Contract of Employment 2023 (guide + free templates)

A 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 contract of employment
  • Contract of employment benefits
  • contents of the contract of employment
  • contract of employment templates
  • etc

Let’s get started

Contract of Employment Definition

A contract of employment or employment contract is a legally binding agreement between employer and employee which contains clear and specific terms and conditions that govern the relationship between employer and employee.

The terms and conditions of the contract of employment specify the name and address and the employer and employee, job title, commencement of the job, remuneration, hours of work, termination clause, rights of the employee, the responsibility of the employer, etc.

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 that is termed a 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 for a specified period of time and determines the nature of the employment relationship.

Read also: Employer-employee relationship; the difference between a contract of service and contract for service

contract of employment definition

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

  1. It gives an employer control over employees by laid down the standards of work.
  2. It reduces the chance of conflicts when all rights and responsibilities are clear.
  3. 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.

  • Title of the document i.e CONTRACT OF SERVICE
  • Date
  • Name and addresses of the parties
  • Position
  • Duration
  • Remuneration and other benefits
  • hours of work
  • Job scope
  • Rights, duties, and responsibilities of parties
  • Termination clause
  • Dispute settlement clause
  • Governing law clause
  • Signatures
  • etc

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.

Contract of employment template

EMPLOYMENT CONTRACT

THIS EMPLOYMENT AGREEMENT IS MADE this ________ day of ____________20_______

BETWEEN

(1) ______________________ of __________________ (the “Employer”)

and

(2) ______________________ of __________________ (the “Employee”).

This document sets out the terms and conditions of employment which are required to be given to the Employee under the law.

Commencement and Job Title

The Employer agrees to employ the Employee from _______________________200_______ in the capacity of ________________________ at ___________________________________________

No employment with a previous Employer will be counted as part of the Employee’s period of continuous employment. The Employee’s duties may from time to time be reasonably modified as necessary to meet the needs of the Employer’s business.

Salary

The Employer shall pay the Employee a salary of USD. _____________ per year by equal [weekly] [monthly] installments in arrears.

Hours of Employment

The Employee’s normal hours of employment shall be _______ to _________ on Mondays to Fridays [and _________ to __________ on Saturdays] during which time the Employee may take up to one hour for lunch between the hours of 12 pm and 2 pm, and the Employee may from time to time be required to work such additional hours as is reasonable to meet the requirements of the Employer’s business [at no additional payment] [at an overtime rate of Tshs. ______perhours].

Holidays

The Employee shall be entitled to ________days holiday per the calendar year at full pay in addition to the normal public holidays. Holidays must be taken at a time that is convenient to the Employer and no more than ______weeks’ holidays may be taken at any one time.

 Sickness

The Employee shall be paid normal remuneration during sickness absence for a maximum of ________ weeks in any period of twelve months provided that the Employee provides the Employer with a medical certificate in the case of absence of more than seven consecutive days. Such remuneration will be less the amount of any Statutory Sick Pay or Social Security sickness benefits to which the Employee may be entitled.

Pension

[There is no pension scheme applicable to the Employee] [The Employee shall be entitled to join the Employer’s pension scheme the details of which are set out in the Employer’s booklet entitled ________________________________________ which is available on request].

Termination

The Employer may terminate by giving written notice to the Employee as follows:

(a)    With not less the one week’s notice during the first two years of continuous employment;

(b)   With not less than one week’s notice for each full year of continuous employment after the first two years until the twelfth year of continuous employment; and

(c)    With not less than twelve weeks’ notice after twelve years of continuous employment.

The Employer may terminate this agreement without notice or payment in lieu of notice in the case of serious or persistent misconduct such as causing a major breach of the Employer’s disciplinary rules.

The Employee may terminate this agreement by one week’s written notice to the Employer.

Confidentiality

The Employee is aware that during his employment he may be a party to confidential information concerning the Employer and the Employer’s business.

The Employee shall not during the term of this employment disclose or allow the disclosure of any confidential information (except in the proper course of his employment).

After the termination of this agreement, the Employee shall not disclose or use any of the Employers to amount to a trade secret.

The Employer shall be entitled to apply for an injunction to prevent such disclosure or use and to seek any other remedy including without limitation the recovery of damages in the case of such disclosure or use.

[Here, the employer may decide to engage in a Non-disclosure Agreement (NDA) with an employee to address confidentiality problems exclusively]

Non-Competition

For a period of [one] [two] year(s) after the termination of this agreement, the Employee shall not solicit or seek business from any customers or clients of the Employer who were customers or clients of the Employer at any time during the ___________ years immediately preceding the termination of this agreement.

Discipline

The Employer’s disciplinary rules and the grievance and appeal procedure in connection with these rules are set out in the Employer’s booklet entitled ___________
__________________ which is attached hereto.

Notices

All communications including notices required to be given under this agreement shall be in writing and shall be sent either by personal service or first class post to the parties’ respective addresses.

Severability

If any provision of this agreement should be held to be invalid it shall to that extent be served and the remaining provisions shall continue to have full force and effect.

Entire Agreement

This agreement contains the entire agreement between the parties and supersedes all prior arrangements and understandings whether written or oral with respect to the subject matter hereof and may not be varied except in writing signed by both the parties hereto.

Governing Law

This agreement shall be construed in accordance with the laws of ……….. in force at the time of this Agreement.

IN WITNESS OF WHICH the parties have signed this agreement the day and year first above written

______________________________
Signed by the Employer in the presence of (witness)

Name _________________________
Address ________________________
_______________________________
Occupation _____________________

______________________________
Signed by or on behalf of the Employee in the presence of (witness)

Name _________________________
Address ________________________
_______________________________
Occupation _____________________

Contract of employment sample

CONTRACT OF EMPLOYMENT

This contract of employment is made this………….. day of ….., 20……

BETWEEN

[full name and address of the employer] hereinafter referred to as employer

AND

[full name and address of the employee] hereinafter referred to as employee

WHEREAS The Employer intends to employ the Employee for the Position, and the Employee agrees to work for the Employer in exchange for compensation.

Therefore in exchange for promises and other good and useful considerations, the parties agree to the following ;

1. Job Title

The Employee will be assigned the job title of (“Position”), which will entail a variety of responsibilities including but not limited to

i) [add specific duties and responsibilities of the employee]

ii) [add general duties of employee]

2. Commencement

The employment will be termed to commence on the date of executing this contract and shall remain valid until this contract is terminated.

3. Hours of Employment

The Employee’s normal hours of employment shall be _______ to _________ on Mondays to Fridays [and _________ to __________ on Saturdays] during which time the Employee may take up to one hour for lunch between the hours of 12 pm and 2 pm, and the Employee may from time to time be required to work such additional hours as is reasonable to meet the requirements of the Employer’s business [at no additional payment] [at an overtime rate of Tshs. ______perhours].

4. Remuneration 

Salary: As compensation for the services provided, the Employee shall be paid a salary of  ___________ dollars per month. The salary is a gross amount subject to all applicable local, state, federal, and other taxes and deductions.

Commissions: In addition to the aforementioned salary, the employee is entitled to commissions, which will be paid every____ and calculated as follows; [show how you wish to pay commission]

Bonuses: The Employee is entitled to bonuses on a [Monthly/quarter/annual] basis, calculated as follows; [show how you wish to pay bonuses]

Benefits:  During the course of employment, the Employee will be eligible to benefit from the Employer’s benefits. These include the following:{add list of all benefits]. The Employer reserves the right to change the aforementioned benefits at any moment.

Reimbursements: The Employer undertakes to reimburse the Employee for all expenses, including travel, food, lodge, etc.

4. Leave

During his employment, an employee is entitled to annual leave, sick leave, maternity leave, and family responsibility leave. The employee may not accrue leave, and in the case that it is not taken, the leave will be forfeited.

annual leave: For each annual leave cycle, the employee is entitled to 21 (twenty-one) consecutive days of paid leave.

sick leave: The employer shall grant to the employee who is absent from work through incapacity during a sick leave cycle of 36 months employment with the employer sick leave equal to the number of days the employee would normally work during six weeks.

When applying for sick leave, the employee will produce a medical certificate to the employer. A medical practitioner or anyone who is certified to diagnose and treat patients and is registered with a professional council must issue and sign the medical certificate.

Maternity leave: Unless otherwise agreed upon or on a date certified by a medical practitioner, the employee is entitled to unpaid maternity leave for a maximum of four months beginning at any time from four weeks before the projected date of delivery.

The employee will notify the employer of such dates at least four weeks before she plans to take maternity leave.

Unless a medical practitioner confirms that she is fit to work, the employee is not allowed to work for 6 weeks following the birth of her kid.

After the maternity leave has ended, the employee is eligible to return to work.

Family Responsibility Leave: During each annual leave cycle, the employer will provide the employee three days of paid leave, which the employee is entitled to take when

i) the employee’s child is born

ii) an employee’s kid becomes ill

iii) the employee’s spouse, parent, grant parent, kid, adopted child or grandchild, brother or sister passes away.

The employee may take family responsibility leave for the entire or a portion of a day, and the EMPLOYER may demand acceptable proof of the grounds for the leave.

5. Public Holiday 

The employee is entitled to full pay on public holidays as stipulated by law.

6. Probationary Period

A probationary period is defined as the first [year/six months] of employment. The Employer reserves the right to terminate employment at any time and without cause throughout this time.

During the probationary period, the employee shall not be entitled to the leave, bonuses, commissions, and [specify the benefits that the employee is not entled] benefits.

7. Termination

If the Employee wishes to end this contract, he or she must give at least ____days’ written notice.

At least days’ notice must be provided by the Employer if wishes to terminate this contract. If the Employer terminates this Agreement, the Employee is entitled to severance compensation for a period of time equal to their pay at the time of termination.

8. Confidentiality

An employee will have access to confidential information that belongs to the employer. This information may not be shared with anybody outside of the employer.

10. Governing law

This contract shall be governed, interpreted, and construed in accordance with the laws of [state, province, or territory].

11. Entirety

This contract contains the full agreement between the parties and replaces all prior written or oral agreements. This agreement may be changed at any time with both the Employer and the Employee’s written permission.

IN WITNESS WHEREOF the parties hereto have executed these presents the day, month and year hereinafter appearing.

[Full name]

Sign:

Date:

EMPLOYER

[Full Name]

Sign:

date:

EMPLOYEE

As Witnesses:
1.[ 1st witness’s full name, address, and title]

Sign:

Date:

2.[2nd witness’s full name, address, and title]

Sign:

Date:

Conclusion

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 explained the types, benefits, and contents of the contract of employment.

Isack Kimaro
Isack Kimaro

Editor-in-chief and founder of sherianajamii.com. Holder of Bachelor of Laws (LL.B) and Post Graduate Diploma in Legal Practice. Lawyer by profession and blogger by passion