5 Things to know about employment contracts

Contrary to popular belief, a Contract of Employment does not have to be in written form to be legally valid. There is no statutory obligation to have the Contract of Employment or the written statement of particulars signed. Once the applicant has accepted the job, there is a legally binding contract of employment between the employer and the applicant. The law does not require witnesses or a signature to make it valid. What really matters is that there is an offer, acceptance, consideration and the intention to create legal relations. As always, getting employment law advice when it comes to contracts of employment is vital. Here’s 5 things you need to know.

  1.  In South Africa, all people contracted to perform a job, no matter how menial, are considered to be ‘employees’, for the purposes of labour legislation. Only independent contractors are excluded, e.g. a plumber or electrician, who you need to call in from time to time, is an independent contractor.
  2. So-called distinctions between ‘permanent’ (full time), ‘casual’ (temporary) or ‘part-time’ employees are academic and non-existent. The informal worker from Zimbabwe who has no passport, ID or work permit is equally entitled to the legal protections afforded to South African employees, if he is employed on a full-time or part-time basis.
  3. An employee is defined as: any person, excluding an independent contractor, who works for another person … and who receives … any remuneration; and any other person who in any manner assists in carrying on or conducting the business of an employer. There is no legal requirement in South Africa to have a written employment contract. A verbal contract is in order provided that the parties have agreed to contract essentials such as:
  • Offer and acceptance;
  • Agreement on specific tasks to be performed, remuneration, duration and hours of work; and
  • Intention to create legal relations.
  1. The contract of employment or letter of appointment needs to be specific regarding:
  • A description of the parties and the nature of the business;
  • The tasks to be performed;
  • Basic employment conditions, annual leave, overtime, etc.;
  • Salary;
  • Pension fund and medical aid (if any);
  • Duties of the employee;
  • Notice and termination of employment provisions; and
  • Restraint of trade (if any).

Simplify contracts, as much as possible, keeping in mind that the contents of the contract may ultimately be used by either party in litigation or other legal proceedings.

  1. At the heart of the employment relationship or contract is an undisputed economic rationale, i.e. the employee undertakes to perform a task in return for money. This aspect cannot be overstressed. Too often, written contracts neglect to emphasize the mutual benefits (between the employer and employee) which center on remuneration and profit.

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