Find us on Google+ My Sensible Cent: Understanding The Basics of Employment Contracts

Monday, September 16, 2013

Understanding The Basics of Employment Contracts

Recently, a job seeker wrote to me this email excerpt about employment contract. I thought it is wise to shed some light on the issue and share it with you.
“I have been working on contract basis for a few years now, and the contract period is about to end. The contract also says that unless otherwise, the employment terms continue even after date of contract ends. I would like to have it renewed officially plus also review some of my contract terms.
Please write about;
1. How to notify your employer of contract periods ending.
2. How long before the end date is it appropriate to send the reminder”
An employment contract is an agreement between an employer and an employee; which sets out their employment rights, responsibilities and duties. These are referred to as the ‘terms’ of the contract. Employment contracts can be very simple or very complicated. A thing that many people seem to underestimate and even neglect is the fact that you need to have an employer and an employee employment contract.
There are different types of employment contracts: permanent, fixed, temporary, project.
1. A permanent contract- This is used when an employee is hired on a permanent basis.
2. A temporary contract- Used when more work is expected for a certain amount of time but it is not sure for how long. It may be a few months, a few weeks and even a few days. You should absolutely state that the contract can be terminated by the employer in case there is not enough work. The reason for this contract is mainly to deal with peak work.
Employment Agreement
Understand your Employment Contract before you sign it.
3. A fixed contract – It is almost like the permanent with the only difference that it has a predetermined start and end date. The relationship between an employee and an employer ends after the end date.
4. The project contract serves well when you have a project to finish but you have no idea how long it will last. The employment ends when the project is completed. It is essential to provide incentives so that the employee does not delay the project deliberately. Also be sure to include the terms how you can terminate a contract when an employee does not perform their duties.
Components of a contract
Having a written contract could cut out later disputes and help you understand your employment rights. A normal employment contract should have:
1. Terms- The term indicates when the contract should begin and when the contract should end. Many if not most employment contracts tend to run from 3 to 5 years.
2. Specific duties i.e. job description. This is a very important part of any employment contract because it is the basis for any employers claim to fire you “for cause”. Many times this section will be generic or general in nature, but for your sake you want it to be as specific as possible.
3. Compensation- How much will you earn? This usually discusses the minimum salary as well as lays out any bonuses or stock options and things of this nature that you can expect.
4. Vacation time- How often each year and for how long can you expect to have a vacation? Can your vacation days be accrued? Will you be paid in place of a vacation? These are all things that you can expect to find in this section of your employment contract.
5. Benefits, including life and health insurance, and any sort of pension plans you can expect your company to provide will be found in this section. You can also find information on relocation expenses especially if you will be moving to your new job from another area of the country or world.
6. Termination- We don’t like to think about this but it’s good to be spelled out before hand in your contract exactly what circumstances will lead to your termination. It will probably also discuss how you yourself can terminate your employment contract; making it a very important section.
7. Dismissal pay- In the case of getting fired; you will get a downward trend/ drop in your career. The contract should specify under what circumstances will these things occur? Also it should specify the notice you should be given and the amount of money to be paid to you.
8. Disability provision- This is optional and depends on the nature of the job. It  discusses exactly what happens should you be unable to continue your employment due to disability; as well as what does and what does not constitute a breach of contract when it comes to disability.
The contract binds you and your employer until it ends; by giving notice or until the terms are changed in agreement between you and your employer. How long before the end date is it appropriate to send the reminder. Also a reminder should be made to either parties just before the expiry of the contract.
1. For the Contract Notification. This depends on whether the contract is renewable or not. If it is renewable both your employer and you have a responsibility to give a notification to each other. The period may vary from 1 month to 2 weeks before expiry of the contract. In this case you can thank the employer for his continued support and either request for renewal of course citing some reasons or you can end the contract if you do not wish to continue.
2. The contract may be non renewable, like for project contracts you can either write to thank the employer for working with you and request him/her to get to you  if another opportunity arises. However, you may choose to be silent until the contracts ends and you leave the place depending on the experience you had while  working for the company.
Dorcas is a Human Resource Consultant at Corporate Staffing Services. Website:

No comments:

Post a Comment