Although most contracts are concluded informally, contracts of a commercial nature should be recorded in writing. Employment contracts fall within the scope of commercial contracts, because what is an employment contract then if not one of rendering services and payment for rendering such services. The contractual document is an instrument that reflects the agreement between the parties and serves as the primary evidence relied upon to enforce the parties’ contractual rights.
There are material issues that need to be dealt with when drafting an employment contract. These are often referred to by lawyers as essentiala (essential elements) and have to be present in a contract in order for the contract to qualify as a specific type of contract. In an employment contract, these would typically be the rendering of services by the employee for remuneration paid by the employer. If these essential elements are not contained in a contract, the contract could be void due to vagueness and, therefore, be unenforceable.
Contracts also contain additional clauses, called naturalia, and these provisions apply to specific contracts even though parties may not specifically agree to these provisions. In the case of an employment contract, these would be provisions relating to leave or working hours contained in employment legislation or the collective agreement in a particular sector. These basic provisions naturally find application in employment contracts by law, serve as the bare minimum and cannot be “contracted away”. It is always to the benefit of parties to include these provisions since the express inclusion will bring these provisions to the attention of the parties and eradicate any uncertainty.
The main objectives when drafting a contract is to draft it clearly in a way that ensures that the parties to the contract know exactly what is expected of them, and that the parties and a court will interpret the contract in a way the parties intended.
- Do start with a generic form as a guide, and adapt it to your particular situation and make sure to address issues described by employment legislation, such as working hours, leave and remuneration
- Do entitle the document “EMPLOYMENT CONTRACT” so that there can be no mistake as to its intent.
- Do make sure the parties are properly identified in the first paragraph, that names are spelled correctly and that addresses are accurate.
- Do date the contract on the day it was signed and indicate where it was signed. If the parties sign on different dates, the date of the contract will be the date when the last party signs. Also, include the date of commencement of employment (and termination date if the contract is temporary in nature).
- Do use common-sense headings to make it easier to find particular provisions in the contract.
- Do number the paragraphs for ease of reference.
- Do use plain language whenever possible.
- Do define all technical terms.
- Do consider the placement of punctuation marks, since even a misplaced comma can change the meaning of a sentence.
- Do carefully review the use of conjunctions, especially “and” and “or,” since the word you choose can have a dramatic impact on meaning, and preferably draft your contract in the active voice.
- Domake sure that the contract addresses all possible contingencies and that nothing is left to chance.
- Do have your attorney review every contract before you sign it.
- Doask your attorney any questions you may have about the contract — remember, there is no such thing as a stupid question, but it can be stupid to let a question go unanswered and pay for it later.
- Dosign in blue or other coloured ink to make the original easily distinguishable from photocopies.
- Doinitial every page of the contract and make sure the other party does the same so that nothing is missed.
- Doinclude notarization if required by applicable law.
- Do retain a copy of the contract for your records.
- Don’t include legalese or archaic phrases like “the party of the first part”, “heretofore,” etc. They generally add little in terms of clarity.
- Don’t include overly long sentences; rather, break sentences down into easily digestible thoughts.
- Don’t be repetitive – unless it is absolutely necessary to do so. It is preferable to refer back to a previous provision according to its number or heading rather than to repeat it verbatim.
- Don’t assume the other party defines terms the way you do. If there is any doubt, include a definition in the contract.
- Don’t read the contract over hurriedly. It takes time to understand all of the possible nuances of the language used.
- Don’t accept the other party’s oral explanation of a confusing term. Include everything in writing.
- Don’t start acting according to the terms of the contract until both parties have executed it.
- Don’t agree to a modification of the contract without memorializing it in writing.
- Don’t assume that use of a standard or form contract eliminates the need for your lawyer’s review. Even if a standard contract worked well in one instance, a change of circumstances, date, or party can change the whole equation.
There are no set legal rules or legal requirements that require contracts to be drafted in a particular way. However, care must be taken to investigate the application of employment legislation in order to comply with any relevant statutory prescriptions when drafting. Care must also be taken to ensure that your contract follows a clear, logical structure and incorporates the rules of best practice.
Drafting a sound and enforceable contract takes considerable skill that requires attention and understanding of employment law and complex substantive contract law. It is, therefore, crucial that a contract be drafted by someone who has demonstrable expertise in and sound knowledge of both fields.
One must keep in mind that the contract serves as the primary evidence of contractual rights. A court cannot conclude a contract for the parties and a court has no jurisdiction to correct or improve a contract or its wording, unless the court is required to do so in time-consuming and very costly litigation.