Employment Agreement (comprehensive)

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Attorney approved Practical points considered

An Employment Agreement is used when an employee is hired or re-hired, and states the compensation the employee will receive, and any other terms and conditions of employment that may exist. Typically, employment agreements cover such topics as rate and frequency of payment, vacation time, confidential obligations (if any), benefits or stock options, termination period, and several related details.

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.

So-called distinctions between ‘permanent’ (full time), ‘casual’ (temporary) or ‘part-time’ employees are academic and non-existent. The gardener 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.

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.

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, nevertheless, the contents of the contract may ultimately be used by either party in litigation and legal proceedings.

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 over stressed. Too often, written contracts neglect to emphasise the mutual benefits (between the employer and employee) which centre on remuneration and profit.

Draftsman

This document was written for Agreements.org by a Senior Attorney (Admitted in the High Court) with more than 15 years’ experience. It complies with current South African law.

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