Are Your Employment Contracts Working Hard Enough for You?

You rely on your employees. Until you find you simply can’t anymore…

That’s when you want to be able to give the bad apple the chop, fair and square, without worrying about any legal fallout. 

A well-worded employment contract could be enough to keep the CCMA at bay. Pity you don’t have one in place for this guy yet.

With staff churn as it is, keeping up with the cycle of producing and renewing and updating these unique, comprehensive employment agreements is a full-time job at least. That person needs to know your business and the latest local labour law intimately enough to draft contracts that work hard to protect your interests and still attract top talent. That’s an overhead, not every small business may be able to carry. 

But can you afford to be casual about your employee agreements? In South Africa, the answer is a resounding No.

What is an Employment Contract?

An employment contract sets in stone what’s agreed upon by both employer and employee as to the nature of the role and their mutual obligations.

On the first day of the job, before even being shown around the coffee machine, every new hire is legally required to sign a formal written document that outlines the responsibilities, expectations and benefits of the job. 

As must the employer. Sign, that is. After all, an employment contract works both ways to protect the rights of both employers and employees.

Employers Employees
Sets standards for performance review Defines what to expect in terms of remuneration
Provides reasons for a fair dismissal  Clearly sets out duties and expectations
Prevents staff from sharing confidential business information  Provides a sense of stability and security
Stops staff from leaving their jobs and competing against you at another company Explains the benefits the employee may expect, including health insurance, paid, sick and maternity leave, retirement plans, and other perks
Provides an exit strategy if things don’t work out Provides dispute resolution processes and recourse if none exist
Enforces legal consequences if the employee breaks the contract Provides proof of employment for other administrative or financial transactions

Table 1.: Employment Contracts Protect Both Employers and Employees

What’s Covered in an Employment Contract?

Employment contracts vary depending on whether it’s for permanent employment, fixed-term employment, probation employment, or project employment, but could include:

  • Commencement date
  • Job title and description
  • Trial period
  • Duration of employment
  • Compensation and benefits
  • Leave
  • Employer’s rules, regulations, policies, and practices
  • Confidentiality agreement
  • Noncompete agreement
  • Dispute resolution processes
  • Termination of employment

Doesn’t a Verbal Agreement Count?

You may believe you’re safer not putting anything in writing. Or that a verbal agreement is good enough in most cases. The opposite is true. Without a formal contract, you won’t have a legal leg to stand on when a dismissed employee claims your company didn’t have any rules and standards, or proper procedures were not followed in their dismissal. 

A written contract also helps staff understand their duties and responsibilities.

But most importantly, every employee needs a written agreement by law. 

According to section 29 of the Basic Conditions of Employment Act 75 of 1997 (BCEA), you as an employer in South Africa must provide every employee with written terms of employment at the start of employment. Failure to do so could land you in jail (section 93 of the BCEA) or liable for a hefty fine (schedule 2 of the BCEA). 

What is an Employee?

Since only “employees” are protected by the dispute resolution provisions of the Labour Relations Act, there’s a lot of debate over whether a person is an employee or not. 

The Labour Relations Act defines an employee ‘as any person, excluding an independent contractor, who works for another person or for the State and who receives, or is entitled to receive, any remuneration.’

Basically, any employee who works for you more than 24 hours a month is considered a permanent employee. That includes everyone from your Malawian gardener to your children’s au pair. 

The Bottom Line

Writing up employment contracts can be time-consuming and costly, but less so than losing days in dispute resolution at the CCMA, and being hit with hefty fines for unfair dismissal. 

Prevent enormous headaches in the long term and ensure both you and your employee are mutually protected by taking the appropriate legal steps from the start.

Do you need employment contracts for your staff fast? Contracts4Biz can help. Our legal professionals are experts in South African labour law and can work with you to draft iron-clad, fully customized employment contracts online in minutes. Click here to get started.

FAQ’s

What is a contract of employment?
A contract of employment is the foundation of the relationship between an employee and employer. It helps employees understand what’s expected of them while working at the company, and helps employers reduce employment liability risks.

Let Contracts4Biz take the hard work out of drafting employment contracts. We’ll set your business up for success with word-perfect employment contracts that work for you, and your people.  

What are the risks of not having an employment contract?
Not having employee agreements in place could land you up in legal hot water. According to section 29 of the Basic Conditions of Employment Act 75 of 1997 (BCEA), employers must provide every employee with written terms of employment at the start of employment. Failure to do so could result in jail time (section 93 of the BCEA) or a heavy fine (schedule 2 of the BCEA).

 

Contracts4Biz makes light work of employment contracts. Draft a watertight contract online in minutes and protect your business and your people today.

Do I need an employment contract for my domestic worker?
Yes, having an employment contract in place for all employees is a legal requirement in South Africa. This protects not only, you but also your domestic worker. 

 

The law covers any staff who work in your home – including gardeners, cleaners, cooks, nannies and au pairs – whether they’re employees or contractors, South Africans or foreign nationals.

Isn’t a written offer letter enough?
No. Most offer letters don’t cover everything that should be included in an employment contract, nor do they stand as a legally binding agreement. It’s important to draft a specific contract that addresses all of the important factors and can be signed by both parties. 

 

Contracts4Biz can simplify this process, allowing you to download and edit templates to quickly draw up these all-important documents as and when a new hire walks through the door. 

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