Well, sometimes you just might want it to be! A written contract is an agreement with terms documented and delineated on paper at least, if not stone.
While many countries, including the United States, prefer to leave employers with the flexibility to decide what should go into a written employment contract, it is usually much easier and safer for both parties to have a mutually agreed-upon written agreement. It avoids misunderstandings, confusion and gray areas – all issues that rear their ugly head whenever a conflict or employment liability comes up.
A well-written employment agreement helps both the employee and employer know what is expected of them and to what they’re entitled. Therefore, misunderstandings are less likely to occur and if a problem does come up, then the employee and employer can refer to the employment agreement for clarification.
In countries where there are no specific definitions of what constitutes a written contract, we have come up with industry best practices which suggest that an employment contract should include:
- Names of the Parties – The employer’s organization details and the employee’s full name, address, and any other pertinent contact information.
- Start Date – The date on which employment will begin.
- Job Title and Description – This usually follows the job title and description specified in any recruitment advertisement and subsequent offer letter.
- Location of Work – Allows the employer to specify the location where the employee will work. However, it also allows for the employer to specify any other location in the future.
- Hours of Work – The employee’s hours are specified within the contract. The employee also agrees to work additional hours if the employer reasonably requests it. However, the hours cannot exceed the labor law’s stipulation.
- Probationary Period – The employer can specify a trial period for the employee with the option of a short notice period at the end of the trial if the employee does not fulfill expectations. The employer can also extend the trial period. This is subject to the jurisdiction and many organizations have to adapt their internal practices to meet with country statutes.
- Salary – This details the employee’s gross salary before tax, national insurance, and any deductions. It also specifies when payments are made.
- Performance Assessments – The employer can state when the employee will receive their first work evaluation and the timing of all subsequent regular evaluations, whether annual or otherwise.
- Deductions – This clause details all the circumstances in which the employer can make deductions from the employee’s salary.
- Expenses – After coming to an agreement with the employee, the employer may outline which work-related expenses will be covered and how/when the employee will be reimbursed. However, as a protection to the employer, to prevent errors and possible fraud, the clause makes it clear that proof of payment (such as submission of receipts) is required.
- Holidays – This clause delineates the annual holidays observed by the organization. It is important as the employer may wish to avoid having employees take traditionally busy periods off, for example, Christmas time for hospitality, retail or entertainment industries. This clause also allows the employer to specify the number of days per year that an employee can take, (subject to a statutory minimum) and whether bank and public holidays are included or excluded. The clause also includes further details regarding the accrual rate, rolling over holidays into the next year, restrictions on holidays where the employee has already given notice and upon termination, the pro rata payment in lieu of any accrued and unused holiday entitlement.
- Sickness & Disability – Absence through sickness can be a cost burden on employers. This clause stipulates the time by when the employee must inform their employer of their inability to attend work. (It does allow for a third party to contact the employer on the employee’s behalf). The clause also states when a doctor’s certificate is required and whether the employee will receive statutory or contractual sick pay. It is recommended that organizations have a separate Sickness and Absence Policy.
- Pension – This clause states the pension provision: company pension scheme, a stakeholder pension scheme or whether the employment comes without a pension provision.
- Notice – The notice period to be given by either the employer or the employee upon separation from the organization. However, this clause also provides a detailed list of actions that constitute gross misconduct allowing the employer to dismiss without giving notice.
- Grievance and Disciplinary Procedure – This refers to the detailed and separate Grievance and Disciplinary Policy or provides highlights on the procedural steps for filing a grievance or how the employer will proceed with disciplinary actions.
- Severability – This standard term states that each paragraph, sub-paragraph or clause is independent of each other, so if one is invalid or does not apply to the employee, the rest of the contract remains valid.
- Prior Agreements – Another standard term, stating the contract contains all the terms agreed between the employer and the employee and that no previous agreement (written or verbal) may supersede.
- Jurisdiction – Confirms the contract of employment comes under the jurisdiction of the local courts.
- Particulars of Employment – Confirms the job duties and core responsibilities, as well as any other elements of employment at the organization.
- Signatures – Signatures, printed names, and signature dates, from both the employee and an authorized representative of the employer to indicate receipt and understanding.
The above list is fairly comprehensive and is intended to cast a broad net to catch all possible categories of employment that might need to be included in a contract. However, some countries may have specific requirements which are not necessarily included here or may only require a subset of this list. Our global compliance software (GPS) has a country-by-country list of the statutory requirements are.
If you are in the market for a general- or country-specific employment contract or template, consider Global People Strategist!