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When an employee gets accepted to work in a company, he must sign an employment contract with his future employer. This legal agreement is a document that establishes and defines the rights and responsibilities of both parties namely the employer and the employee or the worker and the company.
What is a contract of employment?
Most of us have experienced what one goes through when a job offer gets accepted. We usually go through a period of orientation and part of this is getting indoctrinated with a bunch of legal terms which often times aren’t even understood by new employees.
But for the employer, this is an essential way to establish, as well as protect, a good working relationship between the two parties. An employment contract or an employment agreement is a legal document that defines the bounds of the relationship between the employer and the employee.
Why should you have an employment contract?
The best way to clearly define the job, responsibilities, and benefits of the employee is through an employment contract. This will get rid of any confusion about the scope of the job. It is, therefore, essential that a new employee read the contents of the employment contract template making sure that he’s satisfied with all its elements before attaching his signature on it.
As an employee, you also have to bear in mind the legal consequences should you break the employment agreement. If in doubt, ask for clarifications. For instance, the contract may stipulate that you should stay on the job for a minimum period of time. You have to comply with this arrangement.
Or if the contract limits the places that you can work for when he leaves the company, you must follow this too. Remember that the moment you place your signature on it, the contract becomes binding.
Types of employment contracts
There are different types of employment contracts and employment contract samples. Employers have the task of choosing the one which best suits his business, one that would accurately reflect the most favorable arrangements he will have with his employees. Here are the most common types of employment agreements samples to consider:
- Full-Time Permanent Contracts
This is the most common and popular type of contract and is the cornerstone of any business because employees who enter this type are usually the most reliant ones. This contract depends upon the employee who may either get paid by the hour or receives a salary.
The contract should stipulate the employee’s holiday benefits, working hours, the position in the company, and other aspects that are relevant to the worker’s assignments. Depending on the employee’s seniority, the contract can either be very simple or very complicated.
- Part-Time Contract
This type is basically the same as the first one except this type focuses on the employee’s stipend and working hours. The contract should specifically clarify the employee’s holiday benefits and should, in detail, be accurately shown in the employment contract. The employer must also follow the statutory requirements for such entitlements.
- Director’s Service Agreements
This type is generally the most “heavy-duty” and detailed of all contracts. It typically defines in specific details how a director must act within the business environment, as well as the extent, and scope of his responsibilities. This type of contract is often extremely comprehensive as it covers a lot of details.
- Fixed-Term Contract
This agreement is for temporary employees and the tenure of the agreement can vary, from a few weeks to even a couple of years. Such agreements can vary substantially in both its extent and scope.
- Zero-Hours Contract
This type of contract has stirred up some controversy and currently, the government is in the process of implementing some restrictions in terms of how to apply this contract.
By definition, this is a type of contract “between an employer and a worker, where the employer is not obliged to provide any minimum working hours, while the worker isn’t obliged to accept any work offered. “The employee may sign an agreement to be available for work as and when required so that no particular number of hours or times of work are specified.”
- Casual Work Contract
Although there are similarities between this type and the Zero-hours contract, there are significant differences between the two. For one, the employees who enter this type of contract are generally classed as “workers” rather than employees.
This means that the workers have fewer employment rights and don’t have any permanent status. A good example is seasonal workers, who are only employed a couple of weeks for each year.
- Consultancy Agreement
This type of contract is between the company and an individual with certain skills that the company requires. They engage a consultant’s services, but he isn’t considered an employee but a self-employed person.
This type of agreement can take on various forms, from a simple one-page letter to a comprehensive and lengthy contract.
Information to include in an employment contract
As aforementioned, the employment contract template outlines the responsibilities and rights of both the employer and the employee. Almost all types of employment contract sample include the following:
- Wages or salary
As agreed upon, the contract will itemize the wage, commission or salary of the employee.
This refers to the hours and days that the employee will work.
- Employment duration
How long the employee will continue working with the company depends upon their agreement. For most, especially for full-timers, their tenure continues. For some, the contract defines the specific duration. There are also instances where a minimum duration gets laid out but with a possibility of extending this period.
- General responsibilities
This defines the general duties and responsibilities of the employee which he must fulfill.
Most companies today require their employees to sign a separate NDA or non-disclosure agreement. But the contract entered might already include a confidentiality statement.
For employees involved in handling websites social media, or emails, their contract may include a statement which says that the company maintains the control and ownership over all of the communications the employee got involved in.
Prospective employees receive a briefing about the benefits the company offers and these may include but aren’t limited to 401K, health insurance, vacation time, and other types of perks included in the benefits package. You must include all of this information in the contract.
- Future compensation
In some cases, the employment agreements sample may contain a non-compete agreement, also referred to as the NCC. Here, the contract states that when the employee leaves the company, he won’t seek employment which puts him in competition with the one he left. The NCC contract can be a separate agreement but is usually part of the employment contract.
- Other terms
These may include an ownership agreement, any information about dealing with disputes in the workplace, qualifications where the employee may seek employment after he leaves the company, and others.
What is an implied employment contract?
This is a contract that’s inferred from statements made during the employee’s interview, job promotion or from a point mentioned in the company’s handbook or training manual. For instance:
- You can derive implied contracts from statements, actions or the employer’s past employment history.
- An employee might have recorded or witnessed raises, promotions or past employment reviews for their coworkers or themselves.
- During the interview, the employer may have informed the prospective employee that the job is a permanent or long-term position unless they’re fired for valid reasons.
Although implied contracts may be very hard to prove, they’re nevertheless binding. Employees can always prove their validity by pointing out statements, policies, actions, and company practices which made them believe that any promises made were part of the implied contract.
Breaking employment contract legally
Both the employer and the employee have explicit obligations in upholding the contract. Even if your contract was verbally implied, both parties are legally bound by the contract. By experience, it’s difficult to break a contract. However, there are still legal ways to do so which can save you from getting sued for breach of contract.
If you feel that either the employer or the employee involved in the employment contract has made an illegal breach of the agreement, you can always consult with a lawyer for advice. Here are some steps that can serve as a guide:
- Determine if the contract is impossible to fulfill. If so, either one or both parties can legally break the contract.
- Determine if any misrepresentation or fraud has occurred. In case there was a mistake made or one of the parties has mistakenly or fraudulently misrepresented himself, this is a ground to break the contract legally.
- Go through the original contract with regards to termination. There could be an agreement in the contract that permits either party to terminate the agreement after giving written notice.
- Check for any signs that the employer breached the contract. A breach of contract can land you in court, especially if this caused the other party to suffer damages, financially or otherwise, because of your actions.
- The employment agreement is legally broken if there are any unauthorized changes made in the original contract. But you need to be absolutely sure that there were, indeed, changes which you can consider a breach of contract.
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