Contract of employment or an employment contract is a primary document when it comes to labor and employment issues.
Together with labor laws, the contract of employment governs the relationship between an employer and an employee in any state.
The purpose of the contract of employment is to balance the interests between an employer and employee.
The focus here is to share with you the meaning of the contract of employment, types of the contract of employment, Contract of employment benefits, and Primary contents of the contract of employment.
See also a contract of employment template
Contract of Employment Definition
The contract of employment is an agreement between employer and employee concerning their rights and responsibility in the course of employment.
This contract is commonly in written form. However, In many instances, the oral contract is accepted.
The contract of employment mainly comes into existence when an employment relationship is established.
Employment relationship in this context begins when one party (who owns certain resources) procures labor services of another party (who renders services) in return for wages or remuneration.
The employment relationship is formally enforced through an agreement between the parties. It is this agreement which is termed as Contract of Employment
It is within the contract of employment where the duties and obligations of the parties arise and must be fulfilled by both parties.
The terms and conditions established within this contract must be put in writing as they bind both parties to an employment contract. It is the same contract that determines if the parties can work together on a specified period of time and determines the nature of the employment relationship.
Types of Contract of Employment
There are three common forms of the contract of employment that are Permanent and pensionable, contract for a Specified Period of Time, and contract for a Specific Task.
Permanent and pensionable
This is a Contract for an unspecific period of time whereas parties do not state the period of time in which the employment will terminate or come to an end.
Hence the employment relationship continues until when the parties agree to terminate the contract when one of the parties passes away, resigns, or retires as required by the law.
The contract for a Specified Period of Time
This is the type of employment contract which applies to the professional and managerial cadre.
In this type of contract of employment, both parties specify the duration of the relationship and the time in which the employment contract will terminate.
The contract for a Specific Task
In this type of contract of employment, the parties clearly state the task to be accomplished and the contracts terminate upon the accomplishment of such a task.
Importance of Contract of Employment
- It gives an employer control over employees by laid down the standards of work.
- It reduces the chance of conflicts when all rights and responsibilities are clear.
- It restricts competition between employer and employee by adding the covenant not to compete.
Contents of Contract of Employment
- The contract of employment must contain the following provisions/terms.
- Particulars of the parties’ i.e. name and address of employer and employee
- Commencement date
- Duration of employment
- Salary, benefits, and other remuneration
- Duties rights and responsibilities of each party
- Termination clause to show reasons, grounds, and how the contract may be terminated by either party
- Dispute resolution clause, to show how to handle dispute arises from the employment and the law applicable to solve that dispute.
The contract of employment may be accompanied by a job description and written statement of particulars which contains the name, age, permanent address and sex of the employee, place of recruitment, job description, date of commencement, form, and duration of the contract, place of work, hours of work, remuneration and its methods of calculation.
This post was about the contract of employment.
It shows that the contract of employment is an agreement between employers and employees concerning their rights and responsibility in the course of employment.
Further, it explains the types, benefits, and contents of the contract of employment.