In South Africa, it is a legal requirement that everyone you employ, as an employer, has a standard employment contract. The employment contract outlines the conditions of employment and includes information with regards to the following circumstances: what is expected from the employee, annual leave, job title, hours of work, remuneration and more.
In the Main Agreement, this is not so, unless it is a Limited duration contract in which the Main Agreement serves as the outline. However, we do strongly recommend that employees be given a contract to encourage clarity and give certainty.
We examine what a standard employment contract is, the advantages for both the employee and the employer and do’s and don’ts for drafting an employment contract in more detail below.
What is an employment contract?
In simple terms, an employment contract falls within the scope of commercial contracts, hence it needs to be in writing. An employment contract is an agreement between the parties (employer and employee) and serves as the primary evidence relied upon to enforce the parties’ contractual rights.
A standard employment contract regulates the terms and conditions of employment between the employer and the employee. It includes information on what the employer will provide and specifies what the employee is entitled to in relation to company policy, benefits and labour legislation for the specific work performed.
The employment contract is governed by the Basic Conditions of Employment Act (BCEA) and is required by law to be presented to the employee no later than the first day of commencement of employment. An employment contract needs to be agreed upon in the form of written consent.
There is no such requirement in the Main Agreement as explained above.
It is important to note that there are different types of employment contracts that relate to the employment being offered. Each of these types of employment, which include permanent, fixed-term, probation and project employment, have been set out in the Labour Relations Act, 2014 (Act No. 6 of 2014) (LRA) and relate to the way in which employees will be employed. These include:
- Permanent employee: A permanent employee is employed for an undetermined period of time at their place of work. A contract of employment for an undetermined period of time has no agreed date of notice of termination (except retirement age). Such a contract is terminated by either the employer (dismissal) or the employee (resignation) on notice.
- Part-time employees: A part-time employee is a person compensated based on the period of time s/he works (the hours s/he works), which is less than the period of time the employer’s permanent employees work.
- Fixed-term employee: A fixed-term employee, also known as a temporary employee, is a person employed for a determined period of time. This is usually no more than three months of employment. A contract of employment for a determined period of time has an agreed date of termination, being either a specific calendar date or the occurrence of a specific event.
The Main Agreement has specific rules on Fixed Term Contracts, called Limited Duration Contracts, which take precedence over the LRA in this specific area.
What elements are included in a standard employment contract?
When drafting an employment contract, several material issues need to be considered. These are often referred to as essentiala (essential elements), and they must be present in the contract for the contract to be legally sound. These essential elements would typically be the rendering of services by the employee for remuneration paid by the employer. It would also include job description, non-disclosure of trade secrets, compensation, normal payment, etc. If these essential elements are not contained in a contract, the contract could be void due to vagueness and, therefore, be unenforceable.
A standard employment contract also usually includes additional clauses, which are often referred to as naturalia. These provisions would relate to leave, overtime, termination of employment, sick leave cycle, maternity leave, incapacity and deductions. Included in these clauses would be a section on the family responsibility leave days available. These provisions include if the employee’s child is born, if the employee’s child or adopted child is sick, as well as the death of the employee’s spouse or life partner, the death of the employee’s parent, adoptive parent, grandchild, grandparent, or sibling.
The naturalia section would highlight all the specifics regarding what would happen in the case of an illness, such as the need to bring a medical certificate from a medical practitioner to work on the day of an employee’s return. This applies if the employee is off work for more than two consecutive days or if s/he has been absent on more than two occasions in an eight-week period, as highlighted in Section 23 of the BCEA. It also specifies the remuneration for employees working on official public holidays, such as New Year’s Day, and Sundays.
The Main Agreement also refers to having to produce a sick note on Mondays and Fridays, and before and after public holidays.
All of the elements mentioned in the naturalia section are legal requirements that are governed by either employment legislation (BCEA) or a collective agreement in a particular sector (such as the Main Agreement for the Metals Industry). These provisions naturally find application in employment contracts by law and serve as the bare minimum and cannot be “contracted away”. It will always benefit both parties to include these provisions since they express inclusion.
Why is it important to draft a standard employment contract?
The main objective of drafting an employment contract is to ensure that both the employee and the employer know what is expected of them. In this way, both parties are protected against any breach or unlawful action relating to the conditions of employment.
A standard employment contract also protects the employer. If all the company’s policies, disciplinary codes, etc., are included in the contract, the employee will have all the information necessary to ensure that s/he adheres to those standards and requirements. In the same way, the employee is protected by having all elements related to employment included in the contract, meaning that the employer cannot take advantage or act unlawfully towards the employee.
Drafting a sound and enforceable contract takes a considerable amount of skill and understanding of employment law and complex substantive contract law. However, standard employment contracts do need to be drafted with employment legislation in mind and to comply with relevant statutory prescriptions. It is essential that a standard employment contract is clear, has a logical structure and incorporates the rules of best practice.
To make the process of drafting an employment contract a little simpler, we have put together a list of Do’s and Don’ts below.
Employment Contract Do’s:
- Do start with a generic form as a guide and adapt it to your particular situation and make sure to address issues prescribed by employment legislation, such as working hours, leave, deduction of monies and salary or wage.
- Do title 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 spelt 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.
- Do make sure that the contract addresses all possible contingencies and that nothing is left to chance.
- Do have your SEIFSA IR and Legal expert review every contract before you sign it.
- Do ask your SEIFSA IR and Legal expert 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 unasked and unanswered and pay for it later.
- Do initial every page of the contract and make sure the other party does the same so that nothing is missed.
- Do include notarisation, if required by applicable law.
- Do retain a copy of the contract for your records.
Employment Contract Don’ts:
- 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; instead, 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 hurriedly. It takes time to understand all 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 signed it.
- Don’t agree to a modification of the contract without getting it written and signed by both parties.
- Don’t assume that the 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 could change the whole equation.
Employment contracts are required by law and need to add clarity to the employment terms by including information related to working hours, job requirements, leave, remuneration and more. This legal contract protects both the employee and the employer and ensures that there is no unlawful action from either party. To get your free employment contract template, sign up to our SEIFSA resources portal.