29/03/2021
WHY A WRITTEN CONTRACT OF EMPLOYMENT IS SO IMPORTANT
An employment contract is a contract of agreement that is signed between an employee and the employer. The formal written contract of employment is of vital importance for both the employer and employee as it serves as the foundation for the relationship between both parties. It requires of both parties to do their duties and responsibilities. For example: The basic duty of an employee is to work for his/her employer in exchange for remuneration. The contract also regulates the terms and conditions of employment between the employer and the employee and creates a strong basis for protecting both parties’ interest and clarity on the employee’s specific role in the company. The employment contract can be regarded as the first contact point between the employer and the employee and therefore forms the foundation of the employment relationship between the two parties.
In South Africa, the trend amongst small businesses and some medium businesses is to not enter into a written contract of employment with their employees and if they have, more often than not, these contracts of employment are poorly drafted and inadequate to serve as a protection for the interest of both parties. In many cases the employment relationship between the employer and employee is based only on a verbal agreement which means there is no written terms and condition of service. Especially in small businesses there seems to be a relaxed atmosphere where entrepreneurs assume that their dealings with employees can be handled verbally.
In terms of South African labour legislation it is not a requirement that an employer and employee must enter into a written contract of employment in order for an employment relationship to exist. The general principle is that there should only exist mutual agreement amongst all parties to a contract ("consensus ad idem").
Section 29 of the Basic Conditions of Employment Act, 1997 (BCEA), however requires of employer to present the employee, when commencing employment, with the following particulars regarding the employment relationship in writing. Failure to comply with these provisions of the BCEA may result in the imposition of a fine. The specific particulars are listed below:
i) )The full name and address of the employer;
ii) The name and occupation of the employee, or a brief description of the work for which the employee is employed;
iii) The place of work, and, where the employee is required or permitted to work at various places, an indication of this;
iv) The date on which the employment began;
v) The employee’s ordinary hours of work and days of work;
vi) The employee’s wage or the rate and method of calculating wages;
vii) The rate of pay for overtime work;
viii) Any other cash payments that the employee is entitled to;
ix) Any payment in kind that the employee is entitled to and the value of the payment in kind;
x) How frequently remuneration will be paid;
xi) Any deductions to be made from the employee’s remuneration;
xii) The leave to which the employee is entitled
xiii) The period of notice required to terminate the employment, or if employment is for a specified period, the date when the employment is to terminate;
xiv) A description of any council or sectoral determination which covers the employer’s business; and
xv) Any period of employment with a previous employer that counts towards the employee’s period of employment.
xvi) A list of any other documents that form part of the contract of employment, indicating a place that is reasonably accessible to the employee where a copy of each may be obtained.
The above requirement obviously does not apply to employees who work for less than 24 hours a month. Should there be any changes towards the written particulars mentioned above (amendment of the BCEA or Regulations), the list provided to employees must be amended in writing. If an employee is not able to understand the written particulars, the employer must explained to the employee in a language and in a manner that the employee understands.
Important to know is that the written list of particulars requested by the BCEA does not constitute a contract of employment. As the contract of employment forms the foundation of the employment relationship between the employee and employer, it is advisable that employees be issued with such a document which should include the particulars required by the BCEA. The contract of employment will regulate the scope of the employee’s services and provide more certainty regarding the rights and responsibilities of the employee. It will assist the employer in dealing with issues such as the behavior and conduct of the employee, probationary periods, disciplinary issues and disputes and assist in the prevention of lengthy disputes or other legal action. In the absence of a code of conduct and disciplinary code it can be very difficult to manage an insubordinate and obstinate employee. The contract of employment will also protect the employer’s confidential and proprietary information.
It is important that the contract of employment be concluded and signed off prior to the employee commencing work.
