us the honors of reading. See you next week hopefully.

 

15^th March, 2024

THE COLLEGE BUSINESS CONSULT

thecollegebc@gmail.com