22 Nov Contract of Employment – Review of Key Provisions
The dynamic nature of the employment sector makes reviewing employment contracts and other documents governing employees at the work place imperative.
A contract of employment governs the relationship between an employer and an employee by clearly stipulating the intricacies of the relationship and must reflect the reality of the employment relationship. These intricacies otherwise referred to as the conditions of employment require periodical or regular reviews. Such reviews ought to serve the interests of both parties without hindering any of their rights.
Although, employment contracts may differ due to the degree of responsibilities accruing to each industry sector, however, there are certain terms that are common and must be reviewed periodically, such as;
- Remuneration and Promotion
Remuneration is the amount paid by employers to employees for work done or service rendered. It is paid in form of salary or wage including inter alia, allowances, benefits, bonuses, cash and incentives.
Promotion is the upward review of an employee’s position and responsibilities/power with an employer.
Remuneration must be expressly spelt out in employment contracts including clarity around the payment of remuneration which is usually on a monthly basis. When employees are promoted, it is expected that the terms of remuneration and other benefits are amended to suit the new position in order to avoid legal issues on enforceability.
The duties/responsibilities of the employee are not excluded as same must be expressly spelt out in the employment contract or it may be made subject to the employee handbook or other regulatory document of the employer, stating out the new responsibilities.
Thus, it is very important for employment contracts to include provisions that will avoid obsolescence as this can be used to challenge the enforcement of an employment contract. This comes to play when an employee has changed positions through the years since the original contract, and there is no document evidencing the current position, responsibilities and benefits of the employee.
This is a very important term as employers tend to rely on old employment contracts signed by employees which do not protect either of the parties. The periodical review of this clause will lead to the consistent protection of the parties with their various positions and authorities properly stipulated.
Typically, when promotion takes place, an addendum to an original contract of employment or a side letter (setting out the new terms) is issued by the employer in which both parties must sign.
- Employee Handbook
This consists of important rules/policies usually developed by the Human Resources Department of the employer on a plethora of legally significant matters ranging from disciplinary action, code of conduct rules, performance reviews and other miscellaneous provisions that are usually not contained in employment contracts. These rules/policies are mostly influenced by regulatory updates on issues such as bribery and corruption at work places, safety and security; inter alia which require periodic reviews and updates.
The Courts usually require proof that the terms being challenged are legally binding on the employee, and when it has to do with work place conduct, communication from the employer to the employee is key and an understanding of the consequence(s) for lack of compliance.
Employment contracts should contain references, to provisions not contained in them for enforceability reasons and also clauses allowing for amendments from time to time. Clauses which are to the effect, that upon an employee receiving notice of reviewed handbooks, he/she agrees that his/her employment will be governed by such revised rules, should also be added. This is necessary in order to meet the business needs of the employer as well as protect the employee from unwarranted loss.
The termination clause is the most highly litigated clause and its purpose includes to rebut the legal presumption that ‘reasonable notice of dismissal’ will be given to an employee upon termination, as opposed to a clearly specified/defined period.
Typically, the termination clause provides a fixed notice period or a formula for calculating same, based on the employee’s years of service. The benefits and other variable compensation accruable to the employee are not to be left out and must be reviewed/amended upon any change in other contractual terms. The amendment must also reflect the benefits to be continued during the notice period.
The aim of employers here is to reduce the cost of termination seeing as a termination clause does not enjoy the pleasure of certainty as regards employees’ entitlements upon termination.
It is important for employers (companies/institutions/organizations) to make certain that contracts of employment, employee handbooks, code of conduct rules, inter alia, are reviewed periodically to ensure compliance with the law and current processes and procedure.
Berkeley Legal is capable of advising on employment related matters.
The information provided in this article is for general informational purposes only and does not constitute legal advice.