It's a Deal! - Contract of Employment Basics

The Basic Conditions of Employment Act (BCEA), section 29 requires an employer to provide an employee with certain written terms of employment not later than the first day of commencement of employment. This does not mean that there must be a written contract but it is in everyone’s interests to have one.

An employment contract can be described as:  “an agreement between two or more legal persons, in terms of which one of the parties (the employee) undertakes to place his or her services at the disposal of the other party (the employer) for an agreed period in return for a fixed or ascertainable wage, and which entitles the employer to define the employee’s duties and to supervise how the employee discharges them.” (Grogan J, Workplace Law, 10th ed.)

There are several requirements for a legally binding employment contract: The parties must have the capacity to contract. In a nutshell, the employee should be over eighteen years of age, of sound mind and s/he must be sober when they sign. If the person is between the ages of fifteen and eighteen, the guardian’s consent is required, unless s/he is emancipated. This applies equally to family-run businesses. The contract must be legal and capable of performance. For example, it is illegal to employ a minor in a bar and a person who cannot swim is logically incapable of being employed as a lifeguard.

The parties should have the intention to contract and agree to the terms and purpose of the contract. While there is a muddy pool of court opinions on whether particular employment contracts are binding, a clearly written contract that spells out the terms is plain good business. The duration of the contract is the main differentiator between a fixed-term contract and an indefinite or ‘permanent’ employment contract. Fixed terms specify a start and end date, for example, waitrons might be employed for the summer season only. Where no end date is specified, then the employment is assumed to run indefinitely, unless and until terminated, in accordance with the law and the agreement itself. While a fixed-term contract may be renewed, the courts frown on using rolling fixed-term contracts to avoid the obligations of labour law.

In addition, S29 of the BCEA requires the following in writing:

(a)      full name and address of the employer

(b)      name and job title of the employee, or a brief description of the work

(c)      the place/s of work

(d)      date of employment

(e)      ordinary hours of work and days of work

(f)      wage/salary or the rate and method of calculating remuneration and overtime and the frequency (weekly or monthly)

(g)      any other cash payments, payments in kind, or benefits e.g. accommodation or medical aid

(i)       any deductions

(l)       leave entitlement (annual, sick and family responsibility)

(m)     period of notice or period of the contract

(n)      description of any council or sectoral determination which covers the employer’s business

(o)      period of employment with a previous employer that counts towards the period of employment

(p)      list of any other documents that form part of the contract, indicating a place where a copy of each may be obtained.

It is advisable to refer to the BCEA for information on the minimum requirements such as leave and working hours, to remain compliant. However, the contract is supposed to be a written record of what both parties have agreed. It should be in simple language and easily understood. Where necessary, an interpreter should be used to ensure mutual understanding.

The employment contract can be seen as being the foundation, while job profiles, standards, policies and procedures, are the walls and support columns of a healthy employment relationship. A written contract is essential to ensure that both parties know what is expected of the employment relationship. Keep it simple and practical to ensure the employee understands their rights and obligations.

Janet Askew Janet is a trainer, coach, speaker and writer who is passionate about promoting women in business and SMME development. In addition to her consulting work, she is a director of Essentially Natural and serves on the board of the Wot-If? Trust. https://www.linkedin.com/in/janetaskew/